At yesapproved.com.au our team are always at hand to help you with your car loan enquiries. So we have taken some of the most common questions asked by our customers, and detailed them below. We hope that these help you through the process of your car buying journey.
Should i apply for pre-approval before i purchase?
Absolutely. Pre-approvals are a great way to provide you with the peace of mind that your finance application will be approved. When we submit an application for pre-approval, the Lender performs most of the necessary checks on you. This includes credit checks, employment checks and their responsible lending assessments.
It provides you with the comfort of knowing your repayments before you buy; so you can be sure you can afford to buy a new car.
Although there is no guarantee the loan will be approved (as they need to ensure the vehicle meets their risk assessment) you are well on your way to driving your new car.
It’s also worth noting that if any of your personal circumstances change, you must notify your yesapproved.com.au team member. For example, lets say you lose your job in between your pre-approval being issued and the purchase your car; then we must notify the lender.
Consumer Loans versus Commercial Loans
Consumer Loans are availabe to borrowers who are purchasing a vehicle “predominantly” for private use i.e. more than 50%. These loans are regulated by the NCCP Act (2009) which we touched on in our recent blog, Brokers or Dealer Finance.
Consumer loans generally attract a slightly higher interest rate than a commercial contract, however they do tend to have more favourable terms – such as lower exit costs, lower monthly fees and the ability to repay early.
Commercial Loans are unregulated loans, for borrowers using the vehicle predominantly for Business use. Chattel Mortgages, Lease and Novated Leases are the most common form of commercial loan contracts. These contracts are suitable for Business borrowers and/or ABN Holders. Unlike a Consumer Loan they can be expensive to repay before the expiry of the loan term, so it is important to align the loan term with the length of time you expect to keep the vehicle.
What are the minimum and maximum loan terms?
Loan terms range from 1-to-7years on both Consumer and Commercial loans. If you require a Residual Value then the maximum loan term is 5 years.
Should a finance condition clause be included on the Purchase contract?
When you purchase a vehicle that you are looking to finance, you should always include a finance condition. “Subject to Finance through Purchasers Lender of Choice” is a suggested choice for some of our customers, but it could be simply “Subject to finance”. If you do not include a finance condition clause, then you could be legally obliged to buy the vehicle if your finance is not approved.
How can i get the lowest interest rate?
Lenders price their interest rates to your risk profile. So it is important to understand what reduces the risk for a Lender when it comes to a car loan, as this will reduce the interest rate. Here are just a few factors that affect the interest rate on your loan;
Age of Vehicle: Newer cars are considered less risk for Lenders and therefore they attract the lower interest rates.
Equity/Deposit: The higher the deposit on the purchase, the lower the interest rate may be. Lenders utilise Loan-To-Value (LVR) bands when pricing car loans, therefore the lower the LVR (i.e. the higher the deposit) the lower the rate is likely to be.
Credit Score: Your credit file is accessed every time you make an application through a Lender. So it is a bad idea to randomly apply to Lenders without understanding your profile against the lender credit policy. The team at yesapproved.com.au will pre-assess your position, and provide initial quotes without lodging an enquiry on your credit file. Lenders provide us with access to “soft touch” credit checks, which allows access without an enquiry being registered. The higher your credit score, the lower the interest rate is likely to be.
Residential Status: Property Owners or those buying their homes are considered to be more stable in their residence than Renters and/or Boarders. Consequently, they tend to get the better interest rates on car loans, than non-property owners.
Secured or Unsecured Loan: A secured loan involves using the car as security for the loan, and unsecured does not. However given the car has value, it is equivalent to equity in to the loan. This reduces the risk to the Lender and therefore is likely to reduce the interest rate if you do use it as collateral. security. Secured loans are therefore conducive to lower interest rates.
Are Loan Protection Insurance (LPI) or Vehicle Equity Insurance (VEI) compulsory?
Loan Protection Insurance and Vehicle Equity Insurance can be included in your Loan repayments should you decide it is suitable for you. However they are not compulsory. They are optional insurance policy/s for your loan in the event of unforeseen events during the loan term.
How can we make our repayments?
Most Lenders will direct debit repayments from your bank account on a weekly, fortnightly or monthly basis. Each Lender has their own alternative options to make payments should you not want to set up a direct debit. B-Pay, EFT and Australia Post payment options are also available through some Lenders.
Are Low Doc Loans available?
Yes, Low Doc loans are available through many of our Lenders. They are only available to our business customers who hold an ABN. Low Doc loans are available on Chattel Mortgage and Lease Contracts only.
Low Doc loans allow you to apply to a Lender without significant amounts of financial documents for your business (if any at all), hence the name Low Documentation.
They are limited though to home owners or renters with deposit, ABN holders and established business owners.
Do you have access to many Lenders?
We have access to over 20 Lenders on our Panel. these incldue Lenders such as Macquarie, Liberty Financial, ANZ Bank, Capital Finance, Latitude Financial, RACV and Now Finance. Plus many more.
Can i buy privately or through a dealer?
Both are acceptable suppliers. If you buy through a Dealer or Privately, generally the loan terms are not affected. The applicaiton fee is higher on a Private Sale purchase as a Verimoto inspection is required by the Lender to ensure all approprtiate checks on the vehicle are performed.
For more detail on the pros and cons review our Dealer or Private purchase? blog
If i have had previous credit problems, can I still get a car loan?
The short answer to this is, yes. If you have credit defaults on your Credit Report or previously been Bankrupt then it is possible to get a loan. However it will depend on many factors including (but not limited to) the circumstances behind the default/writs/bankruptcy, the recency of the issue/s, the amount and whether it is still outstanding. Other factors will also impact the outcome, such as your current profile – are you a property owner or renter – do you have a deposit – have you got stability in employment and residence?? A yesapproved.com.au team member will be able to help guide you through this process.
Is Comprehensive Insurance compulsory?
Yes, if your vehicle is secured against the loan it is a requirement of the Lender that the car (their security) be insured. You must also note the Lender as the Interested Party on the Insurance Policy.
We hope you have found this information useful, however should you have further questions contact the team at firstname.lastname@example.org.
We also have our FAQ page which may help you with some of your enquiries.
The team at yesapproved.com.au are always on standby to help you with your enquiries, if you would like to enquire about a new loan hit the button below.
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.