When selecting a new car, buyers can easily see the differences between the vehicles they are considering. The different modifications and variations across model ranges and between similar vehicles from different manufacturers are very obvious. It’s easy for potential buyers to weigh up the pros and cons when making a buying decision. But when it comes to their motor vehicle finance, the differences between car loans may not be so easily identified.
Common queries from buyers can include: Are there differences between loans for different types of cars? Are all secured car loans the same? Why are there differences in the interest rates? What are the differences between business car finance products?
Having a good knowledge and understanding of the differences in car loans can be of great assistance to buyers in achieving the cheapest and most suitable motor vehicle finance. There can be several years between the need to buy a new car and source finance and there may be developments in the finance sector since you last applied for a car loan.
As specialists in motor vehicle finance, we take on some of the common questions – from the most simple to the more complex, to provide confidence, direction and assurance to buyers seeking a car loan.
Different Types of Vehicles
Probably one of the most obvious questions is whether or not different types and sizes of cars attract differences in the loan. Answer: yes and no. No, in regard to the type loan. Yes in regard to new versus used cars. No in regard to the size of vehicle.
- The same business car financing products can apply to all types of cars – sports, sedans, hatches, SUVs, luxury, basic. While it may seem that the more luxurious the vehicle and the higher the price tag the more expensive the finance, that is not the case. The same loans and interest rates can apply regardless of the car specifics. But the insurance may differ.
- The business car loan interest rates offered and loan conditions can be different for new car finance compared with used car loans. The age and the condition of a vehicle is taken into consideration by lenders when assessing used car loan applications. Unless they specify otherwise, interest rates and loan specifics advertised and advised by banks and lenders will relate to new vehicle purchases.
- The size of the car – engine capacity and/or overall length, does not by definition affect the loan.
Differences between Lenders
Now for a more complex area of differences in car finance – the lender market. Yes, there are variations in the loans offered by different lenders. The motor vehicle finance sector encompasses banks, finance companies, dealers, manufacturers and finance brokers like Jade Car Loans.
Each lender will price their loans based on their own individual costs, their interest in being competitive in the sector and other factors. One of the most obvious differences is in regard to the interest rates offered by different lenders.
The RBA sets the official cash rate from which most lenders then build-in their costs and risk factors to arrive at the interest rate they are prepared to offer on their loan portfolio. As these individual impacts vary so will the interest rates.
Differences will also exist between fees and charges applied across the motor vehicle lending sector. Analysing exactly these differences can require sourcing detailed quotes. A process which can be time-consuming but worthwhile. The shortcut to achieving the same result without the time and effort is to use a finance broker lender like Jade.
One of our primary roles is to assist customers by cutting through the confusion and differences and source the cheapest car loan. We achieve that through our multiple accreditations and professional expertise.
Private Car Loans v Business Vehicle Finance
Major differences exist between loans for cars purchased for personal/private and finance for vehicles to be used in a business. The interest rate is always cheaper for business finance based on the perceived reduced risk.
To be eligible for business finance, loan applicants must meet the criteria which includes having an ABN and that the vehicle will be used primarily in the business.
Personal Car Loan Options
For new cars, the most popular loan type is the Secured business Car Loan. This type of loan is offered by most lenders but the interest rate value and type may vary. Watch for variable versus fixed interest rate loans, differences around minimum and maximum loan amounts and terms.
Business Finance Options
Businesses can select from a number of finance products including:-
- Vehicle Lease
- Chattel Mortgage
- Commercial Hire Purchase
The differences between these products include:-
- Interest rate
- Treatment of GST
- Suitability to accounting methods
- Tax deductions
- Balance sheet entry
- Ownership of the vehicle during the finance term
To determine which business vehicle finance product will achieve the optimum outcome for a business, we strongly encourage buyers to speak with their accountant.
Making the Loan Decision
Reviewing these differences to arrive at the best loan can be worthwhile as it can mean a difference in repayments and the overall cost of the loan. Jumping into what may appear a quick and convenient option such as dealer finance, may not end up being the cheapest option.
The services of Jade Car Loans are available to both individuals and businesses for the purchase of all types of cars. So if you don’t feel 100% confident in sourcing the cheapest car loan, you don’t want to spend the time needed or you are just astute – brief one of our consultants and allow us to source you the cheapest car finance.
To source the cheapest motor vehicle finance contact Jade Car Loans on 1300 000 003
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.