FOR PERSONAL USE
A consumer loan is any loan that is not for business purposes and can be either on a secured or non secured basis. Secured means the item you are buying will be provided to the lender as security for the loan. A loan that is secured will in most cases have a lower interest rate than non secured loans.
Over the past 12 months there has been many changes in lending criteria for consumer loans and more recently, rules have been introduced to protect consumers from loan products with unnecessarily high interest rates.
While our main focus is business finance, we can provide you with consumer loan options for the purchase of your new or used vehicle. Our options have great rates and are tailored to your requirements.
Please find below a brief outline of a consumer loan product.
Suits personal or non business use
Loan terms generally 1 - 5 years
Lender takes security of the item until the loan is paid off
Generally secured by the item purchased
A Consumer Loan is a finance product where the lender uses the value of the item as security for the loan being taken.
Under a Consumer loan the financier advances funds to the customer to purchase a car. The customer takes ownership of the vehicle at the time of purchase and the financier takes an interest in the vehicle as security. Once the contract is completed the lender no longer has an interest in the vehicle.
Contract terms generally ranging from 12 to 60 months but can be longer
Option of a balloon or residual value so monthly payments can be kept within budget
Generally a fixed interest rate
Deposit (either cash or trade-in) may be used, often no deposit is required
A tax deduction is available when the vehicle is used for income producing purposes, talk with your accountant to determine tax deductibility
loan is secured against the item being purchased (in most cases)
Some lenders offer rate discounts for home owners
An alternative to a consumer loan is an unsecured personal loan. In this scenario the lender does not take a security over the item to be purchased and instead charges you a higher interest rate as the credit risk is higher. Generally, an unsecured personal loan is used when the product to be purchased is undesirable to a lender as a loan security.
What will my repayments be?
Vehicle finance isn't one size fits all. The rate applicable to your loan and the resulting repayment can only be determined once we know the type, age & price of the vehicle you are buying, the proposed loan amount and loan term. Once this is known we can provide a finance quote which will outline the interest rate, repayments and other fees and charges applicable.
Is it all about the rate?
In short no. When comparing & considering car finance it is always important to compare repayments and not just rate over the same term, loan amount and balloon if applicable. This is particularly the case when considering car yard or dealer finance. Car dealer's historically have quoted lower rates in order to make a facility sound cheap. But once commissions are built in the rate becomes much higher. Always make sure you compare multiple quotes from different sources if you are considering dealer finance.
Can I buy a car via private sale?
The answer is yes! If buying via private sale there is more paperwork involved, however the onus for the extra work normally falls to the broker...so it won't require much extra effort from you. Generally an inspection is required by either an independent inspector, bank or broker to make sure the item being financed has been vetted. Each lender has their own requirements regarding private sales.