Choosing the right car loan tends to involve a lot of decision making, so it’s important to consider doing a comprehensive comparison to ensure you land on the best choice for you. This means comparing options such as fixed and variable interest rates, secured and unsecured loans, as well as any extra features. But don’t forget to consider the lenders that are providing the loans, as there can be a range of differences in terms of what they offer.

Generally speaking, car loans are offered by either a bank, a non-bank lender or a credit union. If you’re unfamiliar with what a credit union is, you’re not alone. Here’s a rundown of what they are and how you can determine whether they could potentially provide the right loan for you.

Find and compare credit union car loans

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4.65%

Fixed

4.99%

People's Choice Credit Union

$561

$20k to $100k

4.37

/ 5
More details

4.80%

Variable

4.94%

First Choice Credit Union

$563

From $30k

4.41

/ 5
More details

4.69%

Variable

4.96%

Police Credit Union

$562

From $20k

4.49

/ 5
More details

4.69%

Fixed

4.96%

Police Credit Union

$562

From $20k

4.61

/ 5
More details

From

4.99%

Variable

4.99%

Orange Credit Union

$566

From $15k

4.35

/ 5
More details

4.74%

Variable

5.01%

Transport Mutual Credit Union

$563

From $5k

4.33

/ 5
More details

4.99%

Variable

5.20%

Central West Credit Union

$566

From $30k

4.30

/ 5
More details

4.99%

Variable

5.29%

Transport Mutual Credit Union

$566

From $5k

4.32

/ 5
More details

4.99%

Variable

5.35%

The Mac

$566

From $1k

4.29

/ 5
More details

4.99%

Fixed

5.59%

Queensland Country Bank

$566

$1k to $75k

3.86

/ 5
More details

5.80%

Variable

5.84%

Laboratories Credit Union

$577

$1k to $50k

3.79

/ 5
More details

5.84%

Variable

5.84%

Lysaght Credit Union

$578

From $5k

3.74

/ 5
More details

5.60%

Fixed

5.88%

Illawarra Credit Union

$574

$10k to $50k

3.76

/ 5
More details

5.64%

Fixed

5.92%

Illawarra Credit Union

$575

$10k to $50k

3.74

/ 5
More details

5.65%

Variable

6.00%

BCU

$575

$5k to $65k

3.57

/ 5
More details

Learn more about car loans

What is a credit union and how is it different to a bank?

Credit unions are member-owned financial institutions. When you take out a loan with a credit union, you must first become a member, which also means becoming a part-owner. Credit unions work for their members, using profits to provide them with competitive rates, low fees and other benefits. This differs to the way banks operate in that they are generally owned by shareholders, and they use their profits to pay dividends to those shareholders.

Like banks, credit unions are registered with the Australian Prudential Regulation Authority (APRA) as authorised deposit-taking institutions (ADIs). ADIs are financial institutions licensed to carry on banking business, including accepting deposits from the public.

The services and products provided by credit unions are much the same as banks, including savings accounts, personal loans, home loans, credit cards and term deposits.

Why might I consider a credit union car loan?

While you might think it’s more convenient or less of a risk to choose a car loan that’s offered by a bank like the big four (CommBank, Westpac, ANZ, NAB), it could be worth considering what credit unions have to offer.

Car loans provided by credit unions can often be some of the more competitive loans on the market, as their profits are used to benefit their members in this way. Credit unions also have a reputation for providing a more personal customer experience than banks, which largely comes from their history as community-based institutions.

Credit unions are also considered to be just as safe as major banks, as they are registered as ADIs and in turn are regulated in the same way.

How do I compare credit union car loans?

Credit union car loans can generally be compared in much the same way as any loan. There are certain attributes that might be worth considering, including the following:

  • Interest rates: Take note of both the advertised rate and the comparison rate.
  • Any fees involved: This could include application fees, monthly/ongoing fees and sometimes others.
  • Fixed or variable: Fixed rate loans will have regular repayment amounts throughout the life of the loan, while variable rate loans may see repayments increase or decrease.
  • Secured or unsecured: If you are buying a new or near-new car, you could secure the loan on your vehicle and potentially access a more competitive rate.
  • Loan term: Some lenders will offer different loan terms to others.
  • Extra features: These include redraw facilities, extra repayments and pre-approval.
  • Lender: Comparing lenders’ reputations and offerings might provide you with a more comprehensive understanding of what you could expect from your car loan.

RateCity’s car loan calculator may also assist with your comparison by providing an estimate of how much your repayments might be when comparing different features.

What are the advantages and disadvantages of credit union car loans?

Credit union car loans can differ between lenders when it comes to what they offer, but here are some of the potential benefits and drawbacks to consider:

Possible advantages:

  • Fewer fees in general, or in some instances no fees
  • More competitive interest rates
  • Arguably better customer service

Potential disadvantages:

  • Smaller range of products
  • Fewer branches
  • Fewer online services

Frequently asked questions

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.

Can I get a no credit check car loan?

You may be able to get a no credit check car loan in certain circumstances, although it’s important to weigh up your options before doing so.

Most lenders refuse to provide no credit check car loans, because they don’t want to give loans to borrowers without first confirming that they have a track record of repaying debts. So any lenders that do provide no credit check car loans would take measures to protect themselves against the risk of default.

That’s why no credit check car loans have higher interest rates than other car loans. Also, borrowers often have to provide security and put down a larger deposit.

Who provides bad credit car loans?

Lenders that provide bad credit car loans tend to be smaller challenger lenders rather than the bigger banks.

Bad credit car loans are a niche product. The bigger banks tend to focus on mainstream car loan finance for borrowers with better credit histories. That’s why smaller lenders tend to be the ones that provide bad credit car loans.

Bad credit car loans can have high interest rates and fees, so it’s important to compare options before submitting an application.

Can I get a car loan with bad credit?

Yes, you can get a car loan with bad credit, although you’ll probably find the process trickier and dearer than that experienced by people who have good credit histories.

You can find a number of lenders that specialise in bad credit car loans. However, make sure you compare bad credit car loans before you sign on the dotted line, because not all car loans are alike and having bad credit may mean you are more likely to be hit with higher fees and interest rates.

If you have bad credit, it’s important not to take out a car loan unless you can afford the repayments because a default could further damage your credit rating. Conversely, if you make all the repayments and repay the loan successfully, your credit rating might improve.

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

There are companies that claim to offer no credit check car loans. However, you may find that companies that offer no credit check car loans have high fees and high interest rates.

You might be better off finding a specialist lender who will look at your credit history and income, who will decide whether or not you are able to responsibility pay back the loan. Alternatively, you could contact a car finance broker.

What is a bad credit car loan?

A bad credit car loan is a car loan for borrowers who have ‘bad credit’ or a bad credit history.

Some lenders refuse to offer bad credit car loans, because they believe there is an excessive risk that bad credit borrowers will not repay their loans. However, other lenders are willing to provide bad credit car loans.

Generally, these lenders charge higher interest rates for bad credit car loans than ‘prime’ car loans, reflecting the higher level of risk. Bad credit car loans may also have higher fees than prime car loans.

However, the big advantage of a bad credit car loan is that it allows borrowers with bad credit to access finance. Another advantage is that it could help bad credit borrowers improve their credit rating, assuming they make all their repayments on time.

Can I get a car loan with poor credit?

Poor credit doesn’t necessarily mean you won’t be able to get finance for your car purchase, though your options aren’t likely to be the same as someone with good credit.

In fact, a number of specialist lenders exist offering car finance for customers with poor credit, able to provide access to bad credit car loans.

However having a history of poor credit will likely mark you as a potential risk to lenders, so your car financing needs could see higher fees and interest rates. Alternatively, consider a secured car loan, which is a type of loan that uses the car you purchase as collateral, reducing the risk.

Other options include getting someone close to act as a guarantor for your car loan, or to talk to a broker about a personalised rate specific to your circumstances.

Do low interest no credit check car loans exist?

Some companies will advertise no credit check car loans, however under the Australian National Consumer Credit Protection act, credit checks are required by all responsible lenders, so such lenders are likely to have high interest rates. Depending on your income and credit history, you may qualify for a low interest StepUP loan from Good Shepherd Microfinance.

Do I need good credit to get a car loan?

You don’t need good credit to get a car loan, although the worse your credit history, the harder and more expensive it’s likely to be.

Some lenders will do business only with borrowers who have good credit. However, there are other lenders that are willing to offer car loans to borrowers who don’t have good credit. The catch, though, is that they may charge higher interest rates and fees, and also require more paperwork.

If you don’t have good credit and want a car loan immediately, you can search for lenders that work with bad credit borrowers. If you are able to wait, you can work to improve your credit score and then apply for a car loan once you have good credit.

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.

Are bad credit car loans legit?

Bad credit car loans are legit, although not all lenders and products are created equal.

Some car loan lenders refuse to do business with borrowers who have bad credit histories, but there are others that are willing to provide bad credit. There is a catch, though: some bad credit lenders are disreputable, while some bad credit loans have extremely high interest rates and fees.

That’s why it’s important to do your research and compare bad credit car loans before you submit an application.

 

What is a guarantor on a car loan?

A guarantor on a car loan is a third party, usually a relative or friend, who guarantees to meet the repayments of a loan for the purchase of a car, if the borrower/owner of the car defaults on the loan.

Guarantor car loans can be useful for people who would otherwise struggle in being accepted for credit to purchase a vehicle. These may include people with bad credit, students and young people who may have no credit history, as well as some pensioners.

Many lenders offer guarantor car loans, guarantor personal loans and guarantor home loans, because of the significantly reduced risk to the lender.

Can I get a no credit check car loan?

Even if you have bad credit or no credit history there are loans that are available to you through specialised lenders. Some lenders in Australia advertise car loan offers without running credit checks, however, the Australian National Consumer Credit Protection act requires lenders to loan money responsibly, so credit checks are normally required by all responsible lenders. 

Do banks do guarantor car loans?

Yes, some banks will be willing to provide guarantor loans, including Commonwealth Bank, NAB, Westpac and ANZ, though the terms for signing up to a banker-issued guarantor car loan may not necessarily be as good as another lender.

You should keep in mind though that these larger banks, because of their monopoly of the market, tend to have higher interest rates than the smaller lenders.

In comparison, smaller loan companies and credit unions tend to be more competitive in their battle for your business. There are plenty of lenders willing to lend to people with bad credit or no credit history who have willing guarantors.

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.

I’ve been denied a car loan before; can I still get car finance?

Even if you’ve been denied a car loan before, you might still be able to get car finance. The key is to make the right application to the right lender.

The ‘right’ application is one that makes you look like an acceptable risk, which might include things like improving your credit score, increasing your savings rate and accumulating a bigger deposit.

The ‘right’ lender is one that deals with borrowers like you. For example, while some car loan lenders only deal with good credit borrowers, there are others that specialise in bad credit or poor credit borrowers.

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.

How much is your car worth?

If you already own a car, you could potentially bring down the cost by selling your car in the process. Before that happens, though, you’ll need to find out how much your car is worth.

One of the first places to find this value is to research the value of your current car, giving you an idea of roughly how much it’s worth in its peak condition.

There are plenty of websites that offer a free online valuation, allowing you to enter your car’s make, model, year, badge and description, with results listing a price guide based on both selling your car privately and through a dealership.

Of course, dealerships will try to profit on your trade-in by buying it for less than they can sell it, making it highly unlikely that you’ll get the same price selling a car to a dealer as you would selling a car privately.

However, private car sales can be costly and can take months to sell, making car trading more convenient with a guaranteed return, even if you may not be able to realise the total value of your car’s worth.

Remember that everything is negotiable. If the dealership is offering you less for your trade than you wanted, try to negotiate elsewhere to gain that money back. Start by negotiating on the price of the trade and then ask them if they can give you a further discount on your new car.

Should I service my own car?

There are also costs associated with vehicle ownership, such as paying for petrol and the obligatory ongoing maintenance. But should you cut down on costs by servicing your own vehicle?

If you’re considering getting out the tool box, spanner, and grease-laden towel, you need to carefully weigh up the risks and benefits. A trained mechanic will need to complete certain tasks, while you may be perfectly capable to handle other aspects yourself.

If you’re short on time, it may be worth paying for the convenience of a full vehicle service. However if you’re trying to slash your expenses, there are some basic maintenance tasks that you can complete yourself.

You should call a mechanic if you’re unsure about a vehicle maintenance task you’re about to take on. However there are a number of maintenance tasks that you may be able to complete with your own two hands including:

  • Replacing your car battery
  • Changing the oil
  • Replacing worn windscreen wipers
  • Replacing blown fuses

Remember to keep your car’s body in good condition, by washing and applying a protective wax on a regular basis, too.

Always check your car warranty agreement as some new car purchases come with an extended car warranty provided your services are conducted at the vehicle service centre where you purchased the car. In these circumstances, you may find the service fee is capped, alleviating some of the maintenance woes.

Can I get a discounted student car loan?

Being a student is tough enough, and while you might find the odd student discount on movies and technology, the same can’t be said about car loans, as you can’t really get a discounted student car loan.

Lenders make money on the interest and fees that they charge with loans, and the lowest interest and fees are given to the most reliable credit holders: people with excellent credit history.

As a student, you are unlikely to have enough on your credit report to warrant an excellent history. There are however, ways of getting a lower interest car loan if you can’t get an interest-free loan from the bank of mum and dad. One way of doing this may be through getting a guarantor car loan, which can get you a secured car loan by setting your parents up as guarantors.