If you are wondering what is a car loan then chances are that you have heard about the two types of car loans in Australia and want details. A car loan is an agreement between a buyer and a lender where the lender gives the buyer money to purchase a car usually for personal use. In Australia there are two types of car loans, the first type of vehicle loan is a personal loan and the second type of loan is a business loan. Listed below are details about personal vehicle loans in Australia.
Lenders, who offer loans to buyers for cars, provide the money for the selected vehicle when the buyer applies for the loan. Lenders protect their own interest by encumbering the selected car until all the dues have been paid by the buyer. Once the buyer pays the principle amount and the interest amount, the encumbrance is lifted and the buyer becomes the owner of the vehicle.
The tenure for these loans depends on lender to lender, however many lenders offer flexible tenures that range from 24 – 48 months. Many lenders also give buyers the option to trade in their old vehicle or use cash as a deposit. Lenders usually allow buyers to choose between a fixed interest rate and a variable interest rate. The interest rate of the selected car will depend on various factors such as the amount taken, the tenure of the contract and the buyer’s ability to repay the car loan on time.
Car loans can be acquired online by visiting a lender’s website or a broker’s website. The main benefit of opting for loans from brokers is that, customers get various options of lenders to choose from. Another benefit is that, customers can compare prices, interest rates and other details online by using simple to use online comparison features offered by these websites. To help customers understand how much interest has to be paid and how much loan to take, lenders and brokers often provide any online calculator tool that helps buyers calculate the interest on the principle amount, the repayment amount and other details.
While understanding what is a car loan, it is important to note that, all personal car loans in Australia are covered by the Uniform Consumer Credit Code. It is also important to note that personal car loans are ideal for people who will primarily use the selected vehicle for personal purposes. If you plan to use the selected vehicle for business purposes then you may want to get either a business car loan or a novated lease. Other options for people who want to use the selected car for business purposes include a Chattel mortgage and a Car Hire purchase.