Loans aren’t one-size-fits-all, so the best way to find an apprentice loan that suits your needs is by identifying what you require, and then comparing different options to see how they stack up. You can start by using an online car loan calculator to estimate the monthly repayments you’ll be able to afford, and from there you’ll be able to determine how much you’d be looking to borrow.
You’ll also want to look into which lenders offer financing arrangements for apprentices, otherwise you may find that the loans you’re looking at when shopping around won’t actually be suitable for you. Engaging the services of a broker can help here, as they’ll be familiar with the market and can recommend the best apprentice loan providers for your situation.
Additionally, Interest rates can make a big difference to the financial impact of taking out a loan, and naturally, a higher interest rate will see you paying more over time for the same amount. For instance, if you decide to borrow $15,000 for a car during your apprenticeship, and choose a loan with a 5.5% interest rate over a five year term, you’ll end up paying a total of $2,191 in interest over the life of the loan. Hike that figure up to 7.5%, and you’re now paying $3,034 in interest – meaning that the $15,000 car you purchased is actually costing you over $18,000. And that’s not even including fees, which many lenders will pepper throughout the loan duration as a way of being able to offer lower interest rates while still making money.
For this reason, it’s important to look at comparison rates when choosing the best loan option for you. The comparison rate is essentially the loan’s interest rate, but with all fees taken into account as well. Let’s go back to the example of a 5.5% interest rate on a 5 year loan for a $15,000 car. If the lender charges an average of $20 per month in fees, such as establishment, repayment and administration charges, this will give the loan a comparison rate of 8.4%.