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Learn more about car loans

How can you apply for a pensioner car loan 

If you qualify for a pensioner car loan, the next step is to conduct a thorough comparison of car loans from various lenders. This is because if you are rejected from a car loan application, it may negatively impact your credit score. Before you apply, make sure you meet the lender requirements for the loan of your choice. Or call the lender or a financial broker to speak to the experts before you make a decision.  

What do lenders look for when approving a pensioner car loan? 

As with all loans, lenders assess your financial situation before they agree to finance the purchase of your car. 

When assessing your situation, lenders will look at: 

  • What type of pension you receive  
  • The ‘income’ you receive from pension payments 
  • Your credit history - this accounts for both positive and negative credit events  
  • The value of your assets (including your home, if you own one) 
  • Your residency status - are you a permanent Australian resident or citizen 
  • The proposed loan amount, and your ability to repay the principal loan amount 
  • The proposed loan term, and your ability to repay the interest on that loan 

How do you improve your chances of being approved for a pensioner car loan? 

Save for a deposit: if you are able to save a deposit before applying for a car loan, you can reduce the total amount you need to borrow. This will reduce the overall interest you will repay over your loan term, and you will show your ability to save. 

Use an asset as collateral: you are more likely to be accepted for a car loan if you have an asset you can use as security against the loan. This reduces the risk to the lender, as they can recoup their losses by selling the asset you use as collateral. This can also result in lower interest rates on your pensioner car loan. 

How do you choose the right pensioner car loan for you?

When it comes to financial products, there is no one size fits all. Choosing the right pensioner car loan for you will depend upon a variety of different factors:  

  • Do you prefer a fixed rate or variable rate loan? 
  • Do you want to buy a new or used car? 
  • Will you get an unsecured or secured car loan? 
  • How much will you borrow?
  • Do you have supplementary income or do you only receive pension payments? 

Creating a car loan budget  

Before you get a car loan, new or used, it’s crucial tconsider all costs, apart from the cost of the car itself. You will pay interest on the amount you borrow, along with various fees and charges, and the onus is on you to determine exactly how much that is. 

When you create your car loan budget, you need to look at: 

  • Cost of the car 
  • Car insurance fees 
  • Registration fees / stamp duty tax
  • Repairs and maintenance
  • Fuel and road tolls
  • Membership of roadside assistance organisations
  • Monthly car loan repayments
  • The loan term
  • Car loan fees and interest  

How much will you really pay? 

As with any loan, it’s important to read the Product Disclosure Statement (PDS) or fact sheets for each pensioner car loan option you’re considering. These will outline all the fees and costs associated with your loan, some of which may not be prominently displayed. 

You should be able to find these on the lender’s website, but these documents can often be missed. If you struggle to find the PDS or fact sheets for any loan productring the lender and ask for them to send it to you. 

How to calculate your total repayments 

Making sure you are aware of every fee and charge that could be applied to your loan is crucial for making the most informed financial decision.   

To check how much a loan will cost you over the entire term, you can use our handy car loan calculator. 

RateCity analysis shows that a $30,000 car loan with an interest rate of 8% per cent and an annual fee of $100 results in a monthly repayment of $617. 

That equates to $6,998 in interest that you will pay on your loan over the five year term.

That’s 23% more than your original loan amount. 

Frequently asked questions

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.

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 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.

What is a guarantor car loan?

A guarantor car loan is a type of loan that features a guarantor on the agreement. The guarantor is a third-party individual, often a friend or relative, who guarantees the loan will be repaid if the borrower defaults on the car loan.

Guarantor car loans are often geared at people who might otherwise struggle being accepted for a secured car loan when purchasing a vehicle. Some of the reasons might include a lack of credit history such as with a student or young person, if there’s bad credit, or age as a factor such as with pensioners.

How do you get a car loan?

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.

What is a loan term?

The loan term is the amount of time the lender gives you to repay the car loan. For example, if you take out a $20,000 car loan with a five-year loan term, you would be expected to pay off the entire $20,000 (plus interest) within five years.

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.

What is collateral?

Collateral, or security, is an asset you agree to surrender to a lender if you fail to repay a loan. Generally, the collateral for a car loan is the car itself. So if you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

What are loan repayments?

Loan repayments are the regular payments you make to pay off your car loan. Loan repayments generally occur on a monthly basis, although many lenders will also give you the option of making fortnightly or weekly loan repayments.

What is the role of a guarantor on a car loan?

The role of a guarantor on a car loan is to meet repayments if the borrower of the loan were to default for any reason, such as not being able to afford it.

Useful for loan applicants with poor or bad credit, a guarantor makes it possible for these loans to be made secure, because there’s less risk for a lender overall.

Companies will likely give fair warning before they charge a guarantor for the costs of the loan, or before they repossess anything of the guarantor’s that may have been used as security. Still, it is important for a car loan guarantor to fully understand their responsibilities before they commit to the transaction.

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.

What are the pros and cons of guarantor car loans?

Like all things, there are positives and negatives to guarantor car loans, though one may outweigh the other depending on your needs.

Guarantor car loan pros may include that you’re more likely to be approved for a long if you have no credit or a history with bad credit, that you’re more likely to secure a car loan with a lower interest rate, and that because your guarantor car loan is based on a relationship, you will be more inclined to meet your repayment schedule.

However, there are negatives, as well. Guarantor car loan cons may include leaving a detrimental mark on a personal relationship with added strain if you don’t meet your repayments, and you may take out a loan that you can’t actually afford.

Weighing these pros and cons will give you a greater understanding of whether a guarantor loan is ideal for your circumstances.

How to get pre-approval for your ANZ car loan?

Getting pre-approval on your car loan can give you a good idea of how much you may be allowed to borrow. This will help you set your limits while selecting your car. You can apply for pre-approval for an ANZ car loan by filling out a simple online application form, where you’ll have to submit relevant identity, employment and income documentation. 

ANZ will then conduct a credit check based on your application and documentation. It’s important to note that this could have an impact on your credit history. Based on your credit and income documentation analysis, ANZ will provide an amount they are willing to give you as a loan. After this, you can find the right car that matches the proposed loan amount and send it through your final loan application. 

It’s important to remember that pre-approval gives you an indication of how much you can borrow from ANZ to purchase your car, but it doesn’t guarantee the final approval.