Mozo guides

Car loan tips and tricks

man and woman driving in a convertible

Whether you’re about to apply for a car loan or still just thinking about it, you’ve come to the right place! Before choosing a lender, we suggest reading up on some of Mozo’s car loan tips and tricks. 

At the end of the day, being clued up on what to look for in a car loan could save you thousands of dollars over the life of the loan. 

So, without further ado – Here are Mozo’s 6 tips and tricks for finding the right car loan:

1. Walk into the dealership finance-ready

Dealer finance may seem like a good idea at the time, especially being a one-stop shop for all your car needs. But when you do the sums and comparisons, lenders outside of the car dealership are quite often the savvier option.

The truth is, it can be tempting to give in to dealer finance options that offer a low interest rate. But there's often a catch. With dealer finance, there’s generally little room for negotiation on the actual vehicle, so you need to consider your options very carefully.

Having your car loan sorted before you walk into a car dealership can increase your negotiating power. The salesperson will see you as a serious contender if you’re not depending on dealer finance to convert the enquiry to a sale. 

The same goes when looking for a second-hand car – it’s generally better to arrange a used car loan prior to making an offer on the vehicle.

2. Think twice about “special deals”

It can be very appealing when a dealership offers you free service for 5 years or up to 80,000km, especially if you’ve got a fancy-ish car that requires dealership service to keep the warranty viable, which could cost anywhere from $450 to $900 per service. You could be saving up to $5,000 in the first five years of your car's life, right?

Not exactly. With these kinds of ‘special offers’, just as in the dealer finance scenario mentioned above, you may not actually shave all that much off the price of the car. Wouldn’t you rather negotiate $5,000 off the sale price and take your car to get serviced at an independent mechanic for $200?

And don't fall into the ‘for a limited time only’ trap. Heard that one before? You should really take your time when making your decision about buying such an expensive item. So, maybe rethink the special offer so you can stay level-headed and negotiate the car you want at a price you can afford. It's better to make a balanced decision than a rushed one!

3. Fix that car loan rate

Yes, some people prefer the excitement that variable rates can offer. In an ideal world where the rates stay low and only get lower, we'd all want to jump on board!

But what if the RBA cash rate falls and your lender doesn’t pass on the benefits? It’d feel like you’re being ripped off, right? What if the cash rate goes up, and your lender suddenly decides to up your rate and then ups it again? There's nothing worse.

Fixed-rate car loans:

That's why many people tend to steer towards a fixed rate. Not only will you (hopefully) secure a reasonable rate, but you will have the same predictable repayment every month. Fixed rates tend to be a little higher at the outset, but sometimes, that security is well worth it.

It also means you can budget for your other monthly expenses around your car repayment. If you always know what your expenses are, you technically shouldn’t ever be out of pocket unless your income decreases or your other expenses increase (hello, cost of living!). Even more reason to avoid the gamble of a variable rate and opt for a safer, more predictable one.

4. Look for a loan that allows extra repayments

When you find yourself with extra money, it can feel all too exciting. That cash bonus you received at work, in the lotto, as a gift, or from your tax return? It should probably go towards your debt.

Whether it's on your credit card, mortgage, or car loan repayment, try to put as much as you can towards what you owe the bank. Why? Because you can pay off your debt quicker, which also means you'll pay less interest in the long run.

If you want the freedom and flexibility to repay more when you can, then you’ll need to find a car loan that offers free extra repayments. It might mean a higher interest rate, but it might be worth it if you’re looking to make extra repayments on your loan. It’s all about what works best for you.

5. Focus on car loan flexibility

After a loan that’ll cover the cost of a new car, plus give you some extra money to put towards a home renovation, holiday or other expense? It sounds like what you might be after a personal loan

What’s the difference between a personal loan and a car loan? A car loan is specifically used for the purchase of a car, whereas with most personal loans, you don’t necessarily need to specify what you intend to use it for.

What’s the catch with using a personal loan to pay for a car rather than a car loan? Well, you’ll likely pay more in interest with a personal loan than if you were to secure a car loan. However, in some cases, you can use the value of the car as security.

6. Watch out for hidden fees

Car loans can come with a range of different fees, like application fees, monthly service fees, early repayment penalty fees, and late payment fees. You’ll want to keep your eyes peeled for these when reading through the terms and conditions because getting stuck with an unexpected fee is a real pain. 

Ideally, you want to find a loan that suits your needs and has limited fees. It's also important to calculate whether the amount of fees you pay is offset by a low-interest rate or vice versa. 

Compare Car Loans today - last updated 27 May 2024

Search promoted car loans below or do a full Mozo database search. Advertiser disclosure
  • 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
  • Car Loan

    Up to 7 years old, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.49% p.a.
    6.84% p.a.based on $30,000
    over 5 years

    Purchase or refinance a new or used car, caravan or motorbike, up to 7 years old. Fixed rate with terms from 1 to 7 years. Make additional payments and free redraw. No early payout penalties. No monthly fees. Quick start application in less than 5 minutes online.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.49% would cost $35,460.64 including fees.

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    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.

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    Details
  • New Car Loan - Special

    Home Owner Discount, Including Demo, Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.24% p.a.
    7.36% p.a.based on $30,000
    over 5 years

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 6.24% would cost $35,880.27 including fees.

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  • 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

Need a little nudge or help exploring your car loan options? We’re here to help! Visit Mozo’s car loan comparison tool to start comparing options today. We've also pulled aside some of Mozo's best car loans.

Rhianna Dews
Rhianna Dews
RG146
Senior Money Writer

Rhianna, RG146 certified in Generic Knowledge and Deposit Products, has helped Aussies with finances for a decade. She's written for TechRadar, Simple Living Australia, and worked with Foxtel and Vodafone.

Sara Borman
Sara Borman
Money writer

Sara has a Communications degree and has contributed to academic and literary publications in the US and Australia. She aims to bring an accessible point of view to credit cards and loans for Mozo readers.

* 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

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