How Do Car Loans Work?
By Ennis Cehic
There's nothing quite like owning your own car. It represents so much more than getting from A to B. It's the symbol of freedom that lets you feel truly independent.
But through all the excitement of picking the car you want, taking it for a test drive, and agreeing on a price, it can be easy to leave one aspect of the process to the last minute; finance.
What you can afford to pay ultimately determines the type of car you'll actually buy. If you don't have the funds up front, getting a car loan could be a good option.
The big question people usually ask themselves is 'do I find the car I want first, then look for a car loan, or is it the other way around?'
This depends on your circumstance. If you already know what you're after, and know you can afford it, you can choose your preferred car. The important thing to note about a car loan is that it can be used to buy a brand-new car, or a second-hand car from a dealer, or via a private seller.
If you're unsure how much you can borrow, it's best to determine what your borrowing power is before you get excited (and test drive that sweet Ferrari).
To help you through the process, here are a few things to consider.
Set your budget
Your new car will play an important role in your life, but don't forget that car ownership also comes with responsibilities, such as ongoing costs and loan repayments.
If you've decided on a car loan, you'll need to have an idea of how much you can afford to borrow and repay.
Use our Budget Planner to see how much you can afford, and our Car Loan Calculator to see how much the ongoing repayments would be. You can choose from weekly, fortnightly or monthly repayments depending on your lifestyle and pay cycles.
Choose your loan
If you're buying a car from a dealership, you may be offered finance directly with the dealer, but be careful as there might be extra fees or commissions. If you're getting a loan with Latitude, here are a couple of features you'll need to be familiar with:
- Secured car loan: Typically has a lower interest rate because the car you're buying is used as security. Latitude can easily check if the car's condition and age is suitable to be used as security before you pay your deposit.
- Fixed interest rates: With a fixed rate loan, you'll always know where you stand. We offer competitive fixed interest rates that'll last for the life of the loan, so you don't have to worry about fluctuating interest charges.
Secured car loan: Typically has a lower interest rate because the car you're buying is used as security. Latitude can easily check if the car's condition and age is suitable to be used as security before you pay your deposit. Fixed interest rates: With a fixed rate loan, you'll always know where you stand. We offer competitive fixed interest rates that'll last for the life of the loan, so you don't have to worry about fluctuating interest charges.
You can easily apply for a loan online or via phone. At Latitude, we'll contact you within one business day to let you know how your application is tracking. If approved, and once your contract is finalised, you'll be on your way.
The best part of buying a new car is test driving the ones that catch your eye. Don't show all your cards though, keep a seller on their toes. Remember, you can try to negotiate with dealerships to get the best price. It also pays to do your homework and compare cars at both physical dealerships and online.
Once you've found your dream car, click the button below or call to speak to one of our loan specialists about financing your new set of wheels.