New car buyers can source a personal car loan through the motor dealer, by applying direct to a bank or finance company, or using a motor vehicle finance broker. The way a loan is sourced may result in varying outcomes with loan conditions, terms and interest rates varying across the motor vehicle finance market. With most buyers seeking the cheapest and most workable finance, assessing the options for sourcing the loan may result in the best outcome.
One aspect that buyers will quickly realise when surveying the lender market is the differences in motor vehicle interest rates. While lenders will use the RBA cash rate as a base, each will set their rates on specific loans according to their own guidelines and forecasts.
The amount that a buyer can borrow to finance a new vehicle can also vary with the lender. Individuals will be assessed by lenders to determine their credit limit or borrowing capacity. In addition, some lenders will have maximum amounts they offer on personal loans. This may affect any deposit required or the price of the vehicle that can be purchased.
Approval criteria also vary with lenders. Meeting or not meeting lender criteria can flow through to the rate and overall finance offer. To assist buyers select the best way to source their finance, we provide this explainer on the different options.
Applying for a Personal Car Loan
New cars are usually financed with a Secured Car Loan. Secured format loans are available through all lenders, dealers and brokers, but may have varying features depending on the lender. What is common to all secured loans is that the vehicle is used as the collateral for the finance. Some buyers may be approved without any additional collateral required while some may be required to provide extra assets. This type of credit product may be used to finance all types of vehicles, subject to lender approval.
To be eligible for personal finance, applicants must meet the guidelines as set for Consumer Credit as regulated by ASIC. These include being over 18 years of age, having employment and income and providing a range of documentation on financials and other aspects with the application. Credit profiles are checked by lenders with applicants with good ratings receiving the best rates and loan conditions.
Personal Car Loan through the Motor Dealer
Many motor vehicle dealers offer their buyers the opportunity to sign up for finance while buying their vehicle – at the point of purchase. The finance may be arranged through a lender or credit provider as a partnership with that dealership or it may be finance through the vehicle manufacturer.
With this type of finance, buyers are provided with only the one lender option. Applicants are offered the interest rates and loan products only available through that lender. While securing finance this way may seem a fast and handy way to go about the process, buyers may be overlooking opportunities to achieve better rates from other lenders.
Securing a Personal Car Loan Directly from a Lender
Many buyers will source their own finance by applying directly to a bank or a finance company. With rates varying across the market, buyers may look to applying to several credit providers or requesting quotes from several to compare and find the best. A great idea to find the cheapest offer. Not a great idea when it comes to your credit rating.
What is a lesser-known issue is that applications for credit are reported to Credit Reporting Agencies and appear on individual credit reports. The same reports that lenders refer to when assessing credit ratings. Multiple applications can be seen as a negative and impact any loan offers.
Apply direct also only allows the option of offers from one or a few of the multiple lenders in this sector.
Using a Broker to Secure a Personal Car Loan
An option available to all vehicle buyers is to use a specialist motor vehicle finance broker to secure their loan. Both individuals and businesses can use a broker to handle their requirements from the initial enquiry through to settlement.
The benefits of using Jade include having your best rate and most suitable loan found for you from our large 80+ lender selection. We don’t just offer one lender such as a dealer or a bank may, we offer more choices and with that, more opportunities to secure the loan that best suits you and at the best interest rates. And, when a broker covers the market for you, it does not impact your credit profile in the way applying to multiple lenders directly does.
When using Jade, you will be assigned a broker to handle your loan individually and personally. Assisting you with the application, finding your best offer, processing your application and carrying out all contact with the lenders. You have an expert working in your best interests. Providing fast, efficient service to get you behind the wheel of your new vehicle with the best finance, quickly and easily.
To compare what we may achieve for you, refer to our current interest rates on personal car loans and calculate estimated repayments using our Finance Calculator.
For the best way to secure a personal car loan, simply connect with Jade Finance online or by phone.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
