When it comes to financing a vehicle, you want the lowest interest rate possible. Low-interest car loans can be an attractive option if you’re looking to save money over the life of your loan.
Low-interest loans are the best car loans to look for because you pay less for the loan.
Keep reading to learn more about low-interest car loans, including how they work, why interest rates are important, and how to apply for one.
What is a Low Interest Car Loan?
Low-interest car loans are auto loans that have a lower interest rate, designed to help consumers acquire new or used vehicles at a lower cost.
The interest rate on a car loan can significantly impact the total cost of the vehicle, affecting monthly payments and your overall financial commitment. Lower interest rates mean less money paid in interest over time, allowing more of your budget to go towards the principal amount—essentially helping buyers save money.
With Loan Direct, you can get a car loan from just 9.95%! This is significantly lower than the starting rates from the “big four” banks (BNZ, ANZ, ASB and Westpac), which offer loans starting from between 12.90% to 13.90%.
You can also get higher loan amounts with Loan Direct – our unsecured loans have limits of $75,000, and with our secured loans you can get up to $150,000! Other lenders have limits of $30,000 to $50,000.
With Loan Direct, you can do more!
How To Get a Low Interest Car Loan
The interest rate you are offered when you apply for a loan is highly influenced by your credit score, which is essentially a rating of your creditworthiness.
If you have made regular loan and bill payments on time and in full, your credit score will likely be good, and therefore you have a better chance of getting a lower interest rate.
On the other hand, if you’ve had trouble paying back loans or making bill payments on time, your credit score might not be so good. In this case, you could be offered a higher interest rate, reflecting the increased risk to the lender.
Even if you have bad credit, that doesn’t mean you have to settle for a high-cost loan – if you have enough regular income, there’s a good chance we can get a positive outcome for you.
No matter what your credit score is, by comparing offers from low-cost lenders, you can still get yourself a great deal.
The best way to do this is using a loan broker service, such as Loan Direct. When you apply for a loan through us, we put your application in front of multiple low-cost lenders to get you the best deal.
Secured and Unsecured Car Loans
Another factor that influences interest rates on car loans is whether the loan is secured or unsecured.
Secured Car Loans
A secured car loan is when the vehicle itself is used as security against the loan.
This means if you fail to repay the loan, the car can be taken back, reducing some of the risk to the lender.
The benefit of this type of loan is that you can often get a lower interest rate with a secured loan.
One of the main drawbacks, however, is that the process of obtaining a secured car loan takes longer than with an unsecured loan. There can also be more conditions attached to the loan, such as the car needing to be a certain age.
With a secured loan through Loan Direct, you can borrow up to $150,000.
Unsecured Car Loans
Unsecured loans – the most common type of loan Loan Direct provides – is when you are simply given cash to spend as you please.
Because there’s no security, you can go out and buy whatever car you like!
It’s great to have this freedom, but unsecured car loans tend to have slightly higher interest rates when compared with secured loans.
At Loan Direct you can borrow up to $75,000 unsecured.
Where to Get a Low Interest Car Loan
Finding a low-interest car loan can be a straightforward process when you know where to look. There are various lending sources available, each with their own pros and cons.
Credit Unions
Credit unions often offer competitive interest rates compared to traditional banks. Being member-owned, credit unions prioritise the financial well-being of their members over profits, which can help you secure a lower interest rate.
However, you’ll need to become a member of the credit union, which might require meeting certain eligibility requirements.
Banks
When seeking a personal loan, banks are a common choice, but they can have higher initial interest rates than some budget-friendly lenders. Not all banks tailor their interest rates to the borrower, so you could end up paying more than you need.
Additionally, banks generally impose strict criteria for loan approval. Those with a less-than-ideal credit history may encounter difficulties securing a loan through a bank. In contrast, finance companies and online lenders often exhibit more leniency in their lending decisions and may be willing to extend loans to individuals with challenging credit histories.
Online Lenders
The rise of online lenders has transformed the way people secure loans. Online providers can offer competitive rates because they have lower overhead costs. Many of these lenders provide a quick and easy application process, often allowing you to receive your funds in less than 24 hours.
However, it’s crucial to conduct thorough research and review feedback to confirm that they are reliable and credible.
Why Using a Loan Broker is Best
Loan Direct is an online loan broker that merges fast lending with competitive interest rates to deliver a borrowing experience that is second-to-none.
Utilising a loan broker is much better than making multiple loan applications yourself, as each application you make is recorded against your credit score.
If you make a few loan applications in a short period of time, your credit score could take a hit. If your credit score is already on the low side, that’s the last thing you need!
With Loan Direct, you just have to complete one simple online application form and you’re good to go.
We make your loan affordable by structuring it to suit your circumstances. With the option of a loan term from 6 months to 7 years, we make it easy to meet your loan repayments.
We’re also fast thanks to our 100% online process! After you complete our super easy loan application form, we can usually get approval within 1-2 hours!*
Find out more about why Loan Direct is your first choice for fast, easy loans at great rates.
*Subject to responsible lending criteria.
