What is a Personal Car Loan?
Whether you need a second car for the kids to drive or the car of your dreams, there's a personal car loan that can help you get it.
What's a personal car loan?
When it comes to buying a car, most people don't have quite enough in the bank for the new model that they want to buy.
Even if you do, it might make more sense to pay for your car on a weekly payment rather than in a lump sum, so you don't clean out your savings.
It might make more sense to pay for your car on a weekly payment rather than as a lump sum purchase.
Most personal car loans are secured car loans, and this is the type of loan that you'll want if you're buying a car that's less than seven years old and you're using it mostly for personal transport.
What are the benefits?
Getting a personal car loan to buy your car generally allows you to afford a car that's a bit nicer than you'd otherwise be able to buy.
It means you can keep your savings where you need them, and still get the car you want or need to make a statement, or just to get from A to B. Approvals are generally fast, within 48 hours, so if you find a car that you really want, you can have finance in place before someone else drives it away.
A personal car loan has a fixed interest rate, so your regular car loan repayment will be constant for the life of the loan. Your car loan payments may also include some of your on-road costs, such as insurance.
The regular payment amount and agreed loan period can be arranged to perfectly fit into your current finances. You can also reduce your personal car finance repayments by putting a deposit towards your car purchase.
A personal car loan is usually secured against the car, so you will have a lower interest rate than you would if you buy a car using an unsecured personal loan.
What do you need to look out for?
Once you find the car that you really want, it can be tempting to get personal car finance with the first option you find, whether that's at the car dealer or from your regular bank.
If you're ready to buy a new car, it can pay to get your finance pre-approved before you start to look for the vehicle. This allows you to lock in the best finance deal before you get your heart set on a specific car. You're making a rational, emotionless choice to get the best value for money on your car loan.
Then when you find the car that you want to buy, you can focus on negotiating the sticker price.
Save thousands when you get the best car loan deal, plus the best sticker price on your next car.
Arranging finance and negotiating the purchase price of your car separately will maximise your savings as there's no confusion between your repayment amount and the total price of the car.
When you take out a secured personal car loan you need to keep in mind that if you fail to make the loan repayments, the lender could repossess the car and sell it to cover the outstanding amount of the loan. If the car is sold for less than the balance owing on the loan, you may need to pay the difference between the sale price and the loan balance.
How does it stack up next to a regular car loan?
The main advantage of a personal car loan is that you have complete independence to do exactly what you like with your car. If you change employers or careers, there are no changes you need to make to your personal car finance. Plus, you're free to sell the car anytime too.
A secured personal car loan isn't strictly limited to the purchase of a car. You can use a personal car loan to purchase a motorbike, caravan, motorhome, or even a boat.
Just like a chattel mortgage, with a secured personal car loan, you've got the option of making a lump sum final payment, known as a "balloon payment". This can help you to get a lower car loan interest rate.
Who does it suit?
A personal car loan suits anyone who wants to purchase a car while keeping their cash flow stable. From first car personal car loans to second or third car loans for growing families, taking out personal car finance can give you options that you may not otherwise have.
Whether it's an "I need to fit the kids and in-laws in" car or the "dream car I wanted since I was twelve" there's a car loan that will fit your purpose.
Anyone with a regular income, whether you're employed full-time, casually, or part-time, should be able to get the right car loan for you.
There are even car loan options available if you receive social security payments.
Would a personal car loan be right for you? Find out for yourself and calculate your potential car loan repayments.
Are you employed in a permanent role? You might consider a novated lease, which is a type of personal car finance that allows you to make your car payments from pre-tax salary and access additional tax benefits.
Or find out more about how a business car loan works to see if it would be a better fit for your needs right now.