Car Finance Victoria

Your interest rate

It represents one of the most critical factors in weighing up any loan. It’s got a lot to do with the overall cost of your car finance, but it’s not the be-all and end-all of comparing car loans.

Watch out for lenders who advertise a low interest rate but weigh in with hefty establishment fees or even use a significant residual amount to reduce your regular repayments.

Be wary of too-good-to-be-true offers, and remember that a zero per cent interest rate is often not what it seems.

Car loan fees

It can add up significantly during the course of a five to seven-year car loan agreement. There are two primary types: establishment fees and regular account fees. The former is a one-off fee for setting up your loan account, typically spread throughout your repayments. Setup fees can range from $100 up to $700.

The latter is a monthly or annual charge related to running your loan account, and lenders may charge anything from $10 per month to $40 or more.

Both fees can vary significantly between lenders and products, so it’s worth comparing your options closely.

Loan features

When you’re comparing different car finance solutions, it’s important to consider features, because they can vary. Some lenders may require you to use a deposit while others might not.

Likewise, you may be offered a bigger balloon payment option by some providers. Before you commit to a car loan, it’s also important to compare terms – some lenders might limit your repayments to five years, while others offer seven – and repayment flexibility is important too.

Will your lender allow you to choose a schedule that matches your weekly or fortnightly pay, for instance?

Different lenders also offer innovative features where you can make extra repayments throughout your loans term, without fees, and then access the resulting equity when you need it. Car loan redraw facilities provide a convenient option for many borrowers – and if they don’t use the funds, they end up paying their car finance off more quickly.

Comparison rates

It allow borrowers to get a better idea of the actual cost of a loan. They work by adding any associated account and setup fees to the loan’s interest rate. In this way, you can see a more accurate cost of your loan as a whole.

Remember, though, that paying down your car loan early can attract break fees if you’re operating on a fixed-rate loan, and making extra repayments could also see you pay more.

Variables like that are impossible to include in a comparison rate, so it’s worth considering this before hand.