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Best Ways to Finance a Car

Written by

Shaun McGowan

A car is one of the most expensive purchases in life, so why would you pay even more?

Unlike a house, most of us will buy more than one car in our lives - if you want to start saving money early, it’s important to learn the best ways to finance a car.

Here are our best tips for financing a car, so you can get a better car, at a better deal, with the best rates available:

1. Check for available car incentives

Before you start browsing for a vehicle, check to see if there are any available vehicle incentives available in your state.

Currently, elective vehicles (EVs) are heavily incentivised across Australia, with some savings beneficial for both personal or business use:

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Australia EV Incentives

StateEV Incentives

New South Wales

  • $3,000 rebate for EV or hydrogen fuel cell cars below $68,750 including GST.
  • No stamp duty payable on both new and used EV and hydrogen fuel cell vehicles purchased for less than $78,000 including GST.

Victoria

  • Luxury Car Tax (for vehicles above $68,740) is reduced to $8.40 per $200 market value compared to up to $18 for combustion engine vehicles.
  • $100 annual registration discount.

Tasmania

  • Two-year stamp duty waiver on both new and second-hand electric vehicles.

Queensland

  • Reduced Stamp Duty at $2 per $100 in value up to $100,000, and $4 per $100 after the threshold. Non-EV vehicles pay up to $6.

ACT

  • $0 in stamp duty on new EV purchases.
  • Two years worth of free registration for new and used EV vehicles.
  • ACT government offers interest-free loans of up to $15,000 to help cover the upfront costs of buying an electric vehicle with up to 10 years to repay it.

South Australia

  • Subsidies of up to $3,000 along with a three-year taxation exemption from July 2022.

Western Australia

  • Uber, Taxi, Charter Vehicle drivers - exempt from the 10 per cent on-demand transport levy
  • Purchased vehicles are eligible for the EV Home Plan Incentive, which offers $200 and 60km free per year for charging during off-peak periods.

Northern Territory

  • None

2. Calculate the cost of your car

You’ll also want to see how much you can afford - not so that you can push your budget, but you’ll know where you can make it stretch.

For example, some loans may include a balloon payment to reduce your regular repayments, and any deposit you might make could lower this even further

Car loan balloon payments
For a cheaper total loanFor cheaper regular payments
  • The shortest term you can afford
  • Loans that allow you to make additional repayments
  • Loans you can pay out early without penalties.
  • A lender with the least amount of fees
  • Choose a longer loan term
  • Include a balloon payment
  • Buy the newest model car you can afford
  • Avoid using an intermediary like a car dealer

You can use the Money.com.au car loan calculator to quickly see how much you’ll pay on any car finance amount, in either weekly, fortnightly or if you wish to consider a balloon payment, use our car loan repayment calculator with balloon option.

3. Check your credit score

Before you look at loans or pre-approval, it’s worth checking your credit score and making sure it’s accurate.

You can obtain your credit report by requesting it from any of Australia’s major credit bureaus, and it can take up to 30 days to resolve any inconsistencies.

Other than clearing up inaccuracies, your credit score will be important if you’re considering finance from a lender; your score is used to determine your trustworthiness, risk-level, and to assign things like fees and interest rates.

Learn more about credit scores and how to improve your credit score fast.

How your credit history affects your loan options with Money Matchmaker
Are you considering upgrading your car? If it's time for you to do this, read our guide on the best ways to finance your next car.

4. Pay extra costs wisely

Before you look at lenders, you’ll want to consider all the additional costs that come with purchasing a car. These can include:

If you’re trying to get the lowest rates and the best deal on car finance, you’ll want to avoid bundling any of these costs in with your loan amount - keep that just for the car purchase. Lastly, dealerships are notorious for stacking on add-ons to their loans, from trying to sell finance to overselling insurance. Avoid sales tactics for unnecessary costs, and avoid them entirely with car loan pre-approval.

5. Get car loan pre-approval

Pre-approval gives you a figure to work from when visiting a dealership or speaking with a private seller, allowing you to haggle from a lower position up to your pre-approved borrowing amount.

Once you have obtained pre-approval, you will have a limited amount of time to arrange for the purchase of your vehicle and submit an official loan application. Your lender will then need to conduct a hard credit check and receive an invoice from the dealership or private seller, and you’re good to go ahead with the purchase

Car loans for used cars with Money Matchmaker

Loans for new and used cars

Keen to get started on your car loan pre-approval? Look through the options below to learn more about a specific loan product and see if it suits your needs. 

The most popular finance for a new or used car in Australia includes:

  • Car Loan - A secured loan with competitive rates. No restrictions on vehicle choice, and a range of options to compare. The vehicle can be used for personal and business purposes.
  • Personal Loan - An unsecured loan that gives you more options. You can usually choose between a fixed or variable interest rate, though rates and fees vary more than secured loans.
  • Novated Lease - A type of salary-based finance that provides GST and tax benefits. The vehicle can be used for personal and business purposes, but you and your employer must meet specific conditions to qualify.
  • Chattel Mortgage - A secured car loan that provides GST benefits for businesses and self-employed workers. Competitive rates and options, but the vehicle must be used for business purposes at least 51% of the time.

Personalised loan shopping with Australia’s Money Matchmaker®

Money.com.au aims to clear up the confusion around rates, fees, repayments and approval, so we can provide the best consumer experience possible.

The easiest way to find a competitive loan from lenders is to simply use our Money Matchmaker® engine. We’ll compare the best car loans we can find from our available pool of lenders, personalised entirely based on a few simple questions.

You can see exactly how much you’ll pay with each lender - this includes all the little details like fees and restrictions, so you can find the offer that suits your lifestyle the best.

Compare car loans from our list of lenders today to see how much you could save.

No stress, and no impact on your credit score.

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About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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Disclaimer

Money Pty Ltd (trading as Money.com.au) provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. Money.com.au does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the Money.com.au website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.