Find the cheapest car loans on the market
The cheapest car loan is not necessarily the one with the lowest interest rate. It’s also important to consider upfront and ongoing fees, as well as loan features that can increase the overall value you get.
Compare car loans
Compare a range of auto loans using Canstar’s comparison charts. You can filter results based on your preferred loan amount, loan term, and whether you want to buy a new or used car. You can filter the results by products with the lowest comparison rate. The comparison rate takes into account the interest rate of the loan, as well as most initial and ongoing fees. It is designed to give borrowers a better idea of the overall cost of a loan per year.
How to find a cheap car loan?
One of the best ways to find a cheap auto loan is to shop around and compare your options. In addition to looking for a low interest rate and comparison rate, it’s important to consider the specific fees charged and the features available.
Lenders may charge a range of fees on auto loans, which add to the overall cost of the loan. Some common charges include setup fees, monthly service charges, missed payment charges, additional redemption charges, and prepayment charges. Although the comparison rate takes into account most initial and ongoing costs, it does not include everything. For example, it does not take into account charges that only apply in certain circumstances (such as prepayment charges).
The features you get with the loan can help increase its overall value. Check if you can make additional repayments and prepay the loan without paying any fees. Additional repayments can help reduce the amount of interest you have to pay on the loan and help you pay off the loan faster. Some loans also offer access to a withdrawal facility so that you can access the extra money you have paid on the loan if you need it.
Beware of auto loans that offer a “lump sum payment” feature. This is a one-time lump sum payment usually made at the end of the loan term. While this may reduce your regular repayments, you’ll usually end up paying more interest and the loan will cost more overall.
Other Factors to Consider
Here are some other factors to consider when comparing car loans.
Fixed or variable interest rate
A fixed rate car loan is a loan where your interest rate is locked in and will remain the same for the fixed period. This means that your repayments will also stay the same, which can help with budgeting.
On the other hand, a variable rate car loan is one where your interest rate can change. Therefore, your repayments may increase or decrease if the interest rate changes.
Secured or unsecured
With a secured auto loan, you must provide an asset that will act as collateral (or collateral) for the loan. With car loans, it’s usually the car you buy. If you don’t repay your loan on time, you run the risk of losing your car. The lender is able to repossess your car and sell it to recover the loan amount owed.
With an unsecured loan, you do not need to provide collateral for the loan. However, since you don’t have this extra layer of protection, the interest rate will usually be higher. The lender can also sue you if you don’t repay the loan. According to Moneysmart, unsecured loans are more often offered for used cars.
term of the loan
The term of the loan is the time you have to repay the loan. By taking out a car loan with a longer term, you will generally be able to make lower repayments. But it also means you’ll be paying interest over a longer period of time.
Canstar compares auto loans using a unique and sophisticated personal and auto loan star rating methodology that considers both price and features. Ratings represent a shortlist of products, so you can narrow your search to auto loans that have been rated and ranked.
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