Car Finance

Buying a new car is exciting and can be a lot of fun. Organising a car loan can be a lot less enjoyable if you don’t have the right information and if you don’t know where to go. We’re providing explainers on the options for both personal car loans and business car finance to simplify the process for you.

For a start, different loan types are available if you are buying a car purely for your personal use and if you are buying a car primarily for use in your business.

Personal Car Loans

The main types of personal car loans are:

  • Secured Car Loan: the lender uses the car as security against the loan, the interest rate is usually fixed, the loan term fixed and you have fixed monthly repayments. Additional payments allowed and minimal break fees apply if you pay out the loan early. Can be used for new and used cars but some lenders may have guidelines around how much they will lend depending on the value of the car. If comparing car loans, remember to look at both the interest rate being offered and the Comparison Interest Rate.
  • Unsecured Personal Loan: no security is offered against the loan so the interest rate is usually higher than a secured loan. Interest rate may be fixed or variable, additional payments allowed, set monthly payments.

If you do use your car in carrying out your job, you may be entitled to a car allowance or mileage from your employer.

Business Car Finance

To finance vehicles purchased for use in a business, there is a number of commercial finance facilities available:

  • Chattel Mortgage
  • Commercial Hire Purchase (CHP)
  • Novated Lease with Salary Sacrifice
  • Car Leasing

The differences between each type of finance are in their treatment of GST, tax deductibility of some elements of the loan, depreciation and suitability for either cash or accruals accounting methods.

The similarities are that each usually includes a fixed interest rate, fixed monthly payment, fixed loan term and the option for a balloon, residual or buyback.

Using a Car Loan Calculator

Many banks, lenders and finance brokers that offer car loans also offer a car loan calculator on their website. This may be a great resource to help you decide between different cars or to get your finances organised before applying for a loan. Make sure you read the disclaimers to ensure you know exactly what the estimate calculated represents and what it does not allow for. We know where you can access a car loan calculator and can provide you the link if you contact us.

Sourcing a Car Loan

To get a car loan you can contact a bank or finance company but the smart car buyer uses the services of a finance broker to source them the best car finance deal. Why? Because that is what they specialise in and they have access to more lenders than you will, they have the skill to negotiate the interest rate and terms down to the lowest level and they’ll save you time and hassles.

Most finance brokers are available to both individuals and business but ensure the one you select is experience in motor vehicle finance and is a licensed finance professional.

We know finance brokers that specialise in car finance. If you would like their contact details, please get in touch with us.