Buying a New Car? - The Most Affordable Option for You

10 November 2016

A vast number of us can’t simply buy a new car because we don’t have the money available. Therefore many of us may resort to buying second hand or taking out a loan to buy a car with. If you need a newer vehicle and taking out a car loan is an option you are considering, there are different means some of which are more expensive whilst others save money.

We are going to look at the different ways a car loan can work for you, what types of finance are available and what the best things to look out for are to ensure you make the best decision financially. Finally, I look online for the most affordable companies at different borrowing amounts.


the basics of a car loan in AustraliaThe Basics of a Car Loan

Most car loans are secured in today’s market which basically means the lender has the right to repossess the vehicle if you default on your loan payments. Although this can be a tough price to pay, it does allow the providers to offer lower interest rates. A new car loan also doesn’t mean you are isolated to buying only from a dealership, most lenders will also accept a vehicle up to two years old from a dealer or private sale.


Car Loan Types

Bad Credit: If your credit rating isn’t good enough to qualify for any of the options below, but you still need a new car then you can always consider a bad credit secured car loan. Repayment rates will be higher but it’s still an option.

Unsecured loan: The bank or loan company doesn’t hold the vehicle or any of the borrowers assets as security. In the event of a default on payments, the lender has little power to do anything besides send reminders and then debt collectors if ignored. If all fails, the lender will try to take the borrower to court.

Secured loan: The bank can use the car as security if the borrower defaults on repayments. The interest rate is usually lower than that of an unsecured loan and is less risk for the lender.

Variable Rate: Basically the interest rate will fluctuate according to the rates determined by the Reserve Bank of Australia. It may be a cheaper option now but that could change at any time.

Fixed Rate: The rates might be higher than the Variable option above, but you have the certainty that the repayment values wont fluctuate over time. If rates go up in the future, then this option could well be a cheaper alternative over the next few years.

The cost of taking out a new car loan


The Best Things to Look Out for

When choosing a car loan you should always look at the fine print and ensure you check a few key areas before making a decision. The following are the most important:

  • Interest rates – see how competitive one loan is versus another.
  • Additional fees – early termination fees.
  • Extra repayments – some companies will charge you for repaying your loan back sooner.
  • Eligibility – does the car meet criteria? Min and max loan amounts?

There are a huge variety of car loan options out there, but ultimately it helps people afford a new car and which are also generally easier to get finance for. The negatives are that the price of the vehicle is higher than the resale value of the car due to interest payable and its decreasing market value.


Most Cost Effective Options Found via Online Search

The table below shows the best car loans available online as of November 2016 in Australia for loan terms of two years, but with varying loan amounts.

Company Name

Loan Amount ($)

Loan Term

Interest Rate

Monthly Repayments



2 years

4.99% (fixed)




2 years

4.99% (fixed)




2 years

4.99% (fixed)


Beyond Bank


2 years

5.69% (fixed)



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