For those new to buying a car or taking out finance it can be a daunting prospect. However, when you know the facts it is rather simple.
If you had the money in your account to buy a car you could pay the current owner – either a dealership or an individual – the price of the vehicle and register the sale.
If you don’t have the money you would need to apply for car finance: where you borrow the money to buy the car now, and pay the money back over time.
A financier would check your personal details to make sure you are the person you claim to be, your income and bank statements to make sure you can afford to pay back a loan, and your credit history to make sure any previous debt history is suitable. If you can afford to pay back the amount you borrowed the financier would then decide whether or not to approve your car loan.
There is some paperwork involved whereby you sign a contract agreeing to the terms of the loan.
Once approved, the money will usually be transferred directly to the current car owner’s bank account, or in some cases transferred directly to your bank account (e.g. unsecured personal loan) so you can pay for the car.
After taking out car finance you will have possession of the car and be required to pay back the loan amount, with interest, over an agreed time period. This would be set out in the conditions of the loan which include the loan interest rate, repayment amounts and frequency, as well as any additional fees or charges that may apply.
These conditions will be different based on the kind of loan you take out.
What is a Secured Car Loan?
A secured loan is one where the car you are taking out the loan for is, pledged as collateral for the loan. Secured loans will often have lower interest rates as there is less financial risk for the financier.
What is an Unsecured Loan?
An unsecured loan will often have a higher interest rate to make up for the risk of not being secured against an item of value.
If you’re looking to take out your first car loan you can talk to the team at Aussie Car Loans about our range of financial services. We have long associations with a large panel of lenders, so we can shop around for a great car loan to suit your circumstances.