Car Loans Information
How to Apply for a Car Loan
It may seem daunting and stressful, however applying for a car loan is made very easy at Approved Car Loans.
Your application can be done over the phone or online in as little as two minutes. All you need to do is have some basic information ready about yourself, such as your residential address, salary/income, along with what assets you own and any current debts you may have.
The team at Approved Car Loans will take the rest of the stress away by guiding you through the loan application and car buying journey, helping you every step of the way.
Our experienced brokers will assess your individual situation and find the right car loan product for you and your personal situation. This ensures you get the best possible deal from one of the approximately 57 different lenders on our panel. No matter your situation, we have a lender who can help you drive away today in your dream car.
How does Car Finance work?
A car loan allows you to buy a new car or asset now without waiting to save more money or dipping into your savings. Under a typical car finance agreement, you will make payments on the loan every month/fortnight/week over a fixed period of time, typically anywhere from 12 to 84 months.
When you take out a car loan, a lender will loan you the funds to make your new purchase and usually secure the car against the loan. The lender will transfer the funds for the new purchase directly to the seller (either private or dealer sale).
You will then repay the loan plus any interest over the agreed repayment period. In the event you do not know the exact car you want to purchase; Approved Car Loans can organise a loan pre-approval. If you have a rough idea of the amount you want to spend and the type of car you are looking for, you can get pre-approved for an agreed amount.
Our team can easily take an application and help you work through options such as: the amount you might qualify for, repayment amounts and even assist you in finding your ideal car. You will know the exact amount you are approved for which can also help you when you are negotiating the price you want to pay the seller. Having a pre-approved loan figure also helps to narrow the options when car hunting.
What Are the Benefits of Financing a Car?
There are many benefits of using a car loan to buy your new car today. A car loan is typically going to give you access to extra funds now, in addition to your savings, or trade in value, meaning you will have more purchase options available to you.
Without a loan, your budget may initially be just $5000 to $7000, but with the additional funds from a car loan, you may be able to consider cars up to $30,000 or more. All depending on how much you can afford and the monthly repayments you are comfortable paying. It expands your options, allowing you to purchase a nicer, safer and more reliable vehicle.
Depending on the loan you take out, in Australia, you can choose to pay your loan over 12 months to up to 7 years. This can make your purchase more affordable than you first thought. Some lenders have no fees for making extra payments or paying off your loan earlier, so any time you have some extra funds, you can make additional payments, allowing you to pay off the loan sooner. A secured car loan will also often have a lower interest rate than a personal loan or credit card.
New or Used Car?
There are many things to consider when looking to purchase a new vs used car and it ultimately comes down to the individual and your needs from the vehicle.
A new car can often come with many benefits & extras, such as the latest safety equipment, technology such as USB ports, digital radio, and other modern features. New cars will often come with other features such as a factory warranty, roadside assist, and sometimes fixed price servicing; and nothing can beat that new car smell! Depending on the type of car you are purchasing, you may need to be prepared to pay a higher price for a new car compared to a used vehicle.
Purchasing a used car in Australia can be more cost-effective as the value of the car decreases over time. A used car may still have many of the features you are looking for without the higher price tag. Used cars will generally not depreciate in value as fast as a brand new car.
Unlike a new car, a used car has been pre-owned, so while it may be cheaper, it’s important to check that the car has been regularly serviced. You should try to obtain complete service history before buying. A fully qualified mechanic should look over the vehicle before you purchase it to ensure there are no underlying problems that may cost you more in the long run.
Other Costs to Consider When Buying a Car
While buying a new car is always exciting, it is important to consider all costs associated with that purchase. Some key things to consider when buying a car may include:
- Cost of Insurance
- On-going servicing and maintenance costs
- Running costs including fuel and fuel consumption
There are a lot of resources available online which can help you make an informed decision when comparing different cars and it is important to do your research, so you get a strong idea of the actual cost of the car.
How To Get The Best Rate on Your Car Loan
There are many factors that will be considered when it comes to getting the best rate possible for your new car loan. Every individual is different, your personal circumstances, combined with the car you are purchasing are all taken into consideration when determining your approval and interest rate. Some things that will be assessed include:
- Residential status
- Current employment situation
- Credit score & Prior experience with debt
- Price & Age of new vehicle purchase
- Secured vs unsecured lend
The above points are all key considerations for lenders when assessing your credit worthiness as part of the application process. Every lender has different assessment criteria and at Approved Car Loans, we understand the types of customers our lenders are looking for.
Going through a finance broker like Approved Car Loans can help to ensure you’re getting the best rate available. We will always ensure the lender we choose is going to give you the best rate possible based on your individual situation. We have access to over 57 trusted lenders, and some that deal directly with us, which means we can get access to car loan deals that you as a direct customer cannot.
How Much Can I Borrow With a Car Loan?
The amount you can borrow on a loan will depend on a range of factors such as your age, income and expenses, your assets, and current debts that you may have, and most importantly your credit history. Lenders will assess your ability to pay back previous/current loans and credit cards to determine your creditworthiness and how much they are willing to lend you.
If a lender is taking the car you are buying as security, the amount you can borrow will depend on the cost and the value of the car. When buying a new car, you may receive more from lenders than if you were to buy a used car. This is due to the value of the car and the reliability of the asset.
When assessing your application, Approved Car Loans will ensure that you do not finance an amount that you cannot afford to repay. We assess your application thoroughly to ensure you can comfortably afford this new commitment. It is important that you are aware of all costs involved in buying a car and to fit the amount you want to borrow around your lifestyle, not the other way around.
What is a Pre-Approved Car Loan?
A pre-approved car loan is when you apply for finance wanting to get approved for a specific amount before purchasing a new vehicle. The finance company agrees to give you a car loan and you are able to shop for cars knowing exactly how much you can afford.
This is a popular choice for many car buyers, as some people are not sure if they are eligible for a car loan and want to get approved before finding a car. This gives you the security of already being approved and having access to the funds, allowing you free-range to shop for cars. It also means you can enter the car buying process, knowing exactly how much you can afford.
Am I Eligible For a Car Loan?
A finance lender looks at many factors when determining if you are eligible for a car loan. The factors considered are age, income, current assets and debts and credit score/previous credit history.
You must be over the age of 18 and have a current income source. If you are unsure if you are eligible you can run through an application with someone at Approved Car Loans and they will be able to advise if you are eligible and find you a loan product most suited to your circumstances.
Can I Get a Car Loan With Bad Credit?
Having poor credit does not automatically rule you out for a car loan. Lenders look at many different factors when considering lending you money, your credit score being one of those.
If the rest of your profile is strong, such as your residential status, income and assets, a finance company may still lend you money. Here at Approved Car Loans, we look at your profile as a whole and do our best to find a lender that will approve your finance.
However, it is important to note, the approval may not be the same as someone who has good credit. You will not have access to the same amounts, interest rates or other conditions.
How To Calculate Your Repayments
To calculate your repayments, you can use the car finance calculator. This will help you work out how much you will be paying each week/fortnight/month to help you determine what you can afford. The loan amount, interest rate and loan term will all determine your repayments.
When calculating your repayments, you will need to understand the following terms.
- Loan amount is the amount of the car you are buying minus any deposit or trade in.
- Loan term is the length of the loan, the longer the loan is running the lower your regular repayments will be. However, if you are paying the loan off over a longer time, you will be paying more interest over the course of the loan. You can request a loan term from 1-7 years.
- Interest rate is dependent on your profile, the stronger your profile is in terms of residential and employment status, income, assets and credit history, the lower interest rate you will get. The lower the interest rate, the lower your repayments will be.
- You can choose to pay your loan back weekly, fortnightly, or monthly depending on which one is more manageable for you. Most people match their repayments up with their pay cycle.
It is important to note that the extra costs of the car that are not included in the car loan repayments.
For the most accurate calculation of your repayments, it is best to speak to someone at Approved Car Loans as they will be able to determine your likely interest rate and help you work through the loan calculator.