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Top-rated car loans for May 2020
If you’ve been dreaming of buying a car for a long time, it's worth comparing your options with some of Australia's leading car loans for May 2020, as rated by RateCity's Real Time Ratings system.
Which car loans have the lowest interest rates?
Thanks to the coronavirus pandemic, buying a new car may have been the last thing on the minds of many Australians. But with some social distancing restrictions starting to ease in selected areas, some Australians may be in the market for a car loan for their next vehicle purchase.
Sydney car loans
Sydneysiders looking for car finance have plenty of choice when it comes to their options for vehicle loans. In this major city, there are deals offered by established lenders as well as newer, online-only financiers. All of this is advantageous if you’re looking for a good value loan for your next, or first, car.
Commercially, Sydney is a favourite with multinationals, and the finance and insurance services industry is very buoyant, which works in your favour.
How do car loans in Sydney work?
With a competitive marketplace, you can be assured that interest rates on loans are kept low, making it easier to find a bargain. With a pre-approved loan, you can secure your finance before making a purchase and there are plenty of lenders willing to oblige. If you plan to buy a new car, you may well benefit from lower interest rates than those purchasing used vehicles.
The same applies if you are willing to secure your loan on your car or a property, for example your home. Often, secured loans are cheaper than unsecured ones. In any case, your credit history will be checked when applying for a Sydney car loan.
What are the main features of car loans in Sydney?
Loans differ according to the criteria you are seeking and the facilities offered by the lender. These focus on the amount you want to borrow, the type of interest rate, your credit status and any extra features you may require.
Interest rates may be fixed or variable. Features may include balloon arrangements, flexible repayments and low cost loans reflecting individual circumstances, such as whether you are a single parent or a pensioner, for example.
A balloon payment system allows you to pay smaller regular amounts on the basis that a much larger payment falls due at the end of the loan period. In certain circumstances, you can decide to refinance your vehicle instead of repaying the final instalment in full.
A flexible payment system permits you to make more than the agreed minimum payment from time to time. This means you might be able to repay your loan early, however, as some lenders place restrictions on how often you can do this, or charge additional fees, you should check these details in advance.
What are the pros and cons?
A good deal on your personal finance borrowings will help you get the vehicle you want promptly, and at a fair price. This is one reason why when choosing your loan provider you should always check the comparison rate displayed alongside the advertised rate. Any extra fees or charges are included in the comparison rate so you will be able to get a clear picture of the differences between lenders.
Read your car loan agreement carefully before making a commitment. This is to prevent damage to your credit history in case you discover you cannot manage repayments and ultimately default on your 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.
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.
Alex is a personal finance writer and PR professional at RateCity, and has been writing about finance for over three years. She is passionate about closing the gender pay and superannuation gap, and aims to help young Aussies to overcome their financial apathy and better manage their finances. Alex has been published in numerous print and online outlets, including Money Magazine, Lifehacker Australia, and Business Insider.
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