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Car Loan Ratings
RateCity allows you to search through hundreds of car loans from Australian lenders. With so many car loan options to choose from, rating the available offers and working out which ones will most ideally suit your finances can sometimes be tricky.
Car loans can be rated by their interest rates, fees and charges, features and benefits, and their flexibility. By rating car loans by each of these categories, and getting a better idea of their potential impact on your finances, you can make a more informed decision when selecting your car loan.
Car loan ratings by interest rate
One of the simplest and most straightforward methods of rating different car loan offers is to compare their interest rates. The lower the interest rate, the less extra money you’ll need to pay back to the lender on top of your car loan’s principal.
Many car loans come with fixed interest rates, where you pay the same amount of interest with each repayment for the full term of the car loan. Fixed rate car loans can help to keep your repayments consistent and your budgeting simple. However, if you have a fixed interest rate, you won’t enjoy any savings if your lender cuts its interest rates.
Variable interest rates are also available for certain car loans. If you choose a variable rate car loan, your lender may raise or lower the interest it charges from month to month, based on the current economy. While this could lower your repayments if rates are cut, it could also mean paying more if rates rise, which can make preparing a budget more challenging.
Rating secured and unsecured car loans
It’s worth considering whether you’d prefer a secured or unsecured car loan, as this can affect your interest rate.
Many car loans are secured loans, where the money you borrow is guaranteed against the value of the car you’re buying. This can help to reduce the lender’s risk, and therefore allow you to enjoy a more affordable interest rate. However, with some lenders, these loans may not be available for used cars over a certain age, where the vehicle’s value isn’t likely to be enough to guarantee the loan over the full term.
On the other hand, unsecured car loans don’t require the borrower to provide an asset as security, making them flexible enough to purchase a wider variety of vehicles. However, because of the greater risk they represent to lenders, unsecured car loans are more likely to have higher interest rates than their secured counterparts.
Rating car loans for new or used cars
When you’re rating the available car loans, it’s important to consider whether you’re planning to buy a new or used car.
While it’s no secret that new cars tend to be more expensive than used cars, new cars can often also offer significant value for money. New cars may integrate new technologies that can help to provide longer-lasting performance and retain the vehicle’s value for longer, which can be important when rating your choice of secured car loans.
Used cars tend to be more affordable than new cars, but that’s not their only appeal. Their value also tends to depreciate more slowly than new cars, allowing you to enjoy greater value from your car loan, and a well-maintained used car can also provide reliable performance. However, for used cars beyond a certain age, you may have trouble applying for a secured car loan with some lenders, who may not feel confident that these vehicles will retain sufficient value to guarantee the loan. In these cases, you may need to pay a higher interest rate for an unsecured car loan.
Rating car loans by fees and charges
Many lenders charge fees as well as interest on their car loans, which can make a big difference to your household budget. A car loan with a low interest rate and high fees and charges could ultimately turn out to be more expensive in total than a car loan with a higher interest rate and lower fees.
To work out the total cost of different car loan offers, you could add up each loan’s upfront and ongoing fees and combine them with the estimated interest payments, but it might be simpler just to look at each car loan’s Comparison Rate instead. The comparison rate expresses the approximate combined total of a car loan’s advertised interest rate and its standard fees and charges, allowing you to quickly and easily get a better idea of how much a car loan is likely to set you back.
It’s worth keeping in mind that Comparison Rates are best used as general guidelines only when you’re looking at car loans. Some lenders charge nonstandard fees for some of their car loan features, which can make these loans more expensive than what their Comparison Rate indicates. On the other hand, some lenders offer extra features with their car loans, which can provide additional value beyond what’s indicated by the comparison rate, depending on your financial situation.
Car loan ratings by lender
A wide variety of different lenders have car loans available, ranging from the big banks to non-bank lenders such as credit unions and building societies. There are benefits and drawbacks to borrowing with different types of lenders, which can affect how you rate different car loan choices.
Banks are popular lenders, capable of offering a variety of financial products along with their car loans. Plus, they can often offer a variety of ways to access information about your car loan, from phone and internet banking to dropping into your local branch. However, banks are more likely to have fixed lending criteria for their car loans, which can make it more difficult for some borrowers to successfully apply for a car loan from a bank.
Non-bank lenders are more likely to offer car loans with competitive interest rates and flexible lending terms, which can make them appealing to a wide variety of borrowers. However, these lenders may not be able to offer the same range of features and benefits with their car loans as those offered by certain banks. And if you take your car loan out from an online-only lender, you won’t have the option to visit a local branch or shopfront to discuss your car loan in person.
Car loan ratings by flexibility
Depending on your financial situation, you may rate car loans that offer greater repayment flexibility more highly than those with fixed repayment schedules. While keeping car loan repayments consistent can help you to manage your budgeting, having additional options available for paying off your car loan can also prove valuable in the right circumstances.
Some lenders allow you to make extra repayments onto your car loan, on top of the scheduled repayments. The more of your car loan’s principal you pay off, the closer you’ll come to exiting the loan early, reducing the amount of total interest you’ll need to pay, and ultimately saving you money.
If you do plan to plan to pay off your car loan ahead of its scheduled term, keep in mind that some lenders charge early exit fees to make up for the interest payments they’d be missing out on. Make sure that paying off your car early doesn’t accidentally cost you more than you expected!
Another flexible option to keep an eye out for when rating different car loan offers is a Redraw Facility. If you make extra repayments onto your car loan, a redraw facility will allow you to withdraw any surplus balance in excess of your scheduled repayment total. This can come in handy in case of emergencies when you’ve already paid you’re available money onto your car loan – just use the redraw facility to withdraw what you need, subject to the lender’s terms and conditions.
Checking your car’s history
Regardless of the car loan you choose, it’s important to organise a Personal Property Securities Register (PPSR) report when purchasing a car. This report, formerly known as a REVS check, looks at the financial history of your vehicle and confirms whether or not it’s being sold with a financial encumbrance (money still owing on it from a previous owner). You can organise one of these reports for yourself, and some lenders can save you time and hassle by organising a report for you as part of your car loan, though some lenders charge a fee for this service.
Car loan ratings at RateCity
Depending on the type of car loan you’re looking for, you may rate different car loan deals more highly based on different criteria, ranging from car loans offering interest and comparison rates to help you save money, to car loans with flexible features and options for managing your finances.
Whatever your budget, RateCity puts a wide variety of a car loans from different lenders all in the one place, allowing you to rate and compare offers however you choose. By rating the available car loans by the most useful criteria, you’ll be able to narrow down your choice of car loan providers until you can make an informed decision about which lender you’ll choose when you buy your new or used car.
Property Personal Finance Writer
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.
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Frequently asked questions
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.
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.
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 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 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.
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.
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.
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.
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.
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.
Can I buy a car as a student?
Buying a car is a huge financial decision, and shy of marriage and purchasing a house (or perhaps around the world travels), it may be the biggest financial decision you make. But if you’re looking at your empty pockets, don’t despair! Your dream of owning your own car could become a reality, if you look for and compare the right car loans for your circumstances.
Where can I find lenders who offer no credit check car loans?
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.
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.
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.
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.
Where can I find lenders who offer no credit check car loans?
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.
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 get a guarantor car loan?
There are multiple lenders who are willing to provide loans secured by guarantors.
If someone is willing to go guarantor for you and they meet the requirements set out by lenders, you can apply for guarantor finance online, over the phone, or in person.
Some banks also provide guarantor car loans, though because they’re larger banks, they may have higher interest rates than smaller lenders.
You may want to compare guarantor car loans at RateCity, and find a guarantor car loan ideal for your purposes.
How much is my car worth?
If you own a car, it may be something that can help you bring down the cost of your next vehicle purchase through its sale. However, before you can do that you’ll want to find out how much your car is worth.
Your car’s worth can depend upon various aspects, including:
- Model and make
A great starting place for aspects of this includes websites that offer online valuations, allowing you to enter your car’s make, model, year, badge and description, with the listed results displaying a price guide based on both selling your car privately and through a dealership.
Both have pros and cons, as cars can be very profitable, something that will no doubt impact any chance you have to make the most of your car’s value upon sale. Dealerships will try to profit on your trade-in by buying it for less than they can sell it for, so you shouldn’t expect the same price selling a car to a dealer that you would necessarily get selling a car privately.