Home > How to find the lowest car loan rates
It’s important to find a car loan that suits your budget and needs. If you only settle for the best car, then you won’t want to settle for anything less than the best car loan. We can help you learn ways to improve your chances of getting the lowest car loan rates and what you should be looking out for. We can help you understand what methods you can take to have access to the lowest car loan rates. Let’s get started!
Car loan rates are interest rates you pay on top of your car loan. Interest rates are expressed as a percentage of your loan amount. Think of them as a fee for borrowing the money.
There are two types of interest rates. These are fixed and variable interest rates. A fixed rate won’t change for the entirety of your loan term. This means you can calculate what you expect to pay overall before you sign your contract and commit to your loan. A variable interest rate, on the other hand, fluctuates depending on market rates.
Dealer finance may seem more convenient when compared to other options. You may be considering dealer finance for the purposes of purchasing your car and arranging your finances all from the one place. However, the convenience doesn’t necessarily make it the best option for you.
There are many disadvantages with financing through a dealership. Car dealerships specialise in selling cars, not providing loans. You might not have access to loan features you would usually expect for other lenders. This includes things like flexible repayments terms, the ability to change your repayments and online customer support.
The majority of car dealers aren’t very flexible in many aspects. For instance, if you finance through a car dealer and decide on paying off your loan early, you will most likely end up paying a large amount in early payment fees. Due to those reasons, if you’re after the lowest car loan rates, dealerships may not be your best bet.
Have you ever noticed car dealers advertising no interest or 1% interest loans? Although these offers might sound tempting, it pays to read the fine print. These loans often have hidden costs that can trap you into paying high fees. Sure, you won’t be paying any interest, but you could actually end up paying more than a regular car loan.
Are you currently paying off a loan but think you can find a better deal? It’s highly likely the loan you currently have doesn’t have the lowest car loan rates. You can refinance your loan with another lender to pay off your current loan and focus on repaying the loan on better terms. This way you can save in interest and fees.
Maybe your lender does offer some of the lowest car loan rates but you’re not happy with the other terms. In this case, you can still consider refinancing your loan. Although you might incur a small early exit fee (depending on your lender), it’ll be worth being with a lender you’re happy with.
Your credit score and history do play a role in what loans you’d be eligible for. That also includes loan amounts and loan terms. In order to find the lowest car loan rates, check your credit score to determine whether it’s high enough for taking out a loan.
Any association with credit in the past 7 years will be included in your credit report . This includes any loan defaults you’ve incurred, loan rejections, and bankruptcies. If any of these are listed on your credit history, it may affect your chances of taking out a loan and therefore could restrict the type and loan amount you’d be eligible for.
Lenders use your credit score as an indicator of your credit worthiness. Essentially, the best method of achieving the lowest car loan rates is by staying on top of your finances and improving your credit score.
By being responsible with your finances, you’re essentially demonstrating you’ve got good financial stability. Think of how you can prove that any past financial complications are nothing but a reflection of your past and not your current stability.
Learn more about bad credit car loans!
Get the lowest car loan rates by illustrating your financial stability through:
By following these tips in maintaining your financial stability, you’ll be able to improve your credit rating. As a result, you could access some of the lowest car loan rates.
There are many aspects to consider when calculating the total cost of your car loan. Apart from your interest rate, here are some other things to consider when determining the total cost of your loan.
Essentially you want to be considering how costs will affect you in the long run. What costs will you expect with loans? Will they help you save money in the long term? By finding the lowest car loan rates, it’s also important to look out for all additional fees and try and compare different offers until you find one that suits your budget and needs.
The charges you’d have to pay with low interest car loans will vary from lender to lender. Below we’ve listed some fees that you can expect to be charged car loan lenders.
Please note – lenders may or may not charge all these fees on their car loans.
Depending on your preferences and financial position, you may want to consider taking out a novated lease. With a novated lease, you may be able to secure lower interest rates.
A novated lease is a type of finance option that enters you into a three-way agreement with your lender and your employer. Essentially, your employer takes the car loan debt on your behalf and you’d pay them back through your salary. This is otherwise known as pre-tax salary or ‘salary sacrificing’.
Novated leases may be more beneficial for you in terms of the interest rates that are included. That’s because your employer is perceived as more financially secure than you and they may therefore be offered lower rates. This is an option to consider if you plan on finding the lowest car loan rates. Keep in mind, however, that with a novated lease, your car might be entirely used for business purposes.
Lenders will not treat all types of cars the same way. Keep in mind that the majority of car loans are secured, meaning the car you’re financing is considered a collateral asset. In order to cover for the losses if you’re unable to repay the loan, your lender may repossess your vehicle. Not all types of cars will be sufficient as they need to be of a certain value. Therefore, when it comes to finding low rate car loans, it’s best to finance a new or relatively new car.
What we mean by ‘new car’ is the car that’s less than 2 years old. You may also find some loans that are more focussed on used vehicles, however, even then there are some requirements the car will have to meet. For instance, with used car loans, the vehicle will have to be ten years old or newer.
If you’re on the hunt for the lowest car loan rates, Jacaranda could be the lender for you. We offer affordable car loans from $5,000 to $35,000 with a repayment period ranging from 2 to 5 years. Learn more about our secured loans here!
Our application could take you as little as 5 minutes. Best of all, you won’t be charged a processing fee for applying! So if you’re concerned about getting rejected, know that you’ll be treated fairly at Jacaranda Finance!
For more general information on car loans, visit the Moneysmart website.
Jacaranda is 100% online. So, we do not accept applications over-the-phone. However, our friendly team is more than happy to answer any questions you may have.