Purchasing a car is a tough process with an absolutely nice outcome! It is tough because you need to consider different financial aspects of it and the bad news is if you don’t pay close attention or just rush into the purchase phase of the process – the most exciting part of the whole process – you might dig a hole for yourself as a result of the situation you created!
So, it’s worth researching possible options you can have and then decide based on your own personal financial interest. One of the best ways to buy a car is to get a loan. Who doesn’t like to pay in instalments? You use the vehicle and you pay its price over the course of the time. Sweet? Nah. it’s not that perfect. You have to know the different types of car loans, their requirements, their hidden fees, their terms and conditions before choosing a loan and loan provider. Boring? Sorry but be assured that in this article we’re going to present to you all the IMPORTANT aspects of securing a car loan in Australia and we promise that we do not beat around the bush.
Am I eligible to get a car loan?
Before going through all the financial terms for different loans, you need to make sure that you actually can get one. The requirements to get a car loan is divided into two categories. One category includes general requirements and the other involves a set of specific requirements demanded by the loan provider. So for the former you MUST:
- Be at least 18 years of age.
- Be either an Australian citizen or permanent resident.
- Be able to prove your income so you can afford the repayments.
And for the latter based on different policies loan provider have you might be asked to do some or even all the following:
- Take out a secured loan.
- Have a good credit score.
- Provide a guarantor.
- Take out comprehensive car insurance
- Meet the criteria for vehicle’s condition
What are the different types of car loans?
1. Secured Car Loan
In this loan the provider basically uses the car you are purchasing as collateral for the loan. As the lender has a form of security, the interest rates are usually lower compared to unsecured loans. However, if you fail to make repayments, the lender can repossess the car.
2. Unsecured Car Loan
In this type the car is not use the car as collateral. Therefore, there is a higher risk for the lender and subsequently the interest rates are generally higher. There is an advantage to get this loan though as loan providers offer more flexibility in terms of how you use the funds if you go after this loan type.
3. Novated Lease
Or as some might call it ‘Salary sacrificing’, is a loan contract between you, the finance company, and your employer. The employer makes lease payments on behalf of the employee, and this amount is deducted from the employee’s pre-tax salary.
4. Personal Loan for Car Purchase
Sort of an unsecured personal loan that you use to buy a car.
Remember that most car loans are secured. Your car will typically be the for the loan. If you don’t pay the loan back on time, the lender can repossess your car and sell it.
With an unsecured loan, you don’t have to provide your car as security. But the interest rate will be higher and you won’t be able to borrow as much. Unsecured loans are mainly for used cars.
How to Choose the best car loan?
To get the best loan according to your financial status you need to check different components of the loan. Interest Rate, Loan Period (1 to 7 years), loan conditions, application fee, loan charges and costs are all the variables you should consider before choosing a loan and a lender.
There are websites that might help you compare lenders but when using them you should be aware that their business is around giving that comparison. So they might have sponsored links for some lenders or have affiliate programs with them. So the comparison they provide is – probably – biassed. What should be done is to compare each lender based on the criteria mentioned above and also read some reviews and matching the terms and conditions with our own personal financial status as well as the car we are looking for.
One Possible solution for you is to consult with our experts at JunkCar Removal in order to weigh up all the options you have and choose the best one tailored to your own best interest.
Documents needed to get a car loan
Start getting your documents in order today for a more efficient workflow. Streamlining your paperwork will help save time and energy in the long run.
You can almost feel the excitement as you imagine driving your dream car. Before you get to cruise on your new car, make sure to take care of all the paperwork. Here’s a helpful checklist to ensure that everything is set & ready:
- Obtaining 100 points ID: This can be achieved with a combination of documents such as your driver’s license (60 pts), passport (50 pts), birth certificate (50 pts), medicard (40 pts) or other government-issued IDs. This will help you in completing the required identification points.
- A minimum of two years of residential history is needed. If you are currently residing in the country on a work visa, then our financial advisors can help you figure out the best course of action to take.
- Proof of income or your last 2 payslips. If self-employed, your last 2 tax returns will do. In order to validate your income, you must present proof of salary or two of your latest payslips. For those who are self-employed, the most up-to-date two tax returns should be sufficient.
- When assessing your financial situation, you need to understand what assets and liabilities you have. Details such as the value of your home, other vehicles owned, cash savings, investments (e.g. stocks), and any other debts should be taken into account.
- When taking out a loan, it is important to make sure that your car has a valid insurance policy for at least 12 months. A certificate of insurance must be obtained before the loan can be settled.
- This tax invoice will include information regarding your car’s chassis or VIN, new registration and the settled purchase cost.
Remember that this is just a guideline – actual requirements may vary greatly depending on the car loan applicant’s individual circumstances. If you need more info in this regard, check out this like here (car loan eligibility)
How to apply for a car loan?
Nowadays, getting a car loan is a simple and straightforward process. Thanks to online lenders that can expedite the application process if you have all the required documents at hand. Generally, applying for a car loan involves:
- Completing an application form or inputting details online has become much easier with modern technology. The streamlined process saves time and energy, allowing you to get your job done quickly and efficiently.
- A credit officer will carefully review your application to assess its validity.
After your loan is approved, the funds will be disbursed either in the form of a cheque or directly to whomever you are buying the car from. - The lender may ask for some of your documents before proceeding further.
- After your loan is finalised, you will need to sign it in order to officially accept the terms and conditions of the loan.
- Your loan will then be funded, either directly to the person or dealer you’re buying the car from or in the form of a cheque.
Conclusion
The excitement of owning a new car is a driving force but we need to be aware of the consequences of choosing a plan of how to acquire the car we want. With financial decisions being tricky, we at Junk Car Removals offer you the best possible car purchase in regions such as Brisbane, Gold Coast, Caboolture, Ipswich and Logan. You can be assured that if you want to sell your used car or even go after a used car, there is no place like Junk Car Removals to help you sell your used vehicle or purchase a used vehicle.
