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Car loan lenders we compare at RateCity

Have you got your eye on a new Volkswagen and want to know what your financing options are? Much like Volkswagen's wide range of vehicles, there are plenty of car loan products on the market, making it easier to find one to suit your individual needs.

What car models are offered by Volkswagen?

Volkswagen is one of Australia’s 10 most popular car brands. The German manufacturer produces affordable, mid-range and luxury vehicles, which tend to be slightly more upmarket than comparable models from other brands.

Volkswagen offers a wide range of vehicles, from hatchbacks, sedans and pick-ups to station wagons, SUVs and vans.

Popular Volkswagen vehicles include:

  • Polo 70TSI Trendline ($19,290) - a hatchback with five-speed manual transmission and a 1.0L engine
  • Golf 110TSI Golf ($29,350) - a hatchback with six-speed manual transmission and a 1.4L engine
  • T-Cross 85TSI Life ($28,390) - a small SUV with seven-speed DSG transmission and a 1.0L engine
  • Tiguan 110TSI Life ($47,382) - an SUV with six-speed DSG transmission and a 1.4L engine
  • Passat 140TSI Business ($46,590) - a sedan with seven-speed DSG transmission and a 2.0L engine
  • Passat Wagon 162TSI Elegance ($53,790) - a station wagon with six-speed DSG transmission and a 2.0L engine
  • Amarok V6 Core ($49,590) - a 4WD with six-speed manual transmission and a 3.0L engine

Keep in mind, the prices listed are the manufacturer's recommended retail price (MRRP) and do not include on-road costs. Prices may vary between dealerships and locations.

Volkswagen also offers finance, insurance, servicing and roadside assistance. New vehicles come with a three-year warranty, while there is also a three-year paint warranty – both with unlimited kilometres.

How can I get a Volkswagen car loan?

Volkswagen's own dealer finance offering, Volkswagen Financial Services Australia, provides car finance options for customers, including secured car loans and novated leases. It also offers a Guaranteed Future Value Program in which customers can choose to trade in, retain, or return their vehicle at the end of a one to four year term.

While it can be tempting to simply sign up for finance at the dealership after a successful test drive, buyers who shop around are likely to find better value Volkswagen car loans, given the number of car loan providers in Australia.

RateCity's car loan comparison tables allow borrowers to compare Volkswagen car loans by advertised rate, comparison rate, upfront fees and loan features.

How do I compare Volkswagen finance?

There are a number of features that are important to consider when comparing car loans, including the following:

Interest rates - Comparing interest rates is a reasonable first step to take when shopping for car loans. Just be sure to also factor in fees when you're comparing, as some low interest loans may have higher fees attached.

Loan term - The length of the loan term is the amount of time you will have to repay the borrow amount plus any fees and interest charges payable.

Features - Different loan products offer different features, such as a redraw facility, unlimited extra repayments, or the option to make weekly or fortnightly payments instead of monthly payments.

Fees - Some lenders may only charge fees for special features such as redrawing or repaying the loan early, while others may also have ongoing monthly fees.

Secured vs unsecured - Secured car loans are typically reserved for new cars, or cars that are only several years old. Older cars may not be eligible for a secured car loan, but the maximum age of the car can differ between dealers.

Balloon payment -A balloon payment is a predetermined lump sum that may be payable at the end of a typically shorter loan term.

Novated leasing - If you're looking for an alternative to a standard car loan, a novated lease, which is paid for out of your pre-tax income, may be worth considering.

Business car loans - If you are a business owner, and intend to use your new Volkswagen primarily for business purposes, some other options you could consider include a commercial hire purchase or a chattel mortgage.

How much can I borrow to finance my Volkswagen?

If you know which Volkswagen model you want to buy, chances are you'll already have a good idea of how much you need to borrow. The next step is to ensure you're able to afford the repayments on your car loan.

RateCity's car loan calculator can provide you with an estimate of your monthly repayments according to your preferred loan amount, interest rate and loan term. Once you have a rough idea of how much your repayments could be, calculate whether they fit comfortably within your budget.

Like any personal finance product, it's important to read the eligibility criteria, the product disclosure statement, and any disclaimers that may apply before submitting an application for your preferred car finance product.

Frequently asked questions

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 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 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.

What is dealer finance?

Dealer finance is a car loan organised through a car dealer – as opposed to car loans organised by a finance broker or directly by the lender.

How do you get pre-approval for a Commonwealth Bank car loan?

You can apply for a CommBank car loan pre-approval online, over the phone or by visiting a branch. The steps to apply for CommBank car loan pre-approval are similar to any other car loan application and include the following:

  1. Consider checking your credit rating before applying for the loan. The lender uses your credit score and credit history to help determine your creditworthiness, and decide if you should be granted approval. Your credit score will likely also be used to determine what interest rate they are prepared to offer you.
  2. Gather all the required documents and your personal information. This should include proof of income, identity and residency.
  3. Review all the terms and conditions, interest rate and additional fees related to the loan to ensure it meets your requirements.
  4. Submit your application to CommBank for approval.

Commonwealth Bank will then review and confirm all your details and, if successful, offer you pre-approval. Once you receive the pre-approval for the car loan from Commonwealth Bank, you can start shopping around for a new car with the knowledge you have finances secured.

What is a dealership?

A dealership is a car yard or a place where cars are sold.

What is vehicle finance?

Vehicle finance, also known as a car loan, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Vehicle finance can be used for both new and used vehicles.

Can you refinance a car loan with the same lender?

You may be looking to refinance your car loan to get lower interest rates or reduce the total monthly amount you have to pay. Often, this leads to the question ‘can I refinance a car loan with the same bank?’

While it’s always worth shopping around for a better deal or at least to compare offers from other lenders, you can sometimes refinance to a different loan with the same lender. It may be simpler,  as the lender already has your details and knows your repayment history. 

Having said that, knowing the terms offered by other lenders may help you negotiate a better deal with your current lender.

How does a car loan affect credit score?

When a lender does a credit check during the pre-approval and full application process, it’s noted on your credit report as an inquiry, which can impact your credit score and chances of approval. If you approach too many lenders for pre-approval, especially in a short period, these inquiries will likely hurt your credit score. Multiple attempts to get your car loan application through can affect your credit score. 

Every time you fail to make repayments on time, it is recorded on your credit report. Inability to pay your car loan installments on time can have a long term effect on your credit score. Further, if you’re unable to pay your car loan, a repossession will be on your credit file for seven years and impact your credit score.

What is a loan-to-value ratio?

The loan-to-value ratio, or LVR, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have a loan-to-value ratio of 75 per cent. Loan-to-value ratios change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the loan-to-value ratio would now be 67 per cent.

Should I service my own car?

There are also costs associated with vehicle ownership, such as paying for petrol and the obligatory ongoing maintenance. But should you cut down on costs by servicing your own vehicle?

If you’re considering getting out the tool box, spanner, and grease-laden towel, you need to carefully weigh up the risks and benefits. A trained mechanic will need to complete certain tasks, while you may be perfectly capable to handle other aspects yourself.

If you’re short on time, it may be worth paying for the convenience of a full vehicle service. However if you’re trying to slash your expenses, there are some basic maintenance tasks that you can complete yourself.

You should call a mechanic if you’re unsure about a vehicle maintenance task you’re about to take on. However there are a number of maintenance tasks that you may be able to complete with your own two hands including:

  • Replacing your car battery
  • Changing the oil
  • Replacing worn windscreen wipers
  • Replacing blown fuses

Remember to keep your car’s body in good condition, by washing and applying a protective wax on a regular basis, too.

Always check your car warranty agreement as some new car purchases come with an extended car warranty provided your services are conducted at the vehicle service centre where you purchased the car. In these circumstances, you may find the service fee is capped, alleviating some of the maintenance woes.

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.

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.

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.

Can you get a chattel mortgage with bad credit?

Getting approval for a chattel mortgage with bad credit may be possible, given ‘chattel’ (usually a piece of equipment or car) is put up as security for the loan. That means if you fail to repay the loan, the creditor can recover the loaned amount by repossessing and selling the car or piece of equipment. This differs from unsecured car loans, where the asset is not tied to the loan and cannot be taken if you don’t meet the repayments. 

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.

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 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.

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.