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When it comes to choosing a car loan, dealer finance might seem like the simplest option - but making a car loan comparison might be easier than you think. Plus, how will you know what kind of deals you might be missing out on unless you shop around?

One borrower's idea of the best car loan deal might look completely different to another borrower's. But with so many options on the market, you're likely to find one that suits your needs - and allows you to avoid settling for what's on offer at the car dealership.

Whether you're looking for flexible repayments, access to mobile banking, or perhaps to connect your new car loan with an existing financial product, doing your due diligence is a smart way to begin your search.

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How to compare car loan deals in Australia

To help you get started on your car loan comparison, here are some of the most common features and fees that are important for you to be aware of.

Interest rates - While comparing advertised interest rates is usually a good way to start your search, keep in mind that a car loan with a low interest rate may not necessarily provide the cheapest deal, or the most value for your money. There's every chance that a car loan with a higher interest rate but lower fees could potentially outweigh lower rate loans in the long run.

Comparison rates - Comparing different comparison rates will give you a better idea of the total cost of the loan each year, as it incorporates fees charged in addition to the advertised interest rate. Having a good understanding of a loan's comparison rate could potentially help you find a genuinely low rate loan.

Fixed or variable - You have the choice between a fixed interest rate or variable interest rate. There can be benefits and disadvantages to both fixed rate and variable rate loans, so be sure to consider what the best option is for you.

Secured or unsecured - You will also need to choose between a secured or unsecured car loan. A secured car loan is backed by collateral, whereas an unsecured loan is not. It is fairly common for a borrower to use their new car as collateral to secure their car loan. However, if you are looking for a used car loan and the car you want to buy is over a certain age, it may not be eligible to be used as collateral.

Extra repayments - If it's important to you to be able to make extra repayments every now and then in addition to your regular repayments, ensure your car loan offers this feature. Making additional lump sum payments when you've got a bit of extra cash could help you pay off the loan faster.

Redraw facility - A redraw facility will allow you to redraw any extra repayments you make on the loan. Loan products that offer extra repayments will often also offer a redraw facility, but sometimes there can be a fee or a limit to how much you can redraw.

Fees and charges - Though they can vary from one personal loan product to the next, the fees you may be charged can add up quite a bit over the life of the loan. So, it's important to factor these in when comparing your options. Some fees and charges include:

  • Upfront application fees
  • Establishment fees
  • Early repayment fees
  • Extra repayment fees
  • Redraw fees
  • Exit fees charged at the end of the loan term
  • Monthly fees and other ongoing fees

Online banking - Most Australian banks and lenders offer internet banking, but it's a good idea to check what kind of access you will have to their services.

Can I add a car to my home loan to get a good deal?

If you're looking for a low rate car loan, you might be wondering whether you can add it to your home loan in order to access a lower interest rate.

In short, it is possible. You could potentially use your home loan's redraw facility to buy a car. Or, you could refinance your home loan in order to access additional funds to buy a car.

But it's important to keep in mind that it's not always the best option.

Click here to find out more.

Can my credit rating help me secure a good deal?

If you have a good credit history, you may find that you have more options available when it comes to finding a good deal. However, if you have a bad credit score, you may still be able to find a car loan that's suitable for you.

To increase your chance of accessing the most competitive loans on the market, consider working towards improving your credit score with more positive credit behaviours.

How to find the best car finance deals at RateCity

When you're on the lookout for the best car loan deals, RateCity's comparison tools might come in handy.

If you'd like an estimate of how much your repayments might cost, consider utilising RateCity's car loan calculator. You can enter your preferred loan amount, loan term, interest rate and credit score to get an idea of what your loan repayments might look like on a weekly, fortnightly or monthly repayment schedule. You can even try entering different amounts and different terms to compare potential car loan repayments before deciding on what's right for your budget.

Once you have an understanding of the type of car loan you're looking for, you can use RateCity's car loan comparison table to narrow down your search results. It allows you to filter your search according to specific lenders, certain features, security type, borrow amount, and loan term.

Be sure to check the eligibility criteria before applying for any credit product, in order to minimise the risk of your loan application being rejected and in turn hurting your credit score.

Can a car loan broker help me find a good deal?

Similar to a mortgage broker, a car loan broker is an intermediary whose job is to provide borrowers with information about lenders and car loans, to help the borrower choose an option that suits them.

Car loan brokers are professionals who work in this space day in, day out, and deal with vehicle loan applications every day. They can help you with your comparison and take care of some of the more difficult aspects of the loan application process for you, including negotiating with lenders.

While it’s not guaranteed that a broker will secure you the best car loan, chances are you could bag a better deal than you'd have been able to find yourself, including loans with lower interest rates. They can also give you advice specific to your unique financial situation.