If you want to know with complete certainty how much your car loan repayments are going to be every month, a fixed rate will give you that.

The fixed rate you sign up for at the start of the loan won’t change for the duration of the loan. A variable rate could go up or down.

A lot of car loans tend to be fixed rate but there are variable ones out there.

What’s more important than the type of rate is having a loan with a low rate AND the flexibility to pay it off early without penalty.

A car loan can typically be anything from $5,000 up to $150,000. The amount you can actually borrow will depend on a few aspects of your personal and financial situation.

But as a general rule, the more cash you have left at the end of each pay once all your expenses are taken away, the more a lender will be willing to lend to you.

This could depend on:

• Your income
• Your regular expenses (including other debt repayments)
• The number of dependents you have

Another factor is how long of a loan term will you have. You might be able to borrow more if you agree to a longer term as your regular repayments will be lower. But this will make your loan more expensive overall due to the extra interest costs.

As I’ve covered above, car loan interest rates are personalised. So yours will likely be different to another person who applies with the exact same lender.

To give you a head start on working out what kind of rate you might get, here are the main factors lenders consider when calculating a borrower’s car loan interest rate:

• Your credit score: A higher score usually means a cheaper interest rate). Check your credit score now.
• Are you a homeowner?: Some lenders see property owners as a safer lending bet so offer them lower rates than renters.
• How stable is your income?: Borrowers in long-term employment generally get a lower rate than someone who’s just started a new job or works for themselves with an irregular income.
• Do you have a deposit?: This isn’t always the case but some lenders may give a lower rate to borrowers who contribute a deposit towards the cost of the car. Tends to be more common with bad credit borrowers.

Be prepared to give the lender evidence of your financial situation when you apply for a car loan. This will likely include:

• Proof of income (pay slips)
• Bank statements (check the health of your bank statements now with our free too)
• Credit card statements
• Home loan statements

I’d suggest having these ready to go when you apply. It will slow your approval down if you can’t provide the documents the lender asks for.

Most car loan lenders can approve your car loan on the same day you apply. This assumes you provide the evidence of ID and any financial documents you’re asked for at the time of application

Typically, you can expect to be driving your car in 2-3 business days.

The short answer is no. In most cases as long as you can afford to meet the repayments, you can borrow 100% of the cost of the vehicle.

You can of course choose to borrow less than 100% by contributing some of your own money towards the cost of the vehicle. This will bring down the cost of interest over the life of the loan.

You can finance most cars with a secured car loan. They will generally need to be less than 12 years old at the end of the loan term to qualify (the age allowed varies by lender).

Buying older cars is still possible with an unsecured personal loan. You can also use a car loan with a private seller.

For commercial vehicles you can get a business car loan.

If you can’t cover the purchase price of your new vehicle using your savings, there are a few car finance options available (using savings will always be the cheapest way to pay for a car):

• A secured personal loan - otherwise known as a car loan
• A novated lease (a finance arrangement where you make loan repayments from your pre-tax salary)
• Adding the car purchase to your mortgage (known as refinancing)
• Putting it on your credit card
• Taking out finance through a dealership
• Borrow money from friends and family

Some thoughts on these options. Credit card interest rates are usually higher than car loan rates. And in turn, a car loan rate would usually be higher than a home loan rate.

But think about the duration of the finance too. Adding to your home loan, which you might be repaying for another 20 years, could be an expensive way of paying for a car you might only have for the next five years.

Ultimately, deciding on the best way to finance a new car means doing your research. Find out what you can borrow and how much the repayments will be including all fees. Then find out if you can pay it off faster by making extra repayments without incurring extra fees.

This will ensure you get the best deal and don't pay more than you have to.

And if you're financing a business vehicle, here are some of the common options:

• Chattel mortgage
• Operating lease or finance lease

Like all financial products, there are pros and cons to getting a car loan.

Pros

• Allows you to spread the purchase cost of a vehicle over a number of years
• Could enable you to get a newer and better model of car than you would otherwise be able to
• Usually a simple and fast process
• You can often pay off the loan faster and save on interest by making extra repayments

Cons

• More expensive than using savings to cover the purchase price of a car
• There are a number of fees to watch out for
• The pricing is complicated and you might not be eligible to get the cheapest interest rate a lender is advertising

It’s possible to get a car loan if you have bad credit. But it can be more difficult.

Some lenders won’t lend to borrowers whose credit score is below a certain level. The ones that do might ask you to provide more financial information and evidence in support of your application. So it will probably take longer to be approved.

If your application is accepted, you may be offered higher interest rates and fees, and more restrictive loan terms.

If you’re struggling to get a loan from a bank or other mainstream lender, there are also lenders who specialise in bad credit car loans.

Find out what your credit score is before you apply for a loan. This can save you time applying for loans you won’t be eligible for. If you're not in a great spot with your finances, it may be worth seeking advice from a financial counsellor before you take on any new debt.

Here are some steps you could consider:

• Check your credit score in advance and consider working to improve it if it’s low
• Look at your household budget and work out how much you will be able to afford in weekly/monthly repayments. This should help you avoid applying for too big of a loan.
• Avoid applying for credit if you have just changed jobs or don’t have sufficient regular income to meet the loan repayments
• Check the lender’s lending policies to see if you’re eligible
• If your situation is complicated, you could speak to a car loan broker. They can advise on lender’s policies and may be able to direct you to lenders who are more likely to give you a loan.

This depends on a lot of factors and what you want to prioritise in your loan.

But generally online car loan lenders often have the best interest rates and fast approvals, particularly if you have a good or excellent credit score.