What is a car loan?

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  • Dealer finance: Many car dealerships offer on-site finance, taking care of everything under one roof. Sounds easy but it’s important to shop around to make sure you’re getting the best deal. You also risk the dealer marking up the cost of the car to make back any discounts they give you on the interest rates.  
  • Chattel mortgage: Like a secured loan, you’re agreeing to put forward an asset as security for a loan. It’s an option for business owners and the self-employed and comes with some tax benefits.
  •  Car lease: With a car lease your lender actually buys the car and you agree to make rental repayments over an agreed term. At the end of the lease, you may have an option to purchase the car outright at a reduced price or return the vehicle.
  • Novated lease: A novated lease is a form of a car lease that is used with salary packaging. It comes with some tax benefits as you repay costs (including both the purchase price and ongoing running costs) with your pre-tax income.  
  • Commercial hire purchase: Similar to a car lease, except when the contract comes to an end and the total costs of the vehicle (including interest) has been repaid, you own the car. As the name suggests, it’s only available for cars used for a business purpose  

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