Handy Hints for Your First Car Loan » Car Money

Handy Hints for Your First Car Loan

Aside from credit and store cards, a car loan is often the first ‘big debt’ decision we make. Signing up for debt is a big step, so it’s important to understand your options and what you are committing to. If you’re considering getting your first car loan, take a moment to read on for a few handy tips.

1. Build a workable budget.

It’s important to ensure that your numbers stack up. A car loan repayment will be an extra cost coming out of your budget, so the first step is to find out what the regular repayment would be on the loan amount you’re considering. Then have a good look at your budget (living costs, entertainment etc) and take a conservative view of whether you can comfortably afford that amount.

A repayment calculator is a quick and easy way to start building a picture of what you can afford to borrow.

2. Know the total cost of your car

Remember, the cost of your car is much more than just the purchase price. You’ll also need to manage running costs like fuel, insurance and registration; and maintenance costs like services and a Warrant of Fitness.

Work out these costs upfront and then take another look at your budget. If things are starting to look a little tight, you might need to reduce the total loan amount.

3. Be smart with your car loan

Understanding how a car loan works can help you avoid unwanted surprises. Naturally, most people focus on the interest rate as the key indicator that they’re getting the right loan, but that’s not always the full picture. Here are a couple of other factors you need to consider:

Shorter is better: Where possible, try to avoid the temptation to add extra years onto your loan in order to reduce your monthly repayment. If you add up the additional cost of interest, you’ll likely find yourself motivated to opt for a faster repayment schedule (as long as it is affordable). Additional or lump sum payments could also help you pay off your loan faster.

Know all the costs; not just the interest rate: Make sure you understand all the costs associated with your car loan before you sign on the dotted line. Pricing which seems attractive upfront could hide unexpected fees or set up charges that might undermine any savings in interest. Getting the complete picture could help you make a smarter choice for the long term.

Understanding how a car loan works, especially if it is your first loan, will help you make a smart borrowing decision.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.


1.*Fixed interest rates range from 9.95% p.a. to a maximum of 29.95% p.a. on a minimum 12 month to a maximum 60 month loan term. The actual interest rate charged to you will depend on your circumstances, the type of lending required, the security provided, and is determined by the lender.

2. Fees apply, including an establishment fee of up to $450 and an introducer fee of up to $995. A loan of $5,000 over 12 months at 10.95% p.a. has fees totalling $495 and a total repayment of $5,832.00 equating to 12 monthly payments of $486.00.

3. Approval is subject to meeting lending criteria, and affordability test applies. Our lender will independently assess whether you are eligible for a loan. We don't provide advice on whether a particular car loan offered by a lender is suitable for you.

4. One hour application decision subject to affordability test, the applicant meeting the lending criteria and supplying all the required information to process the loan application.

5. Same day payout subject to the applicant meeting the above conditions and completing loan documentation by 12pm.