Car finance options

The pros and cons of using a personal loan, home loan redraw, car dealer finance, or car manufacturer finance to buy a car.
 
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03.Personal loans

A personal loan can be a great way to finance a car, holiday or other major expense. They’re available for:
  • periods between one and seven years
  • minimum amounts between $1000 and $10,000.
The longer the period and the less you borrow, the lower the repayments.

Personal loans are available for fixed or variable rates. “At the moment, fixed rates work out better than variable rates as there’s not much more room for variable rates to fall,” says Peter Marshall, head of data for finance comparison site Mozo.

There are two types of personal loans: secured and unsecured.

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Secured personal loans

Pros:
  • Cheaper interest rates than unsecured loans
Cons:
  • If you fall behind with repayments your car can be repossessed.
  • Insurance premiums can be more expensive than for cars with unsecured loans and cars paid outright.
  • Usually only available for new or fairly new used cars.

Unsecured personal loans

Pros:
  • Your car isn't the security for the loan so would normally not be repossessed if you fall behind with repayments.
  • Available for used cars.
Cons:
  • Higher interest rate than for secured loans.

Tip: Check credit union loans for cheap interest rates.

 

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