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Car loans and vehicle finance
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Your guide to getting a secured car or vehicle loan
Looking for a new car? Motorbike? Caravan? Boat? Not sure how much you can afford? Want to avoid expensive dealer finance?
You've pulled into the right driveway! My Finance Agent has been providing award-winning lending advice to Australians since 2014. Car loans and vehicle finance are no exception.
We specialise in getting our clients behind the wheel of their dream cars, boats, motorbikes and more without overpaying for the privilege. Whether you’re in the market for a new or used vehicle, we're here to find you the best rate.
Keep reading to discover...
Everything you need to know about car loans and vehicle finance in Australia:
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Different types of vehicle finance, including how they work
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How to compare car loan lenders and what to look for
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Why car dealer finance should be avoided
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How to apply for a car loan, including the paperwork you'll need
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Frequently asked questions about getting a car loan
Let's go!
What are the different types of vehicle finance in Australia?
Finance provides a means to buy a vehicle (such as cars, trucks, motorcycles, vans, and other forms of transportation) without having to pay the entire purchase price upfront.
Vehicle finance can take several forms, including:
Car loans
Car loans are a common form of vehicle finance. With a car loan, the borrower (the person buying the vehicle) borrows money from a lender (usually a bank, credit union, or financing company) to purchase the vehicle. The borrower then repays the loan amount, plus interest, in regular instalments over a specified period (loan term). The vehicle may serve as collateral to secure the loan.
With a secured car loan, the lender can repossess the vehicle if you stop making your repayments.
Car leasing
A car lease works on the premise that the lender (lease company) owns the vehicle, and the lessee (person leasing the vehicle) rents it via monthly payments. The rental (lease) period is usually two to four years. Some car lease agreements allow the you to purchase the vehicle at the end of the lease agreement at a predetermined price, known as a "balloon payment." Otherwise, you hand the car back at the end of the lease period. Leasing can offer lower monthly payments than traditional car loans, but may come with mileage restrictions and wear-and-tear conditions.
A 'novated car lease' allows an employee to pay for a vehicle's finance and running costs with their pre-tax salary. The tax deductibility of leasing can make it an attractive option for self-employed people and some employees.
Dealer finance
Most car dealers can offer on-site lending services to help you buy a car. But beware of the cost of this convenience. Car dealer finance can be notoriously expensive because there is no power of comparison. Working with a trusted broker like My Finance Agent lets you quickly compare the best market rates across a massive panel of lenders.
If you need a new car quickly, we may be able to get your car loan approved in just a few hours and funds disbursed the next day.
Commercial vehicle loans
Businesses often use financing to purchase vehicles for commercial use, such as delivery trucks, vans, or company cars. Commercial vehicle loans cater to the unique needs of businesses. The vehicles themselves may serve as collateral to secure the loans. See our Business Loans and Commercial Finance hub for more information.
Hybrid and electrical vehicles may be eligible for an interest rate reduction with some lenders.
Personal loans
Some people may choose to use a personal loan to finance the purchase of a car. Personal loans are typically unsecured (no asset required) and can be used for various purposes, including buying a vehicle. The requirements for an unsecured loan include stable employment and sufficient uncommitted income to cover the loan repayments.
Unsecured loans generally come with higher interest rates because of perceived increased risk for the lender.
Choosing the right vehicle financing method comes down to your aims and needs.
We'll help you to look at the big picture and come up with recommendations that include a tailored interest rate and terms based on your specific situation.
Finding the right car loan and comparing lenders
Finding the best car loan in Australia and comparing lenders involves looking at a number of factors. The interest rate is certainly a big consideration, but there are numerous other things that contribute to the cost of a car loan.
Let's take a closer look...
New vs. Used Car Finance
Perhaps your budget doesn't stretch to a new car. Or you might simply prefer buying a used vehicle. The good news is that buying a second-hand car does not mean you cannot finance it. Lots of lenders provide loans and/or leases on used cars. Our job is to find the best rate and terms for the right type of car loan to suit your needs.
Secured vs. Unsecured Car Finance
Secured and unsecured car finance are two distinct types of auto loans. Secured finance, as the name suggests, involves offering collateral, typically the vehicle itself, to secure the loan. If you stop making your loan payments, the lender has the right to repossess the vehicle. Unsecured car finance, on the other hand, does not use the vehicle as security. Instead, approval is based on your credit history and income. Since unsecured loans are riskier for lenders, they often come with higher interest rates and lower borrowing limits.
Car Loan vs. Car Lease
With a car loan, you're essentially buying the vehicle and making payments to the lender until you own the vehicle outright. This provides you with the freedom to customise the car and drive it as much as you like. With a car lease, on the other hand, the leasing company buys the vehicle and you rent (lease) it from them. Most car lease periods are two to four years. Leasing typically offers lower monthly payments but comes with mileage and use restrictions designed to protect the value of the car. Plus, you'll have to return the car at the end of the term or buy it from the leasing company. The end-of-lease purchase is done via a "balloon payment"—typically 20 to 50 percent of the loan value. Besides the lower repayment rate, tax benefits are the main reason people opt for a car lease over a car loan. Your lease payments may be considered a tax-deductible expense, which can reduce your taxable income. Talk with one of our lending experts to find out if you would qualify for these tax benefits.
Long vs. Short Car Loan Term
'Loan term' refers to the duration or amount of time over which you, the borrower, is expected to repay the loan balance and interest to the lender. The average car loan term is about five years. But we don't believe in playing averages at My Finance Agent. We make sure that your car loan term is tailored to your needs. A term that is too long means that you may pay more interest than you need to. A term that is too short can lead to being stressed by repayments that are too high. We'll compare your options and crunch the numbers for you.
Is dealer finance bad? Why not finance through a dealership?
You've gone car shopping and found the perfect model in your favourite colour. Now the dealer is offering you an attractive price, plus the convenience of fast finance approval while you wait. The trouble is that this convenience may come at a hefty cost.
Nearly all major automakers have their own finance divisions—Toyota Finance, MyFord Finance, BMW Finance, and so on. Even secondhand car dealers usually have exclusive arrangements with a lender to provide their buyers with dealer finance. Even
Finance is a significant source of dealership revenue. But that, in itself, is not really the problem. The issue with dealer finance is a lack of competition. You'll find that most auto dealers present their customer's finance application to just one lender, the only lender with a presence in the dealership.
On the other hand, working with a finance broker like My Finance Agent, means you gain access to our nationwide panel of lenders, from big banks to niche leasing companies. We analyse your needs and negotiate to get you the best market rate possible.
Need a fast approval?
Of course! Same-day car loan approval and disbursement may even be possible. It will depend on the time of day you enquire and the type of finance required.
Credit history isn't perfect?
As long as you have good serviceability (sufficient income to cover the repayments) and stable employment, black marks on your credit file may not stop you from getting a car loan.
No deposit?
A host of lenders provide no-deposit car loans. Some will even lend more than the purchase price, depending on your circumstances.
Do you have a novated lease through your employer? You may be able to choose your own lease provider to reduce your lease payments make your salary sacrifice go further.
BELINDA SLATER
Finance Broker
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How to apply for a car loan
We've made applying for a car loan as easy as a Sunday drive.
1. Work out your budget
It's a great idea to work out a budget for your car loan repayments before you start shopping. Most people are pleasantly surprised that financing makes more vehicles affordable to them.
2. Compare car loan lenders
How much you plan to spend, coupled with your financial information, will influence what sort of interest rates you'll be offered, as well as your eligibility for different loans and lenders. We will collate this information and then match your needs across our large panel of lenders to find you the lowest rate and best terms. Once you've chosen a lender, we can secure you a car loan pre-approval or immediately progress to a full loan application.
3. Submit your application
Found the perfect car? Great! It's time to apply for your car loan. As well as the usual 100 points of identification, proof of income and other financial documents, we'll help you prepare information about the vehicle. You will generally need to provide:
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Dealer invoice or contract
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Year, make and model of the car
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Vehicle chassis number (VIN)
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Vehicle registration
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Proof of insurance (cover note)
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Engine type (loans for electric/hybrid cars may be eligible for a discounted interest rate with some lenders)
4. Receive the loan approval
Following approval, you'll receive a formal loan offer detailing the terms and conditions. We'll help you review the documents to ensure that everything is in order before you sign them.
5. Take ownership of your new car
Disbursement of funds happens promptly after the signed loan documents are returned. If your purchase involves a deposit or trade-in, we can help to coordinate this. Once the dealer has receipted the funds, they will issue you with a fully paid invoice and handover the keys!
With a pre-approved car loan, you’ll know exactly how much you can comfortably spend and what your repayments will be. Pre-approval lasts up to three months while you find your perfect car.
GREG ROBINSON
Finance broker
Frequently asked questions about car finance
Do I need a deposit for a car loan?
Not necessarily. Depending on your circumstances, you may be able to borrow the full amount of the vehicle's purchase price. Alternatively, putting down a deposit or using your existing car as a trade-in may help to lower your loan balance, interest rate and repayments. We'd be pleased to do the calculations for you.
Can I refinance my existing car loan to get better terms or a lower interest rate?
Yes. If your situation has changed or you find yourself stuck with a high interest rate or other undesirable terms, you may be able to refinance to a more favorable loan. However, it is important to understand any costs associated with paying off your current car loan early. We would be pleased to conduct a free loan review for you.
What is a good interest rate on a car loan?
When working out your interest rate offer, lenders will take into account your credit score, income, employment, loan amount, loan term, and value of the vehicle. But remember: don't only focus on the interest rate. You may discover that a loan comes with an attractively lower interest rate, but higher fees hidden in the fine print. This is the benefit of using My Finance Agent to find you the best-tailored market rate. We analyse all of the details for you.
Can I get a loan to buy a car from a private seller?
Yes, you may be able to buy a privately sold car with finance. Private car sale loans are designed to help individuals purchase vehicles from private sellers, rather than dealerships. The process is much the same—the vehicle is used as collateral to secure the loan. However, there may be extra lender criteria relating to the age of the car, roadworthiness, a requirement for the vehicle to be free of liens (no debt owing on it), and other possible conditions. We'd be pleased to help compare private sale car loans for you.
The difference with My Finance Agent is that we don't only do auto finance. We look at the big picture because our aim is to help you to achieve all of your financial goals.
CHRISTOPHER JONSON
Director & Finance broker
Serving all of Australia
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