Car loans are used to purchase new or used vehicles. They can take the form of loans, leases, hire purchase and rental agreements.
Getting a loan or lease for a car can be a short, streamlined way to finance up to 100% of the value of the car you need for you or your business.
There are many option for car loans, including leases, hire purchase and loans. The best option will depend on your individual needs and situation. Here are some examples and explanations.
A standard vehicle loan allows you to borrow up to 100% of the cost of a vehicle with fixed repayments. The vehicle is generally the only security required for the loan.
A finance lease is a form of rental agreement because the lessor owns the asset. At the end of the lease, you have the option of purchasing the asset (for a residual amount that was agreed upfront), trading in for a new vehicle or simply terminating the lease.
There is the risk that at the end of the lease the asset will be worth less than the residual value. One advantage of a finance lease is that the finance company pays the GST component, which makes your payments lower.
With a hire purchase, the finance company owns the vehicle during the life of the agreement. When you make the final payment – including a balloon payment if relevant, i.e. the lump sum owed at the end of the loan term after you’ve made all the regular monthly repayments – you take ownership of the vehicle.
Use one of our loan calculators to find out what your repayments on a loan would be.
For large loans, further financial statements may be required.
Most individuals and businesses will qualify for a car loan, including people with bad credit and startups. You can use our online prequalification tool to find out what types of loans you are eligible for.
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