Doing the maths is smart

At this point, it can also be a good idea to look at your finances and decide how much you can comfortably afford to repay. For instance, if you think that you can afford to pay around $1,000 per month on car loan repayments and you want to repay your loan as quickly as possible, set the car loan calculator to the shortest loan term and the repayments to monthly. 

Then, slide the loan amount toggle along until you reach your loan repayment limit. This will give you an indication of the maximum amount you can afford to borrow and the budget for your new car. 

From here, play around with the loan term, loan type and repayment frequency to see how it affects the monthly repayment and the total amount of interest to be repaid. Once you’ve done this, you’ll have a much clearer idea of the type of loan you’re after when you get a rate estimate.

Want to know more about all your car loan options? Check out our Smart Guide, The Complete Guide to Car Loans in Australia.

It does, however, have some potential benefits for you too. You may find that you’re eligible for a better interest rate with a secured loan and there’s also the possibility of borrowing a larger amount. So, if the car you want to buy is on the more expensive side, a secured car loan could be a better option.

An unsecured car loan is a loan that’s not secured against the vehicle you’re buying. As there’s less security for the lender, the interest rates available to you could be a little higher and the maximum loan amount available is often lower. However, it does mean that you’ll have more flexibility with what car you buy as there are no restrictions on the age of the vehicle.

Your income surplus will also have an impact. Essentially, this is how much you have left over after you’ve paid all your expenses, such as your rent or mortgage, bills, food, fuel, hobbies and whatever else you usually spend money on in a month. 

Your income surplus is then used by lenders to work out how much you can comfortably afford to repay. So, the bigger your income surplus, the larger the amount you are likely to be able to borrow.

Finally, your credit score will also have an impact. Your credit score tells lenders how well you’ve managed borrowing in the past. If you have an exceptional credit score, it’s more likely that you’ll be able to borrow a higher amount. Likewise, if you’ve hit a few bumps in the road or you’ve got little-to-no credit history, you may only be eligible to borrow a smaller amount.

However, this also means that your monthly repayments will be bigger as you’re repaying the loan over a shorter amount of time. So, if you’re borrowing a larger amount, you may need to spread it out over a longer amount of time to make your loan more affordable. 

Longer loan terms

On the flip side, a longer loan term (aka 7 years) will give you the lowest monthly repayments as you’re spreading the cost out over a longer period of time. This can make the loan repayments more manageable and give you more of a buffer if your other expenses fluctuate. 

That said, it does mean that you’ll repay more in interest overall. You may also prefer to be in the knowledge that you’re paying your loan off as quickly as possible, which means a longer loan term may not be right for you. 

Pro tip: At Wisr, we don’t charge any early repayment fees, so you can make extra loan repayments any time or settle up in full early at no extra cost.

When you have a clearer idea of your credit history, the car loan calculator will give you a better indication of what your monthly repayments might be. 

Want to learn more about credit scores? Dig in to our Smart Guide, Credit Scores 101.

The comparison rate makes it easier to compare different credit products against each other (such as loans vs credit cards) as it tells you the true cost of your borrowing once everything has been taken into account.

Want to know more? Dive into our Smart Guide, The Power of Comparison Rates

That said, it’s super important that you check in with your finances before taking on any debt. While borrowing can accelerate your goals and keep life moving, it’s a good idea to have a plan or a savings buffer set aside in case your circumstances change. This can give you peace of mind when taking out a loan. 

Ultimately though, you’ll want to look into all your options before you decide to make sure a car loan is right for you. Using a car loan calculator is a good place to start as it will give you some ballpark figures to work with. Next, you can get a car loan rate estimate to find out your personalised interest rate and get a clearer idea of what’s available to you.

From here, we’ll run a soft credit check (the kind that doesn’t affect your credit scores) and, if you’re eligible for a Wisr car loan, calculate your personalised interest rate. You’ll then be able to see your loan repayment options over 3, 5 or 7 years. 

If you like what you see, you can then go ahead and submit a full car loan application. 

Want to see your Wisr car loan options? View them now by getting a rate estimate in just a few minutes.