Car finance is overwhelming on its own, whether you’re borrowing money to buy a new or used car. There are a number of car loan products to choose from and so many requirements and conditions wrapped around terminologies that make a regular person scratch their head in confusion. Wouldn’t it be simpler if you could understand the terms used when you take out a car loan? We’re here to help.
On this page, you will find a thorough guide that will allow you to navigate the world of car finance with ease.
Use the buttons below to jump to a section you want to learn more about:
The Most Basic Car Finance Terminologies
When you are ready to take out a loan to purchase a car, there are some terms that you will encounter, no matter where you choose to borrow. The most common are:
When considering which lender or car loan product to go for, always look at the APR or comparison rate. Whilst the interest rate is often the advertised rate, check the APR, which gives you a more accurate picture of the total cost of the loan.
Where Do You Get Car Finance?
If you cannot buy a car upfront, you have a number of options to afford the payment, including:
Whichever source of financing you use, you will always undergo an assessment to determine your capacity to repay the loan. Your current circumstances, including debts, bankruptcy, and regular expenses, will also be evaluated before you can be approved.
Types, Methods, and Agreements
Car finance can come in a variety of shapes and sizes, including:
We recommend waiting at least six months after getting approved of your previous loan before refinancing; otherwise, it can hurt your credit score.
Payments, Rates, Fees, and Penalties
The cost of the loan is a huge deciding factor for any borrowing customer. Here are some terminologies associated with the loan cost that you should know about:
One more fee that you need to know is the stamp duty. In WA, this is based on the manufacturer’s price for new vehicles or a reasonable value for used cars. Stamp duty starts at 2.75% for vehicles costing up to $25,000. For vehicles over $50,000, the stamp duty is 6.5% of the price. Use the stamp duty calculator from the WA Department of Finance here.
Other Important Car Finance Terms
There are still a lot more terminologies used in car finance. Here are common terms that you will likely encounter upon loan application:
Use the definitions above to decode the terms in car finance that you need to know. If you require more in-depth assistance on your loan with us, please do not hesitate to contact our friendly team here at Loans Unlimited.
If you have any questions about car finance, why not talk to us? Our team can walk you through what a loan means for you and how it can get you in your new car sooner!
Contact our team on 1300 212 200 today.