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How does RateCity’s car loan calculator work?

RateCity’s car loan calculator can give you an estimate of how much you can potentially borrow and how much it may cost to repay the loan. It also shows you some of the lowest advertised rates on RateCity’s database to give you an idea of what’s available in Australia. Here’s how you use RateCity’s car loan repayment calculator:

  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: 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. Choose your repayment frequency: You can 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.
  4. Select a loan term: A longer loan term 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.
  5. Compare car loans: Note that the calculator only provides estimates and has not taken into account your personal objectives and circumstances.

How can RateCity’s car loan repayment calculator help me?

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.

You can try putting in different interest rates and loan terms to compare how repayments could differ in various situations. 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 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. Make sure you can afford the loan’s regular repayments, as failure to make repayments could result in losing your car and potentially being left with a bad credit rating. Here are some of the things you should understand before applying for a car loan.

  • Interest rates – Loan rates are generally one of the first things you look at when comparing car loans, as it is one of the biggest deciders of how much your total repayment could be. The interest rate determines how much you'll need to pay back in addition to the original amount you borrowed. Be sure to not only compare the advertised rates but also the different comparison rates as these tend to include any additional fees and charges.
  • Potential fees – Typical fees you may be charged include upfront 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.

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:

  • Credit score – The better your credit score, the lower your potential interest rate might be and the more likely a lender may approve your loan application. This is because lenders generally use your credit history as an indicator of your reliability.
  • New/used car – New car loans are generally secured by the car and tend to offer lower interest rates. You may also be able to borrow more for new cars. For older used cars, you may need to apply for unsecured loans, which will have higher interest rates.
  • Secured/unsecured car loan – A secured car loan means the loan is secured by an asset, which is typically the car 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/variable rate – 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 during the specified period. 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.
  • Loan term – Different 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. A longer loan term may mean lower monthly repayments but a higher total amount, as you will be charged more interest.
  • Balloon payment – What this involves is deferring part of the loan’s principal to the end of the loan. For instance, if you defer 25 per cent of a $30,000 loan, you will need to pay $7500 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 can afford to repay the lump sum at the end of the term if you’re considering opting for a balloon payment.

Are there any additional costs to 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. In doing so, you may be better prepared for ongoing costs that are additional to your loan repayment, potentially putting you in a better position to make your repayments on time and avoid penalties. Some of the costs car owners might incur include:

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

What is a balloon payment?

Some lenders will offer borrowers reduced monthly repayments in return for a one-off lump sum – or balloon payment – that the borrower has to pay at the end of the loan. Generally, the total repayments on a loan with a balloon structure will be higher than a loan without.

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.

What is proof of income?

Before giving you a car loan, lenders will ask for proof of income – documentary evidence that you earn as much as you claim you earn. Lenders will typically want some combination of tax returns, pay slips and bank statements. The reason lenders want proof of income is because they want to be sure you have the means to repay the car loan.

What is CTP insurance?

CTP insurance, also known as compulsory third-party insurance or a green slip, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your CTP insurance will be used to pay any compensation due to anyone who might be injured or killed. However, CTP insurance doesn’t cover you for vehicle damage or theft.

What is trade-in value?

The trade-in value is the price you could realistically charge if you were to sell your car to a dealer while buying a replacement vehicle. Generally, a car’s trade-in value is less than its market value. That’s because the dealer has no interest in buying your car unless it can make a profit – which can only be done if the dealer has room to increase the price.

What is a refinance?

A refinance is when you swap one car loan with another. For example, you might take out a car loan with Lender X because it is the best on the market at the time – but two years later, you might switch to Lender Y because you discover that it now has the best loan. Conditions and fees often apply when you refinance.

What is an upfront fee?

An upfront fee is a one-off fee that many lenders charge when you take out a car loan.

What is a loan-to-value ratio?

The loan-to-value ratio, or LVR, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have a loan-to-value ratio of 75 per cent. Loan-to-value ratios change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the loan-to-value ratio would now be 67 per cent.

What is a pre-approval?

A pre-approval is a formal document that indicates how much a lender is willing to lend to a consumer – once that person has found the car they want to buy. A lender will assess a borrower’s credit history and financial circumstances before issuing a pre-approval. However, lenders are under no obligation to follow through on pre-approvals, so pre-approvals should be seen as statements of intent rather than rock-solid guarantees.

What is a green slip?

A green slip, also known as compulsory third-party insurance or CTP insurance, is compulsory if you want to register a vehicle in Australia. If you’re responsible for a car accident, your green slip will be used to pay any compensation due to anyone who might be injured or killed. However, a green slip doesn’t cover you for vehicle damage or theft.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

What is a novated lease?

A novated lease is a car lease that is ‘novated’, or transferred from one party to another. Novated leases are often used when companies provide a car as part of a salary package. The employer signs for the lease and makes the lease payments, but the employee assumes the responsibility of looking after the car. While most car leases involve two parties, novated leases involve three – employer, employee and financier.

What is an unsecured car loan?

An unsecured car loan is a loan that is not connected to a form of security, or collateral. Not all lenders provide unsecured car loans – and if they do, they generally charge higher interest rates for their unsecured car loans than their secured car loans.

What is the principal?

The principal is the value of the loan that is still outstanding. So if a borrower takes out a $20,000 loan, the principal is $20,000. If the borrower repays $5,000 in the first year, the principal is now $15,000.

What is a car lease?

A car lease, also known as an asset lease or finance lease, is an arrangement by which a finance company buys a car on your behalf. You get to borrow the car in return for making regular payments to the financier. At the end of the lease, you can either buy the car or hand it back. 

What is a variable-rate loan?

A variable-rate loan is one where the lender can change the interest rate whenever it wants. For example, if you sign up for a variable-rate loan at 8.75 per cent, the lender might change the interest rate to 8.90 per cent the month after and then 8.65 per cent the month after that. By contrast, if you take out a five-year fixed-rate loan at 8.75 per cent, the lender is obliged to leave your interest rate at 8.75 per cent for at least five years.

What is borrowing capacity?

Borrowing capacity is the amount of money that a consumer is able to borrow from a lender. Each consumer’s circumstances are unique, so different people will have different borrowing capacities. Lenders use their own in-house formulas to calculate borrowing capacity, so the same consumer might have different borrowing capacities at different lenders.

What is comprehensive insurance?

Comprehensive insurance protects you in the event you’re responsible for a car accident. Policies vary from provider to provider, but comprehensive insurance generally covers you for damage to your car and property, as well as the other parties’ cars and property. A comprehensive insurance policy may also protect you from theft, vandalism and natural disasters.

What is vehicle finance?

Vehicle finance, also known as a car loan, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Vehicle finance can be used for both new and used vehicles.

Where can I find lenders who offer no credit check car loans?

You can find lenders who offer no credit check car loans through comparison sites like RateCity or by doing an online search.

One thing to bear in mind is that lenders who offer no credit check car loans are likely to charge higher interest rates and higher fees than on car loans that include a credit check. Also, lenders who no credit check car loans might expect you to pay a higher deposit. You might also be expected to provide security.

Lenders regard no credit check car loans as riskier than other car loans, which is why it’s a niche product that often features special conditions.