if you’re new to the world of car loans, you may be surprised to find that there are a few different types of arrangements for car financing.
essentially, they all work the same way – you borrow an amount of money to purchase the car and then pay it back over time in instalments. but there are a few differences from one car loan to the next. we explain the different types of car loans and tell you who to talk to if you’re looking for a cracking car loan.
secured and unsecured car loans are two quite different types of car loans.
secured loans involve borrowing the amount of money for your car against another asset, minimising the risk to the lender if things go pear-shaped (which, we’re sure, they won’t). this asset is called a collateral and can include a house, a business, a car or any other valuable asset. most of the time, the collateral is the car with which you’re financing. secured loans may score you a better interest rate or better deal in general.
unsecured loans are, you guessed it, when you don’t opt for a collateral as security. these loans generally have a higher interest rate and aren’t as common as secured loans.
there’s also a big difference between fixed rate car loans and variable rate car loans. when you choose a fixed rate car loan, your interest rate will be locked in and stay the same throughout the remainder of your loan term. this has benefits in securing a great interest rate and having consistent repayments to meet.
variable rates may be more your thing if you live life on the edge. well, not really: all it means is that your interest rate could be subject to change – and that means it could either go up or it could go down. think about these different types of car loan and talk to an expert before you make a decision.
new car loans tend to come with a number of benefits. the first will often be a lower interest rate, followed by special rates on certain models. bonus cash is sometimes a neat little deal-sweetener to look out for too. throw in the warranty and discounted service costs which you hopefully scored from the dealership, and you’ve got yourself a great deal.
used car loans may not have the same number of incentives as new car loans, but there are some great deals available if you know where to look.
and where should you look to find the best car loans? fingo!
we are australia’s most helpful bunch of car loan experts (if you don’t believe us, check out our 5 star reviews). we’re here to get you the best possible car loan on your dream ride.
chat with our team to start your car loan journey today.