You may be wondering if interest rates differ from state-to-state, and what range of car loan rates you may be offered if you apply for a Western Australia-based lender.
However, in Australia the rate you may be offered depends on several personal and loan factors, including your credit history, whether the loan is secured and the interest rate type. The location of the car loan lender should not necessarily impact the interest rate you are offered.
Your credit report will impact the interest rate you may be offered, as lenders will assess your credit score to determine your likelihood to repay your car loan on time and your overall reliability as a borrower.
Borrowers with an excellent credit score have a higher chance of gaining loan approval, as the higher your credit score, the less risk you pose to the lender. Having a good to excellent credit history may result in the lender offering you a lower interest rate than a car buyer with a bad credit score.
Secured car loans are generally more affordable than unsecured car loans. By offering up an asset as collateral on the loan, such as the vehicle itself, there is less risk to the lender that you may default on the loan as you run the risk of having the asset repossessed and sold. Due to this reduced risk, the lender will typically offer you a more competitive interest rate than an unsecured car loan.
You will also need to choose between a fixed rate car loan and a variable rate car loan, which can impact the overall cost of your loan. A fixed rate allows you to lock in the interest rate over the loan term, helping to protect your repayments from any rate fluctuations.
A variable rate loan is subject to market fluctuations, so if your lender cuts interest rates, your monthly repayments will be reduced. However, if they lift rates, your repayments will also go up, so you need to choose carefully between the two options.
While a new car may cost you more in terms of the vehicle's value, car loan lenders will typically charge low rates on average for this vehicle type. Used car loans may mean you borrow less from a car loan lender, but again, you may find yourself paying more interest over the life of the loan. Whatever the year of the vehicle, ensure you compare your interest rate options from a range of lenders.