Car Loans: What Are Your Finance Options?

Car Finance Options

Are you considering getting yourself a new set of wheels? Whether you want the latest, most stylish sports car, an off-road adventure SUV or a simple run-around to get from A to B, auto finance is your best bet. There is a selection of car finance options at your disposal. Read our blog to understand each one, and discover which is the most suitable for you.

What You Need to Know About Personal Car Loans


Experiencing the thrill of buying a new car or your first car is a memorable moment for everyone, topped off by that new car smell when you sit inside a car that you now own. A report on statistics came out that almost 100,000 brand new vehicles are sold every month in Australia.

For people who need a ride but don’t have the money to get one right away, applying for a loan may be the best option. The process in doing so, however, can be intimidating for first-timers. That’s why it’s important to have a good grasp of the basics before you set out.

What is a Car Loan?


This is a transaction in which an establishment agrees to lend you money so you can buy a car. In return for their service, you’ll agree to pay the lender back the amount for the loan including interest. This deal usually is done in monthly payments, until the amount that is owed has been paid fully. Quite simple, right?


Now let’s talk about these four basic aspects of a car loan below.


  1. Loan Cost


The cost associated with a car loan can be broken down into two parts: principal and interest. When we say ‘principal’ cost, this is the amount agreed upon to pay the vehicle. The ‘interest’ is the entire amount of expenses that have accumulated over the life of the loan. This is based on the principal cost and the interest rate stated at the beginning of the negotiation.


  1. Interest Rate


This is the most basic rate that is charged to the person who is borrowing loaned money. Interest rates are usually expressed in percentage for a yearly period which is known as the annual percentage rate or APR.


  1. Down Payment


This is the amount that you pay upfront when purchasing a vehicle. This is usually expressed in percentage based on the car’s total price. This isn’t required legally when you take out a loan but will most often be required by the lender.


  1. Terms and Conditions


You can find here the rest of the items that a car loan consists of which should include the loan’s term, registration and insurance requirements, conditions of accident, theft, loan default and repossession. There are a lot of things to read under the terms and conditions section so it’s important to go over them carefully before continuing.



Now let’s take a look at these basic steps to help you when applying for car loans.

How the Car Loan Process Works


  1. Figure Out How Much You Can Afford


Prepare a realistic budget for the car that you plan to get and the terms included to see how much you can afford to pay on a monthly basis. The next thing you should do is to decide how long you’re willing to finalize all payments to the loan, or basically its term. Finally, you should determine how much you’d want to give as down payment. All in all, this will give you a clearer idea of how much you can actually afford when buying a car.


  1. Know Your Credit Score


Before you talk to a lender, it’s important to know your credit score first. Lenders check on such reports and they are also used to determine what terms you’ll have for the loan. Basically the better your credit score is, the higher the chance you can secure a lower interest rate.


  1. Find the Car for You

When you visit your auto dealer of choice, this is the time you should look into the car that fits your needs. Inform the lender what year, model and make you want so they can prepare everything for you. Aside from that, you also have to secure car insurance as soon as you can. This is essential because it can go a long way in helping you save on cost in case you get involved in an accident.


Fixed & variable rate loans

A fixed rate loan is an interest rate that does not fluctuate throughout the duration of the loan. A variable interest rate changes according to the prevailing interest rate, ultimately causing fluctuations in your monthly payments.

Fixed loans will ensure your payments are set, allowing you to budget accordingly. However, it is important to note that if you make extra payments and pay out the loan early, you may be obligated to pay an early termination fee. Furthermore, you will also have to pay account charges.

Secured loans

In the case of secured loans, you offer an asset as a means of security. This means that if you fail to make the required repayments, the lender is legally permitted to repossess or sell this asset as a means to get their money back.

Unsecured loans

This type of loan is commonly used for used cars. Unlike secured loans, there is no need to offer an asset as collateral. The difference, however, is that the amount you can borrow will most likely be less than that of a secured loan.

The reason for this is the risk of non-payment is greater since there are no consequences. What’s more, the interest rate for unsecured loans is usually higher than for a secured loan, acting as an additional incentive to repay.

It is also important to note that while you may not provide an asset as collateral, the lender can take you to court to recover their money.

Novated lease

The novated lease is an agreement between you, your employer and a financier whereby you select a vehicle and your employer pays the lender out of your salary.

Please note: All costs associated with the day-to-day running of the car will be covered by you. What’s more, in the event you part ways with your employer, the car will become your sole responsibility.

Lease agreement

This method involves you leasing a car from a finance company, whether it’s for your personal or business use. You don’t own the car, and at the end of the loan term, you can opt to buy it or return it. You are obligated to pay a monthly repayment while still being responsible for the maintenance and upkeep of the vehicle. Finance leases carry relatively low fixed interest rates because the finance is secured against the vehicle.

Commercial hire purchase

A financier hires a car out to you on a long-term contract. The payments remain relatively consistent throughout the duration of the agreement, with the vehicle being transferred to you once all payments are complete.

Chattel mortgage

A chattel mortgage is a fixed loan whereby the lender will advance you the money for the vehicle and then hold a mortgage over the car, using the car as security. The difference between the chattel mortgage and commercial hire purchase is that you own the vehicle straight from the time of purchase.

Operating lease

This is when your lender buys the vehicle you want and rents it to you. However, unlike a finance lease, the ownership remains with the lender, saving you the burden of any associated risks. When the agreement ends, you have the option of buying the car or getting another lease.

There are a variety of options that allow you to get your dream car sooner than later. A key part of the process should be selecting the right lender. They should be able to give you detailed background information and ample advice before you make your decision. After all, it is an investment.



Quick Benefits of Getting a Car Loan


Worth the Price – Many people are tempted to choosing a used car because they let the idea of taking out a loan overwhelm them. The better choice in the long run, however, is that a brand new car will be the more cost-effective choice. A good reason is that used automobiles tend to have existing problems already which results in breakdowns that cost money to fix. A new car will give you the peace of mind knowing that you won’t be needing repairs (at the least the major ones) for some time.


Useful for Good Credit History – Getting an auto loan even if you have poor credit is still possible. What makes this a great is that if you continue paying in a timely manner, your credit score will eventually turn positive. This will help you secure more beneficial loans in the future.


Better Budgeting – Car loans are great for budgeting because it lets you decide how much you can pay every month. What this means is that you can prepare yourself so you won’t have to overspend or make changes later on. Reasonable loans can even leave you with enough money down the road to have a new car once you’re fully paid.


Perth’s Most Competitive Car Loan Rates at Yes Loans


At Yes Loans, we are among the most trusted car loan providers in Perth that can help you secure the deal you’re looking for. We understand that every person has their own needs and wants and we treat each one of our clients like family.


As your broker, we are going to help you figure out the most optimal budget for your situation. This will take into account all existing expenses in deciding to buy a car such as its licensing, petrol, maintenance and insurance coverage.


What Other Car Buying Services Does Yes Loans Offer?


We don’t only help you get the car loan you need, we also provide a complete car-buying service that will make the most of your purchasing experience.


  • Car Buyers Guide – This will provide you with more in-depth advice on finding and buying the car you want.
  • Loan Calculator – This tool will guide you on the possible repayment terms which is subject to assessment.
  • Car Insurance Info – Learn about competitive car insurance premiums here.


Yes Loans has got you covered when it comes to financing the car that you need.


Contact us now so we can discuss the loan options that are suitable for you!

Yes Loans offers car finance and a host of other finance solutions. We say yes more often and with our fast approval times, you will want to contact us today. Get in touch today and find out what we can do for you.