3 key things to look for in a car loan

three men standing on car bought with car loan

If you’re on the market for a car loan to fund a fresh set of wheels, it’s time to get familiar with the three main things to look for. 

  • Interest rates 
  • Fees 
  • Features 

But what exactly should you be keeping an eye on as you shop around? 

Read on as we put a magnifying glass on the different parts of car loans to see where you could find a killer option... 

1. Interest rates 

As you probably know car loans come with interest rates and this should be your starting point. 

According to the Mozo database, the average new car loan rate sits at 6.41%, while the average used car rate is a higher 6.98%

It’s important to choose a loan with a low rate to ensure you aren’t coughing up too much in interest repayments on top of paying off what you borrowed. 

Also remember to take into consideration the comparison rate as this number also incorporates fees and charges on top of the headline rate. 

Here are some options of low interest car loan:

loans.com.au New Car Loan
  • Low 4.67% (5.22% comparison rate*)
  • Borrow up to $100,000
  • Free extra repayments

If you’re looking for a car loan with a low fixed rate, the New Car Loan from online lender loans.com.au is worth considering. This loan comes with a competitive 4.67% fixed rate (5.22% comparison rate*) and customers can borrow anywhere between $5,000 and $100,000. Loan terms range from 3 to 5 years and borrowers can make either weekly, fortnight or monthly repayments. Plus, extra repayments are allowed on this loan, however there is a hefty $700 early repayment penalty if you pay off your loan in full ahead of time. Also be weary of the $400 upfront application fee.

Plenti New Car Loan
  • Competitive fixed rates from 4.89% (5.44% comparison rate*)
  • Borrow up to $100,000
  • Free extra repayments and no early repayment penalty
Find out more

Want to be rewarded for your good credit with a low rate car loan? Meet the Plenti New Car Loan. With fixed rates starting at a competitive 4.89% (5.44% comparison rate*), customers with excellent credit could really get bang for their buck. Borrowers can take out a loan between $10,000 and $100,000 over a 3 to 7 year term. While there is only a monthly repayment option, Plenti allows customers to make free extra repayments without the fear of an early repayment penalty. However, there are some fees to keep an eye out for - the $399 application fee upfront and $30 late payment fee if you miss a regular repayment.

2. Fees 

The second crucial element you’ll want to consider when choosing a car loan, is that the lender charges minimal fees.

Some of these charges include: 

  • Upfront application fee 
  • Ongoing monthly fee 
  • Late payment fee 
  • Exit fee 
  • Early repayment fee 

While most loans come with at least one or two fees attached to them, it’s important to find one that doesn’t come with too many. 

Also be aware that while some loans may have a low interest rate, they may come with higher fees so crunch the numbers to see whether it’s actually cost effective. 

Check out these loans with minimal fees:

OurMoneyMarket Car Loan
  • No monthly fee
  • No exit or early repayment fees
  • Low 5.35% fixed rate (5.65% comparison rate*)

With the OurMoneyMarket Car Loan not only will you receive a competitive rate, you’ll have minimal fees to worry about. This loan comes with a low 5.35% fixed rate (5.65% comparison rate*) and customers can borrow between $2,000 and $75,000. But that’s not all. This loan also says goodbye to pesky monthly service fees and farewell to exit charges and early repayment penalties. While there is a $250 application fee and $35 late payment fee to consider, customers have the ability to make free extra repayments whenever they want. Meaning you could pay down your loan sooner!

SocietyOne Car Loan
  • No monthly service fee
  • No exit or early repayment fees
  • No establishment fee for customers with excellent credit
Find out more

If you have a good credit score and are looking for a new or used car loan with fewer fees, SocietyOne’s Car Loan might be the one for you. Not only does this loan come with no monthly service, exit or early repayment fees but for customers with excellent credit there is also no establishment fee. Put simply, the minimum a customer will pay in establishment fee is $0, but bear in mind that the maximum is a hefty $995. Another thing based on your credit score for this loan is the interest rate. Starting at a 6.39% fixed rate (6.39% comparison rate*) rates can go up to 17.49% (21.00% comparison rate*).

3. Features

All good things come in threes right? Yes! 

So with that in mind, the last thing to watch for when finding a killer car loan is it’s flexible features

These generally come down to things like repayment schedule options, free extra repayments and redraw facilities. 

Ultimately, you want a loan that is going to allow you to pay it down in a way that suits you, and even save you a bit of cash along the way. 

Take a peek at these loans that come with flexible repayment features:

Wisr Secured Car Loan
  • Free extra repayments
  • Weekly, fortnightly or monthly repayments
  • Fixed rates from 4.74% (5.01% comparison rate*)
Find out more

Looking for options and flexible features in your car loan? With the Wisr Secured Car Loan you’ll get just that. This loans’ fixed rates starting at a competitive 4.74% (5.01% comparison rate*) isn’t the only thing going for it. Borrowers have plenty of options: from loan terms (3 to 7 years), loan amounts ($5,000 to $50,000) and repayment schedules (weekly, fortnightly or monthly). Plus, customers can make extra repayments if they want to without facing an early repayment penalty, should they pay down their balance ahead of schedule. Keep in mind though, there is no redraw facility on this loan so borrowers cannot access their additional funds after they pay. Also remember, you’ll need to budget for a hefty $605 application fee straight off the bat.

CUA Secured Car Loan (Fixed)
  • Free extra repayments
  • Redraw facility
  • Weekly, fortnightly or monthly repayment schedule
Find out more

Take a look at CUA’s Secured Car Loan if flexibility is what you seek. This loan comes with a fixed interest rate of 6.79% (7.16% comparison rate*) and customers can choose to pay it down on a weekly, fortnightly or monthly basis. In addition, borrowers can also make free extra repayments whenever they like as well as take advantage of a redraw facility if they need to. The good news is that CUA doesn’t charge customers that pay off their loan in full early, or charge monthly service fees, late payment or exit costs. It’s important to remember though, you’ll need to pay a $265 application fee when you first take out the loan.

RELATED ARTICLE: How are car loan rates looking right now?

Want to weigh up some more car loan options? Jump over to our car loan hub for more.

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.