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What are the RateCity car loan calculators?

One of the many helpful tools you may want to utilise in your car loan comparison journey is calculators. There are two car loan calculators for you to use at RateCity: the Repayment Calculator and the Borrowing Power Calculator.

What can a car loan Repayment Calculator tell me?

A Repayment Calculator may be able to provide you with an estimate of your potential car loan repayments, based on your ideal loan amount, loan term, and interest rate. Based on this information, the car loan calculator will estimate your potential weekly, fortnightly, or monthly repayments, as well as the interest payable over the life of the loan

By having an idea of the total cost of a potential car loan and what your repayments might be, you’ll be better armed with the information and research you’ll need to make an informed decision.

If you’re tossing up between a few car loan options, you can also enter different interest rates and loan terms to compare how repayments could differ in various situations. This may help you find a car loan that better suits your budget and goals.

Remember that using the calculator won’t affect your credit score, so you can use it as many times as you like to compare different amounts.

What can a car loan Borrowing Power Calculator tell me?

A Borrowing Power Calculator assesses your personal details and gives you a general idea of how much you may be able to borrow.

By looking at your credit score and potential interest rate, as well as how much you can afford to repay and on which frequency, you’ll be shown an estimate of your “borrowing power”: aka how much you can borrow and service affordably.

This may come in handy when narrowing down your shortlist of vehicle options, whether online or at a car dealership, as you’ll have a better understanding of which options you may be able to afford.

How does the Repayment Calculator work?

  1. Enter how much you’d like to borrow: You may have a rough figure in mind based on the car you want to buy, but you might like to consider entering different loan amounts to compare repayment estimates.
  2. Enter your preferred interest rate: If you’ve made a short list of options from our comparison tables, now is the time to enter their details. A lower interest rate could mean lower repayments but be sure to also consider the comparison rate and any other fees that may be involved.
  3. Select a loan term: A longer loan term (4-7 years) could mean more affordable repayments, but you could end up paying more interest over the life of the loan when compared to a shorter term (1-3 years).
  4. Enter your credit score: While not necessary for the calculation, by entering your credit score you can view a range of car loan options under the results page that may suit your financial situation.
  5. View results: To the right of the page, you will see your estimated repayments. You can also choose to make your repayments monthly, fortnightly, or weekly. This may help make it easier to see how the repayments could fit into your budget and pay cycle.

How does the Borrowing Power Calculator work?

The Borrowing Power Calculator provides you with an estimate of how much you may be able to borrow for a car loan based on what you can afford to repay.

Results are based on a loan term of five years and assumes the interest rate does not fluctuate for said term. Please read the Calculator Assumptions and Disclaimers for more information.

Here is how to use the car loan Borrowing Power Calculator:

  1. Enter how much you can afford to repay: Take stock of your budget, review your income and expenses, and enter how much you want to repay with your car loan.
  2. Enter your preferred interest rate: If you’ve made a short list of options from our comparison tables, now is the time to enter their details.
  3. Select a repayment frequency: Enter the frequency at which you’d like to make repayments: weekly, fortnightly, or monthly. As some people are paid monthly, the latter may be a better fit for their budget, for example.
  4. Enter your credit score: While not necessary for the calculation, by entering your credit score you can view a range of car loan options under the results page that may suit your financial situation.
  5. View results: To the right of the page, you will see your estimated borrowing power, based on your details for a loan term of five years. You can also view your estimated total interest payable based on this loan term too.

Can your credit history affect car loan rates?

As you may have noticed, both car loan calculators requested that you enter your credit score. This is because car loan lenders take your credit history and credit score into consideration when determining not only whether to approve your loan but set your interest rate.

Car loan lenders can provide their interest rates in a range, for example, from 5% - 11%, and the rate you may be offered will depend on several factors, including your credit score. By presenting yourself as the most “ideal” borrower (good to excellent credit score, on a full-time income, employed for over 6 months etc.) you may be more likely to be approved for the lender’s lower interest rates.

What’s my credit rating?

Your credit score impacts your chances of being approved for a car loan. Before you apply for any financial product, including credit cards or home loans, it’s best that you are aware of your credit rating. This is because a bad credit history and poor credit score increases your chances of being rejected for the financial product. And as any rejections may further hurt your credit score, you want to avoid this as best you can.

To get a free copy of your credit scores from the main credit reporting bureaus in Australia – Equifax and Experian – please visit RateCity’s Credit Score Hub. A ‘soft’ credit check will be performed on your credit history, meaning this will not affect your credit score.

What do I need to know about getting a car loan?

Before you make any applications, it’s important to be across the various factors that make up a standard car loan. Here are some of the things you should understand before applying for a car loan.

  • Interest rates – Car loan interest rates are a significant factor of how much your ongoing repayments will cost, and how much you may pay over the life of the loan, charged on top of the principal owing. Be sure to not only compare the advertised rates but also the different comparison rates as these generally include some additional fees and charges, based on a hypothetical five-year $30,000 car loan.
  • Fees – Typical fees you may be charged include establishment fees or application fees, ongoing fees such as account-keeping fees, early repayment fees and redraw fees.
  • Repayments – To clear your loan, you need to make regular repayments in either weekly, fortnightly, or monthly instalments. The amount you will repay will depend on your interest rate, whether you are on a fixed or variable rate, fees, how long your loan term is and whether you have opted for a balloon payment.
  • Lending criteria – Different loans will have different lending criteria, so it’s a good idea to make sure you meet the criteria for the loan product you’re interested in before you submit your application. This generally includes being an Australian citizen or permanent resident, meeting an income minimum and having a good to excellent credit score.

How can I find the best car loan for me?

To find the car loan that best suits your financial situation, it might be worthwhile considering the following:

  • New vs. used cars – New car loans may come with lower interest rates than used car loans but used cars are generally more affordable. Some lenders may only offer used car loans for vehicles up to a certain age, such as 3-5 years old. For older used cars, you may need to apply for an unsecured loan option which will have higher interest rates.
  • Secured vs. unsecured car loans – A secured car loan is where the loan is secured by an asset - typically the vehicle you are buying. While most car loans tend to be secured, some are unsecured. These are generally for vehicles that are too old to be used as a security. Like personal loans, unsecured car loans often have higher interest rates than secured car loans.
  • Fixed vs. variable rates – If your loan is on a fixed interest rate, it means the interest rate you’re on and the amount you are paying back will not change over the loan term. This gives you certainty about your regular repayments and the total interest you would be paying. If you’re on a variable rate loan, your car loan repayments and interest rate could move up or down, as determined by the lender and the Reserve Bank of Australia’s cash rate. This can work in your advantage if rates decrease. Further, home loan features are typically offered with variable rate car loans.
  • Loan term – Different car loan terms can ultimately amount to different total costs. Generally, the shorter your loan term, the higher your monthly repayments may be, but this could also lower the total cost of the loan due to fewer interest charges overall. A longer loan term may mean lower monthly repayments but a higher total amount, as you will be charged more interest.
  • Loan features – A car loan lender may also offer helpful features, such as making extra repayments or a redraw facility. Keep in mind that a car loan with a redraw facility may come with redraw fees or caps, so read the product disclosure statement before applying if you want to avoid this fee.
  • Balloon payment – What this involves is deferring part of the loan’s principal to the end of the loan, so you make smaller loan payments to begin with and then pay a large lump sum at the end. For instance, if you defer 25% of a $30,000 loan, you will need to pay $7,500 plus interest at the end of the term. This essentially lowers the regular repayment amount, but it also means the loan’s total cost could be higher. Make sure you calculate that you can afford to repay the lump sum at the end of the term if you’re considering opting for a balloon payment.

What additional costs should you consider when comparing car finance options?

Along with calculating how much you can comfortably afford to borrow to buy a car, it might also be worth factoring in any extra costs that can come with car ownership. This may better prepare you to budget for ongoing costs that are additional to your loan repayment.

Some common additional costs car owners might incur include:

  • Stamp duty
  • Motor vehicle registration
  • Car insurance
  • Petrol
  • Regular servicing and repairs
  • Road tolls

How do I pay off my car loan early?

If you’re hoping to repay your debt before the loan term is up, you may want to consider opting for a car loan that allows for additional repayments. By chipping away at the principal with extra repayments, you may be able to shave months off your car loan and potentially save hundreds of dollars in interest.

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Is a car loan calculator the same as a personal loan calculator?

A car loan calculator and a personal loan calculator are very similar, apart from one key feature: the default interest rate. This is because the average interest rate for both car loans and personal loans is different.

As a car loan is typically secured against the vehicle, and secured loans generally come with lower interest rates. This means that the average car loan interest rate may be lower. Comparatively, the average personal loan rate may be much higher as it’s lifted by the number of unsecured personal loan rates in the RateCity database.

So, when using the car loan calculator and personal loan calculator, you may find the default interest rate is different, and that if you don’t set an interest rate the estimated repayments may be higher for personal loans.

This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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Frequently asked questions

What is a car loan calculator?

A car loan calculator is an online tool that helps consumers understand how much they would have to repay under different scenarios. Consumers can create these different scenarios by entering different borrowing amounts, interest rates, loan terms and repayment schedules into the car loan calculator.

Where can I get a student car loan?

Student car loans are not a necessarily a product in and of themselves, but what you may be looking for is a guarantor car loan.

A guarantor car loan has a third-party act as a form of guarantee for your loan application, telling the bank or lender that if you default on your loan, someone will pay the loan repayments.

Going guarantor on a car loan is no new thing, and before internet-based credit scores, guarantor car loan applicants would apply for loans with a guarantor or property owner who could vouch for the person borrowing the loan.

To get a guarantor car loan, you’ll need someone willing to act as a guarantor for your car loan.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

How to find a great car loan

Historically, finding a great car loan would require excess research ranging from visiting an excess of websites or making phone calls, but technology has moved on. Using RateCity, Australia’s leading financial comparison service, you can check out great deals from a range of lenders on the one site.

To start, select the amount you want to borrow and the length of the loan, narrowing your search to show just fixed or variable interest rate results.

Once you’ve indicated your search criteria, you’ll see an immediate list of lenders, ranked by interest rate or application fees. You’ll also be able to view the monthly repayment amount for each result, helping you to know what you can afford.

Up to six products can be compared side-by-side, complete with more information about each car loan, giving you more information about your options.

When comparing your car loan options, it’s ideal to keep in mind some points find a great car loan for your needs. Consider the following:

  • Choosing a low interest car loan can reduce costs
  • Selecting an option with low fees and charges is ideal, because these can really add up
  • Be aware of penalties, such as early exit penalties if you pay off the loan sooner than expected
  • Consider the features that best suit your situation

There are many ways to ensure that you get a great car loan. Ultimately, you’ll end up with the best deal by doing your research and selecting the most suitable product for you.