Car loan quick tips – the basics. What you need to know


When it comes to purchasing a car, and applying for a car loan there are a few basics you need to know:

  1. Your budget – how much can you afford to repay each week, fortnight or month. This will help in determine the structure of the loan including the loan term, the deposit amount and the value of the car you purchase.

  2. Get Quotes: to ensure you get the best loan for you it is important to have several quotes before you make a decision. The team at will do this on your behalf as part of our service but if you do not decide to use the services of a finance broker then approach several lenders. Product price and features vary significantly between lenders.

  3. Loan Purpose: Are you using it for private use or business use? This will affect the type of loan you apply for. If the car is for business purposes, then you will apply for a Chattel Mortgage or Lease. If the loan is for Private use you will apply for a Consumer Loan.

    If you are an employee looking to salary sacrifice a motor vehicle, then a Novated Lease arrangement may be suitable for you.

  4. Loan Terms: For Consumer and Commercial loans you can apply for loan terms up to 7 years. If you choose to have a Residual Value on your Commercial Loans, then the maximum loan term is 5 years.

  5. Residual/Balloon Values: are a final lump sum payment that are payable at the expiry of the loan term

    Your options with the Residual Value at the expiry of the term are:

    • Pay out the balance with your savings.

    • Trade the car in and use its value to repay the residual value. For example, your residual value is $ 10,000.00 and your trade-in is $11,000.00, the Dealer will repay the $ 10,000.00 on your behalf and there is a $ 1,000.00 remaining; which can be used as a deposit on the new purchase.

    • Refinance the Residual Value towards the expiry of the loan. It can be refinanced for a further period of up to 3 years.

  6. Trade-Ins: If you have, then this can be used to reduce the loan for the new purchase (as a deposit). If you have finance owing on the trade-in, you will require a Payout Letter from the Lender and then provide this to the Dealership.

  7. Secured or Unsecured: Lenders may offer both options and we have written about the benefits of both previously. If you choose to secure the loan with the car you are purchasing, then you are likely to get a better interest rate on your loan.

  8. Buying Privately or though a Dealer: We cover this in more detail here. Most lenders offer similar loan terms for private as they do for a Dealer purchase. Additional checks are required such as PPSR, and vehicle inspection reports.

  9. The Application Process: The consists of two phases – the application and settlement process. When applying for a loan, particular documents and information will need to be provided to your Broker or Lender. This information is used to support the application. When the loan is approved the settlement process begins, and you are one step closer to driving your new car.

  10. Comprehensive Insurance: if you have a secured loan this insurance is compulsory. Simply advise the Insurer of the Lender’s details, and a Certificate of Currency will be issued. This will need to be passed on to the Lender prior to settlement.

By understanding and addressing these basics with your Lender or Broker, the process of purchasing and financing your new vehicle will be a simpler one.

The team at are here to help guide you through this process.

The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs.

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