How to Find the Right Car Loan

How To Find The Right Car Loan

If you’re looking to buy a new or used car on Gumtree, a car loan can help you get there faster. There are many car loan providers—including car dealers, specialist lending companies, credit unions and banks. We’re here to help you understand what lenders offer, so you can fairly compare the best car loans and find the right one for you.

What do I need to prepare to get a car loan?

When you make an agreement with a finance provider, they’ll ask you for evidence of your income (payslips usually suffice) and your living expenses, so get these ready in advance. If you’re new to car loans, check out our beginner’s guide to car loans to find out more before you borrow.

Where can I get a car loan?

Here are a few of the most popular ways to get a car loan for your next vehicle.

Dealer loans

Most new or demo car dealers can offer you a car loan, and many used car dealers can too. Dealers typically offer lower interest rates because making sales is their priority. However, dealer interest rates are not always cheaper than the bank, and there can be extra charges, so always check your purchase contract carefully before committing.

Specialist car finance companies

There are also specialist car finance companies. They’ll usually be able to finance any kind of car—new or old—with either a secured or unsecured loan, and they will often require less evidence of good credit history. A potential downside of this flexibility is higher interest rates, so be sure to compare with other options before signing up. Specialist car finance companies include NRMA and your state or territory RAC, both of which currently offer rates of around 5–6%.

Banks and credit unions

A bank or credit union loan can be a convenient option for those who prefer to deal with one provider for all their banking needs. There’s also the chance of a lower interest rate if you use multiple services from the same bank, such as a credit card or a mortgage. However, many banks can be more expensive than dealer finance—especially when fees are taken into account—so it pays to do a thorough car loan comparison before signing up.

People’s Choice Credit Union, IMB and Plenti have some of the lower secured loan interest rates on the market, with no recurring fees, but they do charge application fees. Commbank and Westpac car loans are unsecured and have similar upfront fees, although the Commbank car loan has a lower monthly fee. If you’re hoping to pay off your loan early, CUA Credit Union allows unlimited extra payments and has no early repayment penalties, whereas a St George car loan will charge early repayment fees.

If you already have a mortgage, you may be able to use your redraw facility to access funds from mortgage repayments you’ve made in the past. This is usually the lowest interest option (currently around 2–3%) and might mean only a small increase on your existing mortgage repayments.

There are lots of competitive loans available, so that car is more in reach than you might have thought! Not ready to commit to owning your own car just yet? Car subscription might also be an option for you.

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