You want to get your first car through a car loan – but how exactly do the car loan rates compare against your ideal budget?
Let’s be frank about it: getting a car can be expensive. However, car financing doesn’t have to be expensive in a way that hurts your credit irreparably. With a little bit of know-how and some diligent searching, you can get your dream car without breaking the bank or throwing yourself into debt.
Here are a few things to get you started on a car loan rates comparison.
It may surprise you to know that there are different car finance rates in the lending market.
When it comes to car loan value, you’ll want to know what your APR and comparison rates are. Knowing the current interest rates for car loans will help you plan your approach to your loan. Similarly, knowing how your car loan rates compare with other loans for the same vehicle will give you a clearer idea of your possible budget.
Ask yourself these questions: what’s the APR like for the overall vehicle finance rates? Do the repayment fees match up with the comparison rates your car loan lenders provided you?
Alternately, what do all these loan terms mean?
While ‘monthly interest rate’ is self-explanatory, annual percentage rates (APRs) and comparison rates aren’t as familiar if you’re taking on a loan for the first time.
Your loan’s annual percentage rate or APR is the total interest earned by your loan in a twelve-month span. This doesn’t include any fees or charges you may have had to pay or have deducted from your principal amount. Some types of credit may have more than one APR. For example, credit cards typically have different APRs for purchases, cash advances, and late payments. Most car financing loan terms have only one, but depending on your loan or mortgage agreement, you may have more than one.
Meanwhile, comparison rates are the overall costs your auto loan incurs, including earned interest, penalty charges, and other nominal fees. Comparison rates are calculated based on a twelve-month period and summarised into a single percentage. Subsequently, the comparison rate will be either close to equal to or higher than the monthly interest rate in overall value.
Always perform a car loan rates comparison on your loan agreements, or ask about them with your loan agent or provider. It never hurts to look at how your car loan rates compare to other options, and your credit score will thank you for it to
There isn’t a fixed number or average that constitutes a good APR – if the APR’s total value is amenable, reasonable, or manageable for you, then it could count as a good one. Some car loan rates compare poorly against others for monthly interest but are almost equal in value when it comes to their APR.
Of course, a lower comparative APR is still something you’d want to have, and the best way to get a lower rate is to have a strong credit score. Your credit score is the first thing that credit companies look into when you apply; it tells the story of your personal loan preferences, repayment habits, and any bad loans you may have had.
Speaking of credit checks – did you know that even credit checks can affect your credit score? Scoring a credit profile involves a number of factors, and the frequency of checks your profile gets can cost your score a few points.
This happens when your credit profile gets hard-checked multiple times for a new personal loan or mortgage in a short period. Hard checks or hard calls involve in-depth investigation or reporting on your credit history; soft checks or soft calls, meanwhile, only preview your score without disclosing your detailed loaning history. A broker car loan is often pre-qualified through soft checks.
Soft checks are a useful tool that CarClarity employs to check how car loan rates compare to your loan preference. By matching your car loan application to the best car loan rate offers from our partners, we save you both the time and effort of applying for loans that aren’t suited to your interests. This way, your credit score isn’t affected by our process, and you only get hard-checked when you’re ready to commit to an auto loan, while our partners get to save time by focusing on serious pre-qualified applications.
Loan terms dictate what your obligations are to your car loan providers and vice versa. It’s why many borrowers may opt to use comparison services that check how car loan rates compare against a borrower’s credit score. However, not all brokers are timely with their comparisons, or they may favour specific lenders over others and push loans that aren’t suited for you. Filtering through them will take some time, especially for a new borrower.
You can cut through the tedium of all that by taking advantage of CarClarity’s intuitive tool. Our smart technology matches your application with the best rate car loans in our partners’ catalogues and pulls the top-matching ones that you can get pre-qualified for. Instead of spending so much time looking for competitive car loan comparison rates or loans with balloon payments, CarClarity will do the legwork for you.
If you feel that the top matches aren’t quite what you’re looking for, CarClarity can also help organise direct financing amounting to $5,000 up to $250,000 for private sales or dealers. Just get in touch with our customer support team and ask about the eligibility criteria and application process.
CarClarity is Australia's first company to develop and utilise pioneering smart technology to streamline the car financing process. Any application and car loan rates comparison is completed 100% online against the best loan offers from over forty vehicle-specialised lending companies.
Whether it’s a business car loan you’re looking for or a quick car loan comparison to decide between two attractive offers, CarClarity is ready to help.
So what are you waiting for? Find the right loan for your dream car with us today!
CarClarity is an online financial comparison service and is owned and operated by CarClarity ACL Pty Ltd ABN 50 606 243 243 / ACN 606 243 243 and Australian Credit License 478 874.
CarClarity provides you access to our expert team who can assist in selecting suitable car loans from our panel of 40+ lenders and over 1000 financial services products. The financial products compared on this website do not necessarily compare all features that may be relevant to you and CarClarity does not compare all rates in market.
All applications are subject to the credit provider’s credit assessment and loan eligibility criteria. Terms, conditions, fees and charges apply. Information provided is factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. CarClarity may receive a commission from lenders we recommend.
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