A car loan is a personal loan which has been specifically designed for the purchase of new or used cars. When you take out a car loan you will have to agree to repay the loan in a certain amount of time – this is known as a term, and is decided on when you apply for the car loan.
Aside from buying property, a car is one of the biggest purchases you will likely ever make, so it’s important to understand your options when it comes to finance. If you don’t have enough spare cash to purchase a car, you can apply for a car loan.
As you are borrowing money when you take out a car loan, you will need to sign a credit contract. It is important you understand the credit contract, including details such as the amount borrowed, term, and any fees and charges associated with the loan.
As mentioned above, you will have to agree on a period of time to pay off your car loan – known as a term. Our very own car loan offers a maximum loan term of 7 years.
By taking out a fixed rate car loan you can be certain of what your repayments will be. This can help you budget accordingly and will save you from worrying about what changes in the interest rate will mean for your monthly spending.
When looking at car loans, be careful that the car loan you are signing up for is not advertising an ‘introductory rate’ as this could mean you’ll end up paying a high interest rate after a specified period of time.
Obtaining approval for your personal loan can be beneficial before you start to shop around for a new or used car. That way you will know how much you can afford to spend, and not feel pressured into taking out finance with a non-bank lender.
A car loan can be used to purchase new or second hand vehicles. The age of a second hand vehicle might determine the type of car loan you take out. For example, the Heritage Car Loan is great for new or second hand vehicles up to 5 years of age. However, if the vehicle you are looking at purchasing is over 5 years of age you will have to apply for another personal loan product, such as our Standard Personal Loan.
Shopping for a new car can be fun and exciting. However, it’s important to understand the ins and outs of borrowing money to finance a car. Use our car loan calculator to get a better idea of the overall cost of running a car, and check out our tips to help improve the likelihood of your loan application being approved.