When you hear the words ‘car finance’, you might automatically think ‘car loan.’ However, a loan is an umbrella term for the many car finance deals you can get in Australia.
Below, you’ll find Westside Auto Wholesales breakdown of all the different types of loans and car finance deals at your fingertips. After reading this, you’ll have a better sense of which loan is best for you.
Need more help with financing your car? Look no further than Westside Auto Wholesale. Call one of our friendly sales representatives on (08) 6145 0099 to learn about excellent finance options!
Car Loans
Though car loans come in numerous formats, they all share these key loan terms:
- Duration: The length of your loan.
- Payments: Weekly or monthly payments on your loan.
- Interest rate: The fixed interest rate you’ll pay for the duration of your loan.
Furthermore, for any car loan, you’ll have more wiggle room to negotiate a solid financing plan if you have:
- Proven, reliable income.
- A good credit score.
- A good track record of paying off previous loans with monthly repayments.
Whatever your financial standing, don’t forget that lenders are in the business to lend! Regardless of your current credit rate or other assets, keep asking your chosen lender for the best car finance deals.
In addition, pay close attention to the comparison rate of each loan you assess. The comparison rate consists of the interest rate of a loan along with the fees and other costs an applicant must pay if they take out that particular loan. As a result, the comparison rate can help clarify which loan is the right fit for you from various lenders.
Now, let’s look at the most common types of loans available in Australia.
Secured Car Loan
A car loan typically comes as a ‘secured’ car loan. This ‘secured’ designation means you put up the vehicle you’re purchasing as collateral if you default on payment. Because of this collateral as a form of insurance, secured loans often boast lower interest rates than unsecured loans.
Chattel Mortgage
This type of car financing is essentially a loan that gives you full ownership of your car after you’ve paid the loan in full. As its name indicates, a chattel mortgage works similar to a home mortgage in which you make loan payments on your home until you’ve paid it in full.
Moreover, a chattel mortgage is often the most desired financing option for business owners. Unlike other loans, this option enables the car owner to claim numerous tax deductions for using the car for business purposes. For instance, real estate agents often decide to take out a chattel mortgage on their car since they rely on their car for their job.
Novated Car Lease
This type of financing entails a somewhat more complicated arrangement. In particular, a novated car lease introduces a third-party buyer of your car in the form of your employer. With this lease, you allow your employer to own your vehicle while you make pre-tax payments to them as part of your compensation package.
This arrangement also benefits your employer since they save money by replacing a portion of your salary with the lease. Another perk of this loan is that you don’t pay GST on the car since you’re not buying it, which amounts to roughly a 10% discount.
Dealer Loans & Financing
Car dealerships edge out most conventional lenders when it comes to competitive car loans. You should strongly consider a car dealership as your lender because:
- Car dealerships do the legwork for you. With traditional lenders, you often face a mountain of paperwork, such as applications and other minutiae. On the other hand, dealerships employ trained finance managers who apply for your loan on your behalf at no added commission or cost to you.
- Car dealerships work efficiently. Besides cutting through the red tape, a dealership allows you to complete all the necessary loan paperwork in abbreviated time. Often, it takes less than an hour for a dealership to apply for a loan on your behalf.
- Car dealerships are more collaborative. A dealership is in the business of selling cars, so they’re incentivized to match you with a viable finance offer so you can easily purchase a vehicle from them. For this reason, the dealership gets to know your finances, offers financial advice for how you can pay off a car loan and presents you with a range of affordable finance packages.
- Car dealerships offer more finance options. A car dealership can be far more flexible with monthly loan amounts and repayment plans. This flexibility holds true even for buyers who have fair to poor credit. Unlike other lenders, they can also be more flexible in payment methods, such as allowing customers to pay with credit cards versus from bank accounts.
- Car dealerships offer sales and other financing incentives. Car dealerships are retailers. As such, dealerships regularly offer sales, discounts and financing deals like any other retailer.
Westside Auto Wholesale: Your First Choice for Car Finance Deals
At Westside Auto Wholesale we are proud to offer a rich array of financing options for your chosen car. These options still apply to you even if your credit rate and finances aren’t in good standing. Call (08) 6145 0099 to speak to one of our finance specialists who can find the best deal for you!
