Compare New Car Loans - Australia

Buying a new car shouldn’t be hard. It can be expensive, sure. But all that jargon can make getting car finance confusing, and it shouldn’t be a minefield! That’s why we put together this guide — to help you compare new car loans, so you can select one that suits your needs.

The term ‘new car loan’ encompasses several credit products that will provide you with finance that you can use to buy or lease a new or nearly new (less than two years old) car. Many can also be used to buy or lease other motor vehicles, like trucks, vans and motorbikes. New car loans can be granted to individuals (making them personal loans) or businesses. And they can be secured by offering the car as collateral, or they can be unsecured. Though it's more common for new car loans to be secured, it is possible to get an unsecured car loan for a new car.

A new car loan is a type of finance that helps you to purchase a new vehicle. A new car loan in Australia is typically secured by the vehicle being purchased, meaning the lender has the right to repossess the car if the borrower defaults on the loan.

In Australia, new car loans are offered by a variety of financial institutions, including banks, credit unions, and specialised car loan companies. Here's a basic look at how a new car loan works:

• The borrower applies for the loan and provides information requested by the lender. This will usually include details about income, employment, debts, and credit history.
• The lender evaluates the application and determines the loan amount and interest rate based on the borrower's application and creditworthiness.
• The borrower agrees to the loan terms, including the monthly payment amount and the length of the loan.
• The lender disburses the loan proceeds to the dealership or the borrower, who uses the funds to purchase the vehicle.
• The borrower repays the loan, including both principal and interest, in monthly instalments over the term of the loan. Once the loan is fully repaid, the borrower owns the vehicle outright.

It's important for borrowers to carefully consider the terms of the loan and to shop around for the best interest rates and loan terms.

If you're in the market for a new car, and plan to use a loan to help cover the cost, here's some steps you’re likely to find along the way:

• Determine your budget. Before you start looking for a new car loan, it's important to determine how much you can afford to borrow. This will help you determine how much you want to spend on the car,and the loan amount you'll need. You can use one of the many car loan calculators available to help get a budget estimate.
• Shop for a great new car. Once you’ve got an idea of how much you can afford to borrow, you can start shopping for a great new car loan for you. You can compare interest rates, fees, and loan terms from a variety of lenders to find a loan that fits your needs – starting with the comparison table on this page.
• Decide on your new car. Once you know your budget and have an idea of the car loan you need, you can start shopping around for your new car. Our new car buying guide has some handy tips that could help.
• Submit a loan application. When you've found the loan and car that works for you, you'll need to submit an application. The lender will perform a credit check and assess your ability to repay the loan. If you're approved, the lender will provide you with a loan offer that details the loan amount, interest rate, and repayment terms.
• Buy your car. Once your loan has been approved, you can purchase your new car. The lender will pay the dealership directly, and you'll make payments to the lender over the term of the loan.
• Repay the loan. You'll need to make regular payments on your new car loan until it's paid off. The terms of the loan will determine the length of time you'll have to make your payments, and the interest rate you will pay.

New and used car loans are fairly similar. For example, you can get new or used car loans with variable or fixed interest rates. They’re also subject to similar lending criteria and both have similar application fees. The way you apply for a car loan, the loan amount you can apply for and the loan term are even likely to be the same or similar. Restrictions related to extra repayments and early repayment fees are also likely to be similar when you compare equivalent new and used car loans. The main difference can often be the interest rate and thus the total cost of the loan.

It’s generally easier for lenders to figure out the value of a new car — it’s just the purchase price. And it’s still pretty easy to figure out the value of a ‘newish’ (up to two-year-old) second-hand car. Once cars age beyond that, there’s a wider range of kilometres that they may have done, they become less reliable and they grow more likely to suffer from significant issues that could reduce their value. As a result, it’s more difficult for a lender to figure out the value of an older car and to predict how its value might change over the life of the loan.

As a result, lenders may face a lower risk of not getting their money back when they give out a loan for a new or nearly new car. So, new car loans generally have lower interest rates than do equivalent used car loans.

The value of a new or nearly new car is also typically much higher than for older cars (except when it comes to vintage cars), so they often make better collateral for a secured car loan. And while new car loans are far more likely to be secured, unsecured loans for new cars are rare but available. If you take out a secured car loan, you have to use your car as collateral for the loan. Under this agreement, if you fail to pay back your loan, your lender will take possession of your car and sell it so they can recover the money you haven’t paid. It also means your lender may be able to offer a lower car loan rate because they know the loan is lower risk. Because the value of older cars is less known, it can be more common to find used car loans that are unsecured.

There are a couple of other things to consider:

• Newer cars are more likely to be fuel efficient, and some newer cars can have electric or hybrid options. So, if your preferred lender offers a ‘green car’ interest rate discount, you’re more likely to be able to access it with a new car.
• Balloon payments can offer lower monthly repayments but require a large lump sum payment at the end of their loan term.

If you're in the market for a new car, taking out a new car loan can help you get the car you want, even if you don't have the cash on hand to buy it outright. With a loan, you can spread the cost (plus interest) of the car over several years, making it more manageable for your budget. There are a few key reasons why a new car loan could be an option to consider, these include:

• Convenience: A new car loan provides a convenient way to finance the purchase of a new vehicle, allowing the borrower to spread the cost of the vehicle (plus interest) over a longer period of time.
• Buying power: For some borrowers, a new car loan can make it easier to afford a more expensive or higher-end vehicle that they might not be able to purchase with cash.
• Interest rates: You may get lower interest rates on a new car loan than you would on a used car loan. This is because new cars typically have a longer lifespan, which makes them a more secure collateral for the lender.
• Credit-building: Repaying a new car loan on time can help build the borrower's credit history and improve their credit score.
• Flexibility: Taking out a new car loan can offer flexibility when it comes to payment terms. You may be able to choose between weekly, fortnightly, or monthly payments, and you can usually select the length of the loan term that works best for you. This allows you to tailor your loan to your specific needs, so you can be confident that you're getting a deal that suits.

Of course, it's important to carefully consider the terms of the loan, including the interest rate and monthly payment amount, to ensure that the loan is affordable for you and your situation. It’s also worth noting that many new vehicles can depreciate in value pretty quickly.

Be sure to do your research, evaluate your ability to pay back the loan, and compare the terms and interest rates of different lenders to find a deal that suits you.

One of the benefits of a new car loan is that you can spread the cost of your vehicle over an extended period, making it more affordable. In Australia, there are various lenders who offer new car loans, and the amount you can borrow depends on various factors such as your income, expenses, credit history, and other debts.

One way to work out how much you can borrow is to calculate how much your desired loan amount plus interest would cost you each month when you spread the payments over the term of the loan. You can use a loan calculator, such as the one at MoneySmart, to help calculate the monthly repayments.

Is the amount you estimated something you can comfortably pay off, allowing for your other regular costs, as well as other ad hoc expenses that will invariably pop up? What if interest rates or other expenses go up? Do you have a buffer, or will that leave you with no extra funds each month?
If the amount is high, you might want to tweak your calculations by considering how much it would cost if you borrowed less, found a loan with a lower interest rate, or spread the payments over a longer period (although, it’s important to keep in mind that spreading the payments will mean paying more interest in the long run).

Another important thing to consider when taking out a new car loan is the deposit. Do you need a deposit for a new car loan? The answer is: not always. Some lenders may require a deposit, while others may not. The deposit you need will depend on various factors, such as the type of loan you choose, your credit history, and the lender’s policies.

If you do need a deposit, it is usually a percentage of the vehicle's purchase price. A larger deposit means you will have less to borrow, and will lower your monthly repayments. This can be beneficial in the long run because it reduces the amount of interest you’ll have to pay over the life of the loan.

When it comes to financing a new car, there are a few common fees to keep in mind in addition to the new car loan interest charges. Understanding these costs up-front can help you make an informed decision and budget accordingly. Here are some common new car loan fees you should know about:

• Loan application fee. This is a fee charged by lenders for processing your loan application. It’s usually a one-time fee.
• Establishment fee. This fee may be charged for setting up your loan, including credit checks, documentation and loan approval. It’s usually a one-time fee.
• Ongoing account-keeping fee. There may be an annual fee or monthly fee charged for maintaining your loan account.
• Early repayment fee. If you want to pay off your loan early, you may be charged an early repayment fee. This fee compensates the lender for the loss of interest they would have earned if you had kept the loan for the full term.
• Broker fees. If you set your car loan up through a broker service, there may be additional broker fees charged. These fees would usually be capitalised into the loan principal.

It's also worth mentioning that some lenders may not charge fees, while others may charge fees but offer a lower interest rate. There can often be different financing options from car dealerships, banks, credit unions or online lenders. It’s important to compare a range of options, this way you can find a deal that suits you, which may include lower fees and interest rates.

Interest charges are the extra amount you pay on top of the principal loan amount to borrow money. When it comes to taking out a new car loan, calculating the interest charges is vital in ensuring you don’t overcommit.

A new car loan calculator could help to provide an estimate of your monthly repayment amount and the total cost of the loan, including interest charges. These calculators allow you to enter in the loan amount, the interest rate, and the loan term. Often they will give you an opportunity to include the cost of additional fees to help you get a clearer picture of the overall financial commitment.

When comparing new car loans, it's important to consider the interest rate as well as any additional fees or charges that may be applicable, such as ongoing fees or early repayment fees. By comparing these fees and charges, you can determine which loan is the most cost-effective option for your needs.

All car loans have pros and cons, which suit each of us to a different extent. So, while there is no “best” new car loan, one way to pick a suitable loan for you is to compare a range of options in the context of what you need and what you want to achieve. We’ve put together an easy-to-use guide to comparing car loans in general on our main car loan comparison page. You can add to that guide for new car loans, by adding these questions into the mix:

How badly do you require a car? If it’s just something that will make your life easier, you may be happy to offer your car as collateral for the loan.

How fuel efficient is the car you want to buy? If it’s very fuel efficient, or is an electric or hybrid car, you may be eligible for a ‘green car’ discount with some lenders.

Do you want to keep the car for a long time? If you intend to upgrade in a few years, you may not want to actually buy the car. You might instead opt for an alternative form of finance, like a novated lease. We’ve included more information about other kinds of finance options available on our main car loan comparison page.

Are you in the market for a new car but don't know how long it will take to get a car loan approved? The time it takes to be approved for a new car loan can vary based on several factors but, in Australia, it can take anywhere from a few hours to a week or more to get a loan approved.

Before choosing a new car loan, you’ll need to decide on the type of loan you want to take out. While there are a range of options, it’s common for car loans in Australia to be either secured and unsecured. A secured loan is backed by some form of collateral (usually the car you’re purchasing), while an unsecured loan is not. Generally, secured loans are more common for a car loan.

Once you’ve decided on the type of loan you want to take out, you will need to find a lender who is willing to offer you a loan. There are many different car loan providers in Australia, and each one has different eligibility criteria, interest rates and fees.

You can compare different loan options by looking at the interest rates, loan terms, and repayment options - you can start with the comparison table above. It’s also worth comparing these against other options, such as dealer finance that could be available through the car dealer you’re looking to purchase your car from. You can also read reviews from other customers to see how they rate the lender.

Once you have found a lender, you will need to complete an application to see if they’re willing to offer you the loan. Then the lender will perform an assessment to determine whether or not your application is approved. The lender will usually provide you with an offer letter, which details the loan amount, interest rate, loan term, and repayment options. You will need to sign the offer letter and return it to the lender.

There are a few things you can do, like being prepared with your application documents, to reduce the new car waiting period and have your car loan application approved sooner.

The short answer is yes, you can!

Refinancing a new car loan means replacing your existing loan with a new loan with different terms, interest rate, or loan amount. This process can help lower your monthly payments, reduce the overall interest costs, or change the length of your loan (if you can find a better loan option).

But first, you need to determine if refinancing is a good idea. It’s important to consider the length of your loan, the interest rate, if there are any fees for leaving your current loan, and the amount of money (if any) you will save. If you have a longer-term loan with a higher interest rate, refinancing to a lower rate may help you save a significant amount of money. But if you have a short-term loan with a low interest rate, refinancing may not be worth the effort.

Next, you need to find a lender who offers refinancing for new car loans in Australia, complete the application process, and wait for the lender to determine whether you’re eligible for the new car loan.

Finally, it’s important to consider the impact of refinancing on your credit score. Refinancing your new car loan will result in an inquiry on your credit report, which may temporarily lower your credit score. However, if you’re approved for refinancing, the new loan can help improve your credit score over time by reducing the amount of debt you owe and making your payments on time.

If you're considering taking out a new car loan, you may be wondering how it will affect your credit score. The truth is, a new car loan can have both positive and negative impacts on your credit score, depending on several factors.

Taking out a new car loan can help to improve your credit score if you make your payments on time and in full each month. This shows that you are responsible and capable of managing debt, which is a positive factor in determining your credit score.

However, if you take out a new car loan and fall behind in your payments, or end up with a default, it can have a negative impact on your credit score. In addition, applying for a new car loan can impact your credit score because there will be an inquiry recorded on your credit report.

Having a bad credit score can impact your ability to get a loan in the future, including new car loans. That’s not to say you can’t be approved for a bad credit new car loan, it’s just that a bad credit loan will usually attract a much higher interest rate, costing you more in the long run.

The amount you wish to borrow will also be a factor in determining your eligibility. Lenders will have limits on the maximum loan amount they're willing to approve for an individual borrower.

In addition to these eligibility criteria, some lenders may also have specific requirements based on their own policies and procedures. To ensure the best chance of success, it can help to compare several different lenders and their requirements before applying for a new car loan - you can start with the comparison table at the top of this page.

The steps you generally take to apply for a new car loan in Australia include:

• Research your options. Before you start your car loan application, it's important to compare the different loan options available, including interest rates, repayment terms, and any additional fees to find the best loan for your needs. The table at the top of this page is a great place to start.
• Determine your budget. To get a clear idea of how much you can afford to borrow, consider your income, expenses, and other debts you might have. This will help you narrow down your car loan options and avoid overstretching yourself financially.
• Get your documents in order. To apply for a car loan, you'll need to provide several documents, including proof of income, identity, and residency. Your lender may also require other documents, such as proof of insurance, a valid drivers licence, and recent pay slips.
• Choose a lender. Once you've determined your budget and have all your documents in order, you can start searching for a lender. Consider the interest rates, loan terms, and any additional fees and charges. You can apply directly with a lender or use a car loan broker to help you find a suitable car loan option.
• Complete the application. Once you've found a lender you like, you can start the application process. Fill in all the required information, attach your documents, and submit your application. Most lenders will provide a decision within a few days, depending on the complexity of your application.
• Finalise the loan. Once you've received approval for your car loan, you'll need to sign the loan agreement and provide proof of insurance. The lender will then disburse the funds, and you'll be able to purchase your new car.

We can’t know your objectives, financial situation or personal situation, so we can’t recommend a specific new car loan. Instead, we’ve given you some facts to help you better understand how new car loans are different to other car loans. And then we’ve laid out some simple questions to help you compare a range of options, so you have the tools to help choose a new car loan that’s suitable for your needs.