Getting a car loan that will set your motor racing - what’s the process?

red cars on green background purchased with car loan

At Mozo, we’re keen to help you through the unfamiliar parts of finance. If you’re new to the world of car loans, there’s a lot about the process of getting one that can be confusing - and we want to demystify that process.

Despite the rising cost of living and shortages in the new car supply to Australia, sometimes you just need a car. 

To make car loans that bit more transparent, we’ve rounded up some ways to clear up the application process and make sure you get great value - compiled with the advice of Simon Bozzi, director of customer finance at Carma.

Take advantage of a trade in on your current vehicle

Right now, second-hand cars are in the spotlight. This is mostly because the limited supply of new cars put used cars in high demand. If you’re looking to buy a new car, make sure you know what your current car is worth so you can trade it in for maximum value. 

If your existing car is still being paid for on a loan, make sure to read our guide to selling a financed car. You have a few options, but you’ll need to consider paying down your existing debt, or upgrading with a dealer. 

Since prices for second-hand cars are so high right now, and there’s often a wait for new cars, the last thing you want is to miss out on potential money.

Know when an advertised car loan rate is “too good to be true”

If you see a car loan with a super-low rate and get excited, just know that it might not be all that it’s cracked up to be.

Bozzi says, “These are usually a minimum rate or a range, so individual borrowers may be offered a different rate based on their circumstances, or advertised rates may come with restrictive conditions.”

If you have excellent credit, you might be offered a rate at the lower end, but hits to your credit score can result in higher results. These rates may also contain restrictions around the type of car purchased, the age of the car, and more.

Shop around for the best car loan rate

Different lenders will offer different rates and you might be entitled to a better rate - or one that suits you better - if you shop around. 

Don’t feel obliged to take the first offer you see, or to jump on the lowest interest rate. It’s important to read the conditions attached to your loan and to make sure it will work for you over its full term, with features and flexibility that fit your needs.

Get all the details in writing

Surprises are one thing, but no one wants to be surprised when it comes to fees and restrictions on their loan. 

Getting a personal copy of all of your quotes will help you compare and contrast them, lining up different features and tracking rates. This should hopefully make it easier to set apart the standouts.

Figure out your exit strategy

With car loans, you might find yourself wanting to make a switch somewhere down the road. Upsizing your vehicle or scoring a new car will see you needing to exit out of your loan, so it’s extremely important to be familiar with the termination terms and break fees in your contract.

Go into the car loan application process prepared

This might seem like a given, but don’t underestimate the power of preparation. 

To apply for a car loan, you’ll need all of the usual points of identification and proof of income. Every lender will require these same basics, so it’s important to enter the process prepared. It helps to have an idea how your credit history is, preparing yourself for the type of loan you could be offered. It is possible to bring your credit score up, but it can take some time.

The car loans process can seem daunting, but by going in prepared and knowing what to expect, you can get yourself a loan with confidence.

Learn more about the fees and features, tips and tricks of car loans. If you’re in the market for a new car, find our picks for the best car loans.

Compare car loans

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 89 car loans.
Last updated 23 July 2024 Important disclosures and comparison rate warning*
  • Used Car Loan

    Fixed, Secured, No vehicle age limit

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured used car loan of up to $75,000 depending on your credit score. No vehicle age limits. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Details
  • Better Car Loan Special Offer

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.24% p.a.
    6.65% p.a.based on $30,000
    over 5 years

    Get a fixed rate car loan for amounts over $20,000 with Police Credit Union. Make additional repayments at any time without penalty. Free online redraw. Available for new and used cars. Can also be used for motorcycles, boats, caravans, trailers or any registrable vehicle.

    Repayment terms from 1 year to 5 years. Representative example: a 5 year $30,000 loan at 6.24% would cost $35,295.27 including fees.

    Compare
    Details
  • New Car Loan

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured new car loan of up to $75,000 depending on your credit score. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Details
  • Any Age Car Loan

    Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    10.69% p.a.
    10.97% p.a.based on $30,000
    over 5 years

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 10.69% would cost $39,053.66 including fees.

    Compare
    Details
  • Car Loan

    Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    8.99% p.a.
    9.13% p.a.based on $30,000
    over 5 years

    Repayment terms from 1 year to 6 years. Representative example: a 5 year $30,000 loan at 8.99% would cost $37,456.30 including fees.

    Compare
    Details

* 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.