Before you hit the road, learn what you need to know about getting a car loan.

1. Budget, budget, budget

Before you start shopping for your dream car, take a good look at your finances. Determine how much you can comfortably afford to borrow and repay each month without straining your budget.

2. Interest rates

Interest rates can significantly affect your monthly repayments. It's crucial to research current rates and understand whether you prefer a fixed rate for stability or a variable rate that may change over time.

3. Loan term

Consider the length of your loan term. A shorter term means higher monthly payments but less interest in the long run, while a longer term results in lower monthly payments but potentially more interest paid over the life of the loan.
4. Loan type

There are various loan types to choose from, such as secured and unsecured loans. A secured loan typically offers lower interest rates, while an unsecured loan doesn't require collateral but may have higher interest rates.

5. Deposit

Many lenders in Australia require a deposit for vehicle loans, which can range from 20% to a lower percentage of the car's purchase price. A larger deposit can lead to better loan terms.

6. Credit score

Just like with any loan, your credit score plays a significant role in your car loan application. Lenders will assess your creditworthiness, so it's essential to maintain a good credit score.
7. Loan features

Different loans come with various features, such as balloon payments, extra payments, and fees. Understanding these features will help you make the right choice based on your financial goals.

8. Professional advice

If you're unsure about the best loan for your circumstances, consider seeking expert advice. Finance brokers can help you work through the car loan process for a successful application.