Looking to buy a car but need a little financial help to make it happen? Well, you're not alone. Over one million cars were purchased in Australia last year, with around 40-45% being afforded via some kind of finance. Added to which, an estimated 23.6% of Australians have some kind of car loan, which translates to about 2.5 million people.
But, with so many ways to borrow, the choices can quickly become overwhelming. Worry not! We intend to break it down for you in simple, no-nonsense terms. From traditional car loans to novated leases, we’ve got you covered.
• Secured car loan
This is the 'classic' car loan option, where your car acts as collateral for the loan. Basically, if you don’t make payments, the bank could take your car away (yikes!). But don’t stress; that only happens if you totally miss the boat on repayments.
Pros: You’ll usually get a lower interest rate because the loan is backed by your car.
Cons: If you don’t pay up, they come for the car.
• Unsecured car loan
No car? No problem. An unsecured loan doesn’t need your car as collateral, which gives you a little more freedom. But with freedom comes higher interest rates, as the lender is taking a greater risk.
Pros: You don't need to use your car as collateral.
Cons: Expect higher interest rates and more paperwork to prove you’re good for the loan.
• Novated lease
Here’s where things get a little fancy. A novated lease is when your employer leases the car on your behalf. Instead of paying with your after-tax salary, they deduct the payments from your pre-tax salary – meaning less tax and more car for your dollar! Plus, the lease will usually include an amount of the running costs (fuel, insurance, servicing, etc).
Pros: You get tax benefits, and all the running costs are wrapped into one tidy payment. Plus, some employers offer fleet discounts for cars and maintenance.
Cons: Not every employer offers this option, and you'll need to stick with your job to keep the lease – if you change jobs, the lease can become a bit complicated.
• Chattel mortgage
If you're a business owner, this one's for you. A chattel mortgage lets your business own the car, but the car still acts as security for the loan. Great for getting some tax benefits, and it offers flexible repayment options.
Pros: If your business uses the car, you might be able to get some sweet tax deductions.
Cons: Not available for personal use, only for business owners.
So, which car loan is right for you?
Honestly, it all depends on your personal situation. Are you looking for lower rates? Or are you after some tax perks? Maybe you just want flexibility. Whatever you decide, it’s always worth talking to a finance professional, comparing different loans – interest rates, fees, terms – before you commit.
Ready to drive away in your next car?
At easyauto123, we’re here to make the car-buying process as easy as possible. Not only do we offer a great range of quality second-hand vehicles, but we also have a range of flexible financing options to suit your needs. Whether you're after a secured car loan, or you want to dive into the world of novated leases, we’ve got a solution for you.
Browse our range of cars today and chat with our friendly team to see how we can help you drive away in style!