Car loan

Buying new or used, from a dealer or privately. A car is a major financial commitment, and the loan behind it deserves the same care as the car itself.

Most people arrive here at one of three points: about to walk into a dealership and wanting finance sorted first, holding a dealer quote and wondering whether it is any good, or buying privately and finding that the dealership option does not apply. All three are worth ten minutes before you sign anything.

We start by sizing the repayment to your budget: shorter terms mean higher monthly repayments but less interest overall. Then we compare rates and fees across lenders, including application fees, monthly service fees, and early repayment penalties that headline rates hide.

Secured or unsecured. A secured loan uses the car itself as security and is generally priced well below an unsecured one. The trade is that the lender can repossess the vehicle if you default. For most car purchases secured is the sensible choice; unsecured earns its place for older vehicles lenders will not take as security.

The term. Longer terms make the monthly figure look comfortable and cost more in total. They also raise the risk of negative equity, where the loan outstanding exceeds what the car is worth, because cars depreciate faster than a long loan amortises.

Balloon payment or not. A balloon is a large lump sum due at the end. It lowers the monthly repayment noticeably and raises the total cost, because you are paying interest on a balance you are not reducing. The example below shows both effects on the same car.

Comparison rate, not headline rate. The comparison rate folds most fees into a single figure, which is why a 7.5% loan with a monthly service fee can cost more than an 8% loan without one.

You choose the loan type that fits, secured or unsecured, and we handle the application.

Car finance is the fastest lending we arrange. Where the paperwork is straightforward it can be approved within a day or two, though that depends on the lender rather than on us.

1. Budget first, car second. We work out a comfortable repayment and what that implies you can borrow, before you fall in love with something at the top of the range.
2. Compare the panel. Rate, fees, balloon options and early repayment terms across lenders, expressed as comparison rates so they are actually comparable.
3. Pre-approval. Useful for negotiating, because you are a cash buyer at the dealership rather than someone who needs their finance. It is conditional and can be withdrawn.
4. The lender decides. Once you have chosen a car, the lender verifies the vehicle details and makes its decision. Approval is the lender's alone and is never certain until given.
5. Settlement. Funds are paid to the dealer or the private seller, and your repayments begin. On a private sale the lender will check the vehicle is not already encumbered before releasing funds.

• Proof of identity: two forms, such as a driver licence, passport, birth certificate, or Medicare card.
• Proof of income: recent payslips, tax returns, or bank statements showing an ongoing income source.
• Credit history: a strong record improves approval odds and can earn a lower rate.
• Deposit: not always required, but it boosts approval chances and shrinks the amount financed.
• Age of the car: lenders favour newer cars that hold their value; age and condition are both considered.

Dealer finance is convenient and it is not free. The finance desk is a profit centre, and the rate offered there often carries a margin above what the same lender would write directly. Getting a comparison before you sit down costs nothing and gives you something to negotiate with.

Negative equity is the trap that follows people into their next car. A long term, no deposit and a balloon together mean you can owe more than the car is worth for much of the loan, and rolling that shortfall into the next finance contract is how a manageable loan becomes an unmanageable one.

Watch the add-ons offered at signing. Extended warranties, paint protection and insurance products financed into the loan are paid for over the full term with interest, which is a very different cost from paying for them outright.