Finance For A Car Loan

Finance For A Car Loan

If you’re considering buying a car and need additional funds, you should seek out finance for a car loan. Getting your finances sorted before you start looking for a vehicle ensures that you get a good deal on your loan as well as a good car.

When people are in a rush to find a car, they’ll use whatever lender is available or seek a loan out with their current financial institution. While these options are reasonable, you will be limited in your choices, and you may end up paying more than you need.

Using CarClarity is an excellent option for people looking to compare several car loans in one place. Many banks and other lenders will rely on the fact that comparing loans can be time-consuming and may not offer you the best car loan comparison rates. CarClarity can show you the best loan that suits your borrowing capacity from a select group of over forty different lenders if you're seeking a new car loan or refinancing a car loan.

Do I need to provide security to finance a car loan?

As you search for finance for a car loan, you’ll find two main types of loans: secured and unsecured.

Secured car loan
With a secured car loan, the vehicle you purchase will be used as security against the loan. The loan security is occasionally referred to as collateral. Using the vehicle as security for the loan helps to reduce the lender’s risk. Your lender may have specific requirements for the type of vehicle you purchase when choosing a secured car loan.

Under a secured loan, if you cannot meet the repayments, then the vehicle can be repossessed by the lender and sold to recover its costs. However, it is important to note that you are expected to pay the difference if the repossessed vehicle is sold for an amount less than the outstanding balance.

In many cases, a lender will require you to maintain full comprehensive insurance on the vehicle, and they may only offer a secured car loan on new cars or cars under a certain age (usually less than five years old). A secured car loan will usually have a reduced interest rate and is often a good choice where you’re after a business car loan.

Unsecured car loan
When obtaining finance for a car loan, an unsecured car loan is often used on a vehicle older than five years. When you have an unsecured loan, it is not necessary to have available assets to use as security for the loan. The lender will determine if you are suitable for a loan based on your income and credit history. With a personal car loan, you can use the funds to purchase anything you need.

What are the eligibility requirements to get finance for a car loan?

Will financing a car loan affect my credit score?

When you apply directly to a financial institution for finance for a car loan, they’ll complete what is known as a hard credit check. With these checks, the lender will check your credit score and determine if you’re a suitable candidate for a loan.

Unfortunately, every time your credit score is checked, it can affect your overall credit score. When lenders check your credit score, they can see how often other lenders have checked it. If you’ve been shopping around for good deals and applied for a few loans, lenders may consider you a higher risk and deny your application.

The good news is that when you use CarClarity to find your car loan finance, we’ll only complete a soft credit check. In a soft credit check, we’ll assess your application before sending it to a lender of your choice. Only when you apply through that particular lender will they perform the hard credit check.

Getting approved for a car loan won’t negatively affect your credit score, provided you make your repayments on time. However, having existing finance may affect your ability to secure new loans unless you’re seeking to refinance a loan where your existing loans will be paid out.

Using CarClarity to find finance for a car loan will allow you to compare car loans in Australia among our partner lenders so you can decide which is the right loan for your situation. Fill out this form, and our intuitive tool will provide you with your top matches from a list of over forty lenders in less than sixty seconds. Apply for your car loan today!

The eligibility requirements to secure finance for a car loan are different depending on which lender you choose. However, there are some base requirements that applicants must meet before they are approved on any loan application.  

All applicants must be over eighteen, an Australian citizen, and earning a regular income. Lenders must perform suitable checks to ensure the loan does not financially overburden applicants and that they can comfortably pay it back.

When you apply for a loan, a lender will check your credit score and determine your risk level. A high credit score usually means that a lender is willing to lend you more money. If you have a low credit score, lenders may offset their perceived risk by offering you a reduced amount or a higher interest rate.