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How To Find The Best Car Loan In 2022

Feb 2, 2022 4:30:44 PM

Nobody purchases the first car they see without checking out other models, do they? Shopping around for car loans is just the same. There are infinite aspects to consider, from secured to unsecured, loan costs, and interest rates. Additionally, there is no one best car loan to reach for. Everyone's financial needs are different.

To find out what is best for you, you need to compare car loans and their different features. We'll show you the various car loans and how to determine what is suitable for you.

Why get a car loan?
What is the best car loan for you? 
Secure and unsecured car loan
Loan costs and fees
Competitive interest rates
Suitable for the car you want
Best car loan if you're self-employed
How to search for the best car loans in Australia 
Finance aggregator with multiple lenders
Bottom line 

Why Get a Car Loan?


Car loans are essential for most people. Paying for a new or used car upfront is a big commitment. Whereas paying for your vehicle in smaller increments over time can relieve a great financial burden. In addition, with the funds from your car loan provider, you're more likely to be able to secure a car you otherwise wouldn't be able to afford.

What Is the Best Car Loan for You?


So, how do you sift between all the options to find the best car loan? Well, determining how suitable each loan is for you is easy. Simply apply the following questions:

  • Will you be able to buy your desired car with it?
  • Can you afford the monthly repayments?
  • Does it have a competitive interest rate?
  • Can you afford any ongoing fees or additional loan costs?

If the answer to any of these is no, then it's not the right car loan for you. Let's dive a little deeper into what each of these questions entails so that you can approach your car loan options more confidently.

Secured and Unsecured Car Loan


Firstly, let's cover what your different car loan options are. Typically, you can apply for secured car loans or unsecured loans.

The former is when your car is held as security against your loan. This means that if you (the borrower) default on a monthly repayment for whatever reason, the lender has the legal right to possess your car. They sell it to cover their losses.

An unsecured car loan is when the lender has no legal right to your car. Therefore, the vehicle is 100% yours from the moment of purchase. Even if you cannot repay your loan, the lender cannot touch your car.

There are pros and cons to getting an unsecured or secured car loan. Which one suits you will likely depend on your financial situation. Plus, some cars aren't valid for a secured loan - e.g. some used vehicles are too old.



Now, one of the most critical considerations is whether you can actually afford your car loan repayments. While a short two-year loan might sound attractive, can you afford the higher monthly repayments?

It's worth spending some time budgeting how much you can reasonably afford to part with each month. This doesn't mean stretching your bank to the limit. Instead, what can you comfortably manage?

You may have to reconsider the types of cars you're looking at. What might fit better within your budget? Or, you could take out a longer loan to reduce your monthly repayment amount. Remember, if your financial situation changes in the future, you can always make extra repayments to end your loan early. However, check that this won't incur early repayment fees.

It's also worth thinking about repayment frequency. Most car loans have the option to be repaid monthly, weekly, or fortnightly. If you get paid weekly, repaying your loan the same way might help.

Loan Costs and Fees


All loans come with additional costs and expenses. There's no way around it. However, with careful research, you may be able to cut down on some ongoing fees.

To figure out additional fees, it's worth looking at the comparison rate. The interest rate will only tell you much you have to pay in interest. On the other hand, the comparison rate informs you of the car loans' additional expenses. These might include an application fee, any ongoing fees, monthly account fees, early repayment penalties, late payment fees, and more.

In addition to the loan, there are also the costs of running the car. Can you afford:

  • Stamp duty
  • Registration
  • Car insurance
  • Petrol costs
  • Regular services, maintenance, and repairs
  • Road tolls

Determine the true cost to figure out your best car loan options. Car financing is expensive; you don't want to find out that you have to pay any hidden costs too late.

Competitive Interest Rate


Interest rates vary depending on several factors. Each lender bases its rates on the RBA's cash rate. When the cash rate goes up, so will your interest rates. These are known as variable-rate car loans. Variable interest rates mean that your interest rate repayments will be lower in some months than others.

However, you can also get a fixed interest rate. Fixed-rate loans are when you repay the same amount of interest each month, regardless of the cash rate. Often these car loan rates are higher than variable rates. However, you benefit from standard payments, making it easier to manage your budget.

Interest rates vary between secured and unsecured loans. A secured car loan typically has the lowest car loan rates. In contrast, unsecured loans are considered higher risk for car loan lenders. Therefore, they might charge higher car loan rates.

Remember, however, that the interest rate isn't the be-all and end-all of car loans. When comparing car loans, consider the comparison rate alongside the interest rate to find the best car loan rates.

Suitable for the Car You Want

For both a new or used car, you need to be careful about which loan you choose. This is especially true of used cars. Not every lender is willing to finance all car models. Remember that a secured loan uses the car as security. Therefore, the lender often has specifications about which vehicle you can buy with your car finance.

Usually, the restrictions are to do with age. Generally speaking, any car that will be twelve years or more after the loan term is up isn't preferred. For example, if you have your eye on a six-year-old car with a loan term of five years, you should be eligible for loan funds. However, it's worth checking with your credit provider or loan broker.

Best Car Loan if You Are Self-Employed


Managing to get a car loan while self-employed may seem challenging. Yet, it's not impossible. The range of car loans might be slightly more limited, and you may not be eligible for flexible loan features. The first thing to consider is whether your new or used vehicle will be used for business purposes. If the answer is yes, what proportion (as a percentage)?

If the vehicle is predominantly going to be used for business purposes, your options typically are:

  • Chattel mortgage
  • Commercial hire purchase agreement

However, if your car is primarily for personal use, you will be eligible for a consumer loan. If you're unsure about your options, seek independent financial advice.

How to Search for the Best Car Loan in Australia


It may feel like finding the perfect car loan deal is impossible. Everywhere you look, there are more car loan options. 

However, you should also bear in mind that it is worth being flexible. While it's good to have a firm idea of what you want from your loan, accept that you might have to compromise. This is also true of the car you desire. If going for a different model means better car loan interest rates, then it might be worth the sacrifice.

Finance Aggregator With Multiple Lenders

If you're unsure about where to start looking for yourself or just want some assistance, then car loan brokers are willing to help. Brokers know the car loan industry inside and out.

Brokers with multiple car loan lenders on their panel will be able to advise you about your options. With many lenders on their panel, they can point you towards a suitable loan option without bias. They can help you by comparing car loans and help you make smart financial decisions.

Bottom Line


Remember that depending on your credit history, the car you want, and the needed loan amount, there are many different car loans that might suit you. Do you want a secured or unsecured loan? Variable or fixed interest rate? Our recommendation is that you speak with an asset finance broker with access to multiple lenders so you get the best car loan for your specific circumstances.  
If you would like to enquire about a car loan and gain access to 40+ different lenders, simply complete the form. Our team will contact you as soon as they can to discuss car loan options available for you.


Find the best car loan

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