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Can you get a car loan in Melbourne?

Often described as the cultural capital of Australia, there is plenty to see and do in Melbourne and the surrounding areas. If you have your own transport, you and all the family can take in the museums, galleries and theatre shows of your choice, or take trips to the mountains or the beaches to make the most of your leisure time.

A car loan can help you get on the road in Melbourne sooner, without having to save up the money to buy a car outright. By comparing car loans before you apply, you can make sure you’re getting one of the best car loans for your financial situation, so you can be making hook turns and dodging trams before you know it.  

Where can you find Melbourne car loans?

Car loans are available in Melbourne from a wide variety of banks, lenders and other car finance specialists. This includes Victoria-based banks and financial institutions, such as Bank of Melbourne, Bank Australia, ME and UBank.

You can also apply for a car loan with Australian car finance providers operating nationwide. Out of Australia’s big four banks, two of them – ANZ and NAB – have their headquarters in Melbourne.

What are the benefits and risks of Melbourne car loans?

Like elsewhere in Australia, one of the biggest benefits of a car loan in Melbourne is that it can help get you on the road sooner, without having to take the extra time and effort to save up the money needed to buy a car outright. Access to a vehicle can make a big difference to your lifestyle. Additionally, if you use your car for work, you may be able to claim some of your car loan expenses as deductions on your taxes – contact a tax accountant to learn more. And if you can successfully manage your car loan’s repayments, this may help you to build your credit history, even if you’ve had problems with bad credit in the past.

Of course, there are also risks when you take out a car loan in Melbourne or elsewhere. One risk is finding yourself in financial trouble if you’re unable to keep up with the repayments. Defaulting on your car loan can also damage your credit score. And because car loans are often secured by the value of the vehicle, you could lose the car if you fall behind on the repayments.

How do you compare Melbourne car loans?

There are several options for comparing car loans in Melbourne, beyond just calling a dozen different car finance companies to get a dozen different quotes.

RateCity’s comparison tables allow you to compare a variety of different car loan offers side by side, from rates, to fees, to features and other benefits. Using the filters, you can narrow down your shortlist to only the car loans that may best suit your needs before you take the time to apply.

RateCity’s Leaderboards rank car loans in a variety of different categories based on their Real Time Ratings™. This system combines the cost of a car loan with the flexibility it offers to create a single simple star rating. These ratings are updated every day, so you can be confident in their accuracy.

You can also use a car loan calculator to estimate the cost of car loan repayments, or how large a car loan amount you can afford to borrow. Based on these calculations, you can compare car loans that may suit your needs.

What car loan rates can you get in Melbourne?

The car loan interest rates you may be offered in Melbourne may depend on a range of factors, including your credit score, and if you’re selecting a secured or unsecured car loan.

Secured car loans use the value of the vehicle being purchased as collateral, so if you don’t pay the loan, the finance company can take the car. However, because this reduces the lender’s financial risk, you may be offered a lower interest rate. It’s also important to remember that you’ll need to be purchasing a car with enough value to secure the loan, which may limit you to new cars, which could have higher purchase prices.

Unsecured car loans don’t use the vehicle’s value as security, so you may have more options to purchase new vehicles or used cars, which may have lower prices. However, because then lender would be at greater financial risk, unsecured car loans tend to have higher interest rates, and may have stricter lending criteria.

Many car loans have fixed interest rates, where you’ll be charged interest at the same rate for the full loan term, keeping your repayments consistent. However, there are some variable rate car finance options available, where the interest rate may increase or decrease, affecting the cost of your loan.

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What are other features of Melbourne car loans?

As well as interest charges, you may also need to pay fees on your car loan, from establishment fees to ongoing fees and more. Sometimes a car loan with a low rate but high fees could cost more than a car loan with a higher interest rate a no fees. To get a better idea of a car loan’s overall cost, you can look at the comparison rate, as this combines the cost of interest and standard fees into a single percentage.

Your loan term can also make a big difference to the overall cost of your car loan. Paying off your car loan over a term of several years may mean your monthly repayments are cheaper, but you may be charged more in total interest on your car. On the other hand, a shorter car loan term may cost you more from month to month, but you may end up paying less in total interest charges.

Some car loans are available with extra features and benefits, such as the ability to make extra repayments. These additional repayments can help pay of your car faster, reducing the total interest you’re charged. Keep in mind that not all lenders offer the option of extra repayments, and some may charge fees for early repayment.

You may be able to opt for a balloon payment on your car loan. This is where you only make repayments on part of your loan amount, leaving the remainder to be paid in one large lump sum at the end of the loan term. Alternatively, you could refinance the car loan at this point, possibly trading in your car for a different model. This arrangement may be useful for some customers, though it's important to remember that the longer you're in debt, the more you may be charged in interest over time, affecting the total cost of the loan. 

Can you get car finance help in Melbourne?

If car finance has your head spinning, one option may be to consult a car finance broker in Melbourne and benefit from their local knowledge. These car loan experts can look at your personal finances and recommend car loans that may suit your personal goals, including options that are exclusive to brokers and aren’t typically advertised. They can also negotiate with the lender to help you get a better deal, and handle a lot of the paperwork on your behalf, saving you rime and effort. Keep in mind that some car finance brokers charge fees, which my be added to the cost of your loan, potentially costing you more in interest charges.

If you already own a home or have a home loan, you may be able to approach a mortgage broker about refinancing your home loan to access a line of credit to buy a car. The amount you can borrow may depend on the equity you have in your property, but this may allow you to pay interest at a lower rate than you would with some car loans.  

How do you get a car loan?

There are four different ways you can get a car loan. You can go straight to a lender. You can get a finance broker to organise a car loan for you. You can get ‘dealer finance’ – which is when the car dealer organises a car loan for you. Or you can organise your own car loan through a comparison website, like RateCity.

Whichever method you choose, you will need to provide proof of identification, proof of income and proof of savings. So you may be asked for any combination of passport, driver’s licence, bank statements, payslips, tax returns and utility bills. You might also be asked to provide proof of insurance.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

Should I service my own car?

There are also costs associated with vehicle ownership, such as paying for petrol and the obligatory ongoing maintenance. But should you cut down on costs by servicing your own vehicle?

If you’re considering getting out the tool box, spanner, and grease-laden towel, you need to carefully weigh up the risks and benefits. A trained mechanic will need to complete certain tasks, while you may be perfectly capable to handle other aspects yourself.

If you’re short on time, it may be worth paying for the convenience of a full vehicle service. However if you’re trying to slash your expenses, there are some basic maintenance tasks that you can complete yourself.

You should call a mechanic if you’re unsure about a vehicle maintenance task you’re about to take on. However there are a number of maintenance tasks that you may be able to complete with your own two hands including:

  • Replacing your car battery
  • Changing the oil
  • Replacing worn windscreen wipers
  • Replacing blown fuses

Remember to keep your car’s body in good condition, by washing and applying a protective wax on a regular basis, too.

Always check your car warranty agreement as some new car purchases come with an extended car warranty provided your services are conducted at the vehicle service centre where you purchased the car. In these circumstances, you may find the service fee is capped, alleviating some of the maintenance woes.

Can you refinance a car loan with the same lender?

You may be looking to refinance your car loan to get lower interest rates or reduce the total monthly amount you have to pay. Often, this leads to the question ‘can I refinance a car loan with the same bank?’

While it’s always worth shopping around for a better deal or at least to compare offers from other lenders, you can sometimes refinance to a different loan with the same lender. It may be simpler,  as the lender already has your details and knows your repayment history. 

Having said that, knowing the terms offered by other lenders may help you negotiate a better deal with your current lender.

What is vehicle finance?

Vehicle finance, also known as a car loan, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Vehicle finance can be used for both new and used vehicles.

This article was reviewed by Head of Content Leigh Stark before it was published as part of RateCity's Fact Check process.