Car Loans

Financing your dream car

Like a home loan, a car will be one of the single biggest purchase you will likely make.

1. What can you afford?

Firstly, what can you afford? Secondly, what are you willing to pay? It is equally important to consider in addition to owning and running a car, other expenses you will likely incur. This can likely include annual registration fees, insurance, roadside assistance, petrol, repairs, maintenance as well as road tolls.

2. Choosing a car loan

Car loans in the first place, are loans you take out for purchasing a new or used car. Therefore, any money borrowed will need to be repaid. If you don’t pay off the full amount of the loan by the agreed end of term, likewise if you can’t afford to make equal payments over the life of the loan, then the final payment must be made as a lump sum.


You will have to choose between a fixed or variable rate loan. A fixed rate is a rate locked in for the term of the loan, in other words, your repayments will be set. Whereas a variable rate, will vary. However, if you make extra payments from time to time, paying your term out early, you could be charged an early termination fee. In addition to this, you will also have to pay account fees and charges.


Secured loans require you in the first place to secure an asset as security against your loan, this can be the car you are buying. However, if you don’t make repayments, the credit provider can repossess and sell your asset to recover their losses. The age of your car of course will affect its resale value, therefore if your car is sold for less than you owe, then you will still have to pay the credit provider the difference.


Unsecured loans are usually for used cars. Due to to this you will of course be borrowing much less, and interest rates are usually higher as the credit provider is taking a bigger risk. If you don’t repay the loan, the credit provider can then take you to court to recover its money.

3. Get value for your money

You should of course shop around for credit then buy your car. Credit providers will give you ‘in principle approval’ for a loan, therefore you’ll know exactly how much you can borrow.