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Car Loan Comparison: How to Start and What to Look for

Car Loan Comparison: How to Start and What to Look for

Looking to compare different car loans? 

Getting a car loan is a lot easier than it used to be. The only problem? there’s so many lenders on the market offering different terms on their loans. A single Google search for ‘car loans’ will bring up pages and pages of results. It might not be best for you to apply with the first lender you see. Instead, you should do a car loan comparison to decide which one is best suited to you and your circumstances. 

What is a car loan comparison? 

A car loan comparison or comparison rate is designed to help you understand the overall cost of a loan based on a number of factors. Despite what you might think, a car loan comparison isn’t just based on interest rate. It also takes other factors into account including: 

  • loan amount;
  • loan term (repayment period);
  • repayment frequency (how often you pay);
  • interest rate
  • fees and charges

The car loan with the lowest interest rate doesn’t automatically make it the cheapest. That’s why a car loan comparison or comparison rate takes into account the other factors mentioned above. 

Pocket Cash: Who are we? 

Pocket Cash is the lender-finder more Aussies trust when searching for both personal loans and car loans. What’s a lender finder? We’re glad you asked. A lender finder in an online service designed to find suitable lenders for applicants. So, even though we cannot lend the money to you directly, we can match you with a lender that can! 

The benefit of this is you don’t have to scour the internet for hours, days or weeks searching for a lender. You can submit an application in just a few minutes, and we’ll do the searching for you. So even if you’ve got bad credit or you receive Centrelink benefits we’ll do our best to get you the money you need. 

Factors included in a car loan comparison

there a number of factors associated included in car loan comparison or comparison rate. Below, we’ve listed a number of these and given a brief description of each:

Interest rate

When conducting a car loan comparison, the first and foremost thing you should consider is the interest rate. For most lenders, the interest rate is the biggest contributor to the overall cost of the loan. However, interest rates differ from lender to lender. So, an applicant must always consider interest rates when conducting a car loan comparison. 

It’s also important to remember, car loan interest rates can differ depending on the borrower’s credit score. The higher your credit score, the more likely you are to get more competitive interest rates. 

Car loan amount

Depending on the lender, you could get either 100% of the loan amount on the spot or you might have to pay a down payment. A down payment is a cash payment made by the  borrower at the onset of the loan. Down payment for car loans usually vary between 10 and 20 percent. 

Some people feel comfortable to make the down payment, while some may not be able to do so. Choose a car loan that best suits you based on your needs. 

Equated monthly installment (EMI)

Car loan repayments are usually made through equated monthly instalments (EMI). If you choose a longer repayment period, your EMIs will be smaller, however you might end up paying more in interest. EMI is basically composed of interest rate and the principal amount. EMIs are generally higher during the initial months and decrease after every month. 

Fees and charges

Another thing you should look for are the relevant fees and charges associated with your car loan. common fees included in car loan contracts include: establishment fee, late repayment fee, rescheduling fees, rescheduled repayment fees. Some lenders will even charge an early settlement fee if you decide to pay your car loan off early. This, however, isn’t very common. 

Processing time 

Everyone wants to get their car loan approved as fast as possible.  so make sure to investigate a couple of things like how quickly the lender you’re applying processes applications? Is the process hassle-free? Does the lender carry minimum documentation procedures? Consider these viewpoints at the time of car loan comparison

Down payment

Another thing to consider when conducting a car loan comparison is if the lender will require a down payment from you. If the lender does require a down payment, you need to ask yourself if you can afford this. car loan down payments usually vary between 10% and 20%.

A down payment isn’t all bad however, because it means you’ve already paid off a portion of you repayments before they’ve even started.  

Insurance premium

Some lenders will require that you have insurance on your vehicle before you apply. This is so, if you were to have an accident, you’ll be covered rather than required high repair costs. The insurance policy attached to your car might not be the best policy in the market. Thus, it is a positive indication to compare the insurance terms and conditions at the time of making car loan comparison

Pre-approval charges

Some lenders ask for a pre-approval fee for the car loan and it is typically non-refundable. In such a case, check your eligibility and credit scores before applying for the car loan. In case your car loan doesn’t get approved, you will lose the money that you paid while filling out the loan application. 

Credit score

Your credit score will most likely affect what interest rate you’re entitled to. The good thing however, is that some lenders can approve applicants with bad credit. 

Additional things to consider

Once you’re done with the car loan comparison step, there are few things that one should keep in mind before applying for a car loan:

  • You shouldn’t apply for more than you need: This can be both unnecessary and affordable for you. Not only that, but applying for more than you need could hurt your chances of loan approval. 
  • Applying for multiple car loans can damage your credit score: When you apply for a car loan, a hard inquiry is creed on your credit report. Too many hard inquiries will cause your credit score to drop. 
  • You will most likely need to secure your car loan: Securing your car loans refers to attaching an asset of value to your loan in case you can’t afford the repayments. When applying for a car loan, your lender will typically ask that you use the car you’re purchasing as your loan security. 

Who can apply for a car loan? 

To apply for Pocket Cash’s online lender finding service, you just have to meet a few basic requirements. All applicant’s must:

  • Be 18 years old;
  • Be an Australian Citizen or permanent Resident;
  • Have a stable income into a personal bank account;
  • Have internet banking set up;
  • Have an active mobile number and email address.

What document will I need to apply? 

At Pocket Cash, we won’t ask you to provide us with mountains of paperwork. We won’t even ask you to print anything out. Any required documents can be submitted 100% online. We suggest having the following details handy to make sure you breeze through application

  • Online banking details; 
  • An active email address and mobile number;
  • The reason you are applying for the loan; 
  • Your MyGov details (if you are receiving Centrelink payments);
  • Employer and contact details.

Ready to apply? 

More Aussies everyday are turning to Pocket Cash to find affordable car loans suited to them. So you can either conduct a car loan comparison to find the best car loan option available to you or you can submit an application with Pocket Cash.

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