Car loans from hell How to avoid the traps
Whilst there are some great promotional deals on the market, there are some precautions you can take to avoid being stuck with the car loan from hell.
Missed Payment Penalty
Redraw Activation Fee
Secured By Vehicle
Early Exit Penalty Fee
$175 during first 2 years
Available to 457 Visa Holders
$4k - $50k
Conditions, fees and charges apply
Westpac issues car loans for both new and used cars. Loans can be up to $100,000 for terms of up to seven years. Weekly, fortnightly and monthly repayments are available. Fees may apply if you repay your car loan early. Westpac also offers bank accounts, home loans, credit cards, personal loans, insurance, superannuation, financial planning and investment services. Westpac is Australia’s first and oldest bank, having begun life in 1817 as the Bank of New South Wales. In 1982, it changed its name to Westpac Banking Corporation following the acquisition of the Commercial Bank of Australia.
Westpac is one of Australia’s leading banks, offering a diverse array of financial services to customers and clients, not only under its own name, but through the St.George, Bank of Melbourne, BankSA and RAMS brands.
Car loans and personal loans are among Westpac’s services, along with transaction and savings accounts, credit cards and home loans. The low fixed interest rate means you can be confident that your car loan repayments will remain consistent and affordable for the full length of the loan term.
Westpac operates branches across Australia, and can also be contacted online via internet banking, or by phone. Additional car loan offers are also available from the other brands in the Westpac Group.
A Westpac car loan offers you a choice of repayment frequency options, depending on whether it would be simpler and easier for you to make payments towards your car loan weekly, fortnightly or monthly. You can borrow between $10,000 and $100,000 to buy a new or used car, and pay it off over a term of 1 to 7 years.
The option is also available to make extra repayments and get your car loan paid off early, with early exit fees only applying if a car loan with a term greater than two years is paid off in less than two years.
By securing your Westpac car loan against the value of your vehicle, you get to enjoy an interest rate that’s below the market average. However, the establishment fee is higher than average, and there are also ongoing monthly charges to consider.
The option to adjust the frequency of your repayments can make budgeting simpler, as you can match your car loan repayments to your employer’s payday schedule.
The option to make extra repayments and to pay off your car loan ahead of schedule with minimal penalties can mean saving a significant sum in interest charges. Even if you’re charged Westpac’s early exit fee for finishing a longer-term car loan in less than two years, this is a fixed fee, rather than being based on the remaining interest payments, so it’s possible you may come out still ahead financially.
To apply for a Westpac car loan, you’ll need:
You can apply online, over the phone, or at your nearest Westpac branch.
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.
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.
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.
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.
A bad credit car loan is a car loan for borrowers who have ‘bad credit’ or a bad credit history.
Some lenders refuse to offer bad credit car loans, because they believe there is an excessive risk that bad credit borrowers will not repay their loans. However, other lenders are willing to provide bad credit car loans.
Generally, these lenders charge higher interest rates for bad credit car loans than ‘prime’ car loans, reflecting the higher level of risk. Bad credit car loans may also have higher fees than prime car loans.
However, the big advantage of a bad credit car loan is that it allows borrowers with bad credit to access finance. Another advantage is that it could help bad credit borrowers improve their credit rating, assuming they make all their repayments on time.
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.
Yes, some banks will be willing to provide guarantor loans, including Commonwealth Bank, NAB, Westpac and ANZ, though the terms for signing up to a banker-issued guarantor car loan may not necessarily be as good as another lender.
You should keep in mind though that these larger banks, because of their monopoly of the market, tend to have higher interest rates than the smaller lenders.
In comparison, smaller loan companies and credit unions tend to be more competitive in their battle for your business. There are plenty of lenders willing to lend to people with bad credit or no credit history who have willing guarantors.
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.