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Melbourne car loans
In 2016 the Economist Intelligence Unit dubbed Melbourne the world’s most liveable city. This was the sixth year in a row, so it’s not surprising that Melburnians are pretty pleased with the results. Often described as the cultural capital of Australia, there is plenty to see and do in the city and the surrounding areas. If you have your own transport, you and all the family can take in the museums, galleries and theatre shows of your choice, or take trips to the mountains or the beaches to make the most of your leisure time.
How do car loans in Melbourne work?
As in other Australian cities, the personal loans market in Melbourne is competitive, keeping interest rates low. You can apply for a car loan via a wide range of financial institutions, plus there are also online companies that handle loan queries from their potential customers remotely.
Depending on your status and personal preferences, you can apply for a Melbourne car loan that is secured, for example on your car, home or other property. This can be a slightly cheaper option compared to seeking out an unsecured loan.
A pre-approved car loan will enable you to arrange finance before choosing your vehicle, which is very useful if you haven't quite made up your mind yet. Be prepared to have your credit history checked, and to negotiate with your lender if you want to make adjustments to your car loan’s terms.
What are the main features of car loans in Melbourne?
Lenders offer a range of different types of car loans at fixed or variable interest rates. They may also suggest features such as flexible repayments, arrange balloon payments, or choose loans with particularly low interest rates. If you happen to be a pensioner, single parent or student, you may find that some companies will have special deals tailored to your level of income.
A flexible payment system allows you to make more than the minimum payment from time to time. This means you might be able to repay your loan early, however, sometimes lenders place a restriction on how often you can do this, or charge additional fees when you do.
A balloon payment system means you can make smaller regular repayments and a much larger one at the end of the loan period. Alternatively, you can often refinance your vehicle to repay the final instalment.
What are the pros and cons?
To get a better deal, use the comparison rate instead of the lender’s advertised rate. The comparison rate factors in any additional charges and fees that are applicable to each loan offer, thereby giving you a more accurate illustration of the true cost of each loan. Use a loan calculator to help you to work out the monthly payments you will need to make.
Read your car loan agreement carefully before making a commitment to avoid running the risk of defaulting on your payments, which could ultimately damage your credit history.
There are four different ways you can get a car loan. You can go straight to a lender. You can get a finance broker to organise a car loan for you. You can get ‘dealer finance’ – which is when the car dealer organises a car loan for you. Or you can organise your own car loan through a comparison website, like RateCity.
Whichever method you choose, you will need to provide proof of identification, proof of income and proof of savings. So you may be asked for any combination of passport, driver’s licence, bank statements, payslips, tax returns and utility bills. You might also be asked to provide proof of insurance.
There’s no set number. That’s because borrowing capacity differs from person to person, as well as lender to lender.
Lenders don’t give out car loans unless they’re confident they’ll be repaid. Each person is different, so the amount of money one person can successfully borrow will differ from another person’s number. Also, each lender uses its own formulas to calculate borrowing capacity – so Mr & Mrs Smith might find that while Lender X will give them a car loan for $20,000, Lender Y will offer only $18,000.
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.
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.
A property and personal finance writer, Nick Bendel covers property, loans, credit cards, superannuation, and other bank products. Nick has previously written for The Adviser, Mortgage Business, Lifehacker, Business Insider, Yahoo Finance, and InvestorDaily, and loves getting elbow-deep in the latest ABS, APRA and RBA data.