If you’re planning on upgrading your daily drive or have your eyes set on buying a second-hand vintage car, then one of the easiest ways to do so is by getting a used car loan, and it works the same way as a standard personal loan. A used car loan lets you take advantage of using your good credit rating to purchase the vehicle you want when you want.
Find out how to get a loan for a second-hand car and why it’s a suitable option for anyone in the market for an old, demo, or used vehicle.
What is a used car loan?
A used car loan is available for anyone looking to buy a car that is too old to qualify for a new car loan.
A pre-owned vehicle is a great option for those in the market for their first car or to upgrade their existing vehicle. Used car loans come with plenty of flexibility since you’re not buying the vehicle brand new and there’s more room to negotiate if you opt for a private sale.
A used car loan works in the same way as a new car loan. You can either apply for a loan first and get pre-approved so that you know how much you have to spend, or you can find the vehicle you want and then apply for the required loan amount.
It’s important that you compare car loan rates in the early stages of your car hunt, as some lenders may have restrictions on vehicles that are older than 12 years at the end of the loan term. You want to get the best rate possible for a used car loan. Once you have this information, you can start to get an estimate on how much your repayments will be and if you have to pay at a fixed or variable rate.
Used car loans generally have the following factors which affect the total cost over the life of the loan:
- The interest rate (either fixed or variable)
- A one-time establishment fee
- Ongoing fees (such as account maintenance fees, late payment fees, etc.)
Fixed or variable rate for used car loans?
When you borrow to finance a used car, interest will be charged on the balance at either a fixed or variable rate.
A fixed-rate is a rate that remains fixed or unchanged, this gives the borrower certainty on how much they will have to spend on repayments over the loan term. A variable rate, on the other hand, is a rate that fluctuates over time. This gives the borrower flexibility when it comes to making repayments. Either option has its pros and cons, and it ultimately comes down to what loan type works best for you.
At Plenti, you can borrow between $10,000 and $100,000 for a new or used car under 7 years old on a secured car loan. The interest rate you’ll receive will be 100% tailored to you, depending on how good your credit history is.
What are the benefits of a used car loan?
A used car loan allows you to enjoy a lower interest rate than you would receive if you were to finance through a credit card. Typically, the average interest rate of a car loan is between 5% to 17%. However, used car loans often attract lower interest rates and borrowers with a good credit rating can see their interest rates lowered to anywhere from 5% to 10%.
A used car loan provides a consistent repayment schedule which makes it easier to budget in advance, reducing your chances of late repayment fees or penalties.
How to get a loan for a second-hand car
Buying a used car is easy with a used car loan. Car loans can be sourced from a lender, which can be a bank or financial institution, a car dealership, or alternative lender.
When applying for a used car loan, you’ll be required to provide details about the car you’re buying, your proof of identity documents, and other documents outlining your assets, liability, and your general ability to make repayments on time.
Plenti provides unsecured car loans to Australian residents and businesses along with individuals who are in the market for a second-hand car.
You can apply for a second-hand car loan if you:
- Are aged 21 years and older
- Are an Australian citizen or permanent resident
- Can demonstrate that you have a regular source of income
- Have a good credit history
The first step to applying for a used car loan with Plenti is to complete a quick RateEstimate online. This is an initial assessment of your eligibility to apply for a car loan. It will provide you with estimated fees, charges, and interest rates based on your proposed loan term, purpose, and credit history. From there, you can apply for pre-approval and be driving away in your dream car in no time!