a five minute guide to car loans
13 September 2010
The world of car loans can be a little tricky to navigate, especially if you're not too sure about the terminology. Our quick five minute primer will give you all the information you need to explore the world of car loans.
Applying for a car loan
Unless you have a ready supply of cash, you'll probably need to apply for some form of financing to buy your new car. A Bankwest Car Loan is a quick, convenient and hassle free way to get the car you need, now. The application process is straightforward. You can apply online, over the phone or in store.
Interest rates, comparison rates and fixed rates
If you're thinking about applying for a new or used car loan, interest rates will definitely catch your eye. These numbers dictate the amount of interest you'll pay on the money you're borrowing. Keep your eyes peeled for a low rate car loan. You'll pay less interest over the term of your loan, which will save you money.
Comparison rates are handy because they show consumers the true cost of a loan. They take into account standard fees and other charges relating to a loan and are converted into a percentage. You'll always see two rates listed in the details of a loan - the interest rate, and the comparison rate. Using the comparison rate, and taking note of the loan's features, are the best ways to decide if a loan is right for you.
The majority of car loans on the market are fixed rate loans. This means that the interest rate attached to your loan is fixed for its duration. Fixed rate loans are handy for budgeting because you always know how much your monthly repayments are.
Secured vs Unsecured
A secured car loan is your best option if you're buying a car. The car is viewed by the bank as collateral until the loan is paid off in full. If you don't make your repayments though, the bank takes your car to recoup their costs. Secured loans are cheaper than personal loans because they have a lower fixed rate of interest and lower monthly repayments.
Banks view unsecured personal loans as a little riskier. While you can use an unsecured personal loan to buy a car, the interest rate will be slightly higher. Also, for either secured car loan or unsecured personal loan you'll need to provide documentation to prove that you are financially able to repay the loan.
Fees and charges
Hidden fees and charges can really throw a spanner in the works. Make sure you know all about the fees and charges your new car loan will attract before you sign on the dotted line.
Get the lowdown on repayments
Repayments are a big deciding factor when you're looking for a car loan. You need to make sure you can commit to repaying the loan long term without causing yourself undue financial pressure. And remember, if you can afford to make extra repayments, you can get your loan paid off sooner. Keep this in mind when you're budgeting.
Do your research
A lot of the information you need to make a decision is available online, check out comparison rates and even read up about applicable fees and charges. Arm yourself with as much information as possible to make an informed and educated decision. Car loans, just like any other banking product, require some forethought and understanding before you start the application process. Make sure you do your best to learn everything you can and really commit to understanding your obligations. Once you've got this part out of the way, the search for your dream car can really start.
Important things you should know:
For the Bankwest Car Loan, lending criteria, fees and charges apply. Terms and conditions apply and are available on request.