How to Get a Car Loan in Australia?

SB Finance | How to get a car loan in Australia?
  • You need to be a minimum age of 18, 
  • citizen or permanent resident (some visas will be considered) 
  • 100 points of ID (at least): can include your drivers’ license, passport, Medicare card and more
  • The vehicle details: the make and model and age of vehicle to begin with as well as whether it’s new or pre-owned
  • Proof of income: you might need two recent payslips
  • Assets and liabilities: details on any properties you own, any other loans you have, your ongoing expenses and any other debts, such as credit cards.

Which is better, car finance or loan? We cant give personal advice as to what is better, as it would depend on a clients individual circumstance. Car finance vs a unsecured personal loan is very similar in assessment. The biggest difference is that car finance would be secured against the vehicle at a lower rate than an unsecured loan.

How do I get a zero interest car loan? – the O%, 1%, 2% rates advertised are what is called dealer subvention campaigns. They are a marketing tool by the manufacturer to encourage the sale of a specific vehicle or run-out model. The difference between that rate and the actual base rate is paid for by the manufacturer as a marketing cost.  There may be a lot of T&Cs and restrictions with those campaign rates

How does a car loan work? The financier lends the customer the money to buy a new or used vehicle. It can be secured (the asset as security) or unsecured (higher interest rate). If the vehicle is the security on the loan then it will be required to have full comprehensive insurance. Finance can include on road costs and payments can be fixed with loan terms up to 7 years.  

What’s the best duration of a car loan? Terms can range between 1-7 years. Longer terms tend to carry higher interest rates, but will provide the lower repayments

What will affect your car loan’s interest rate? Rate is dependant on multiple factors but the following would be the main points:

  • Purpose of the Lend – Business or Private usage will determine the loan product
  • Asset Backing – if you are a property owner, it would generally get lower rates, however its important to note, the property wont be used as security. It just helps achieve a lower rate. 
  • Age of asset – new vs used. Build date of the vehicle will impact the rate
  • LVR – Loan to value ration will also impact rate. i.e large deposit can help reduce the rate
  • Other factors such as credit score, checkable credit history, age of applicant, vehicle price and if under business – age of ABN and GST registration.