What is a secured car loan?

Otherwise known as a consumer loan or a car loan, you’ll essentially borrow the money from the lender who will then hold security over the vehicle. This can be an advantage to you as you’ll often get a lower interest rate.

How does it work?

You’ll take ownership at the time of purchase and the lender takes an interest in the vehicle as security for the loan. Once your contract is completed you’ll own the vehicle outright. If you’re unable to make your repayments, then the lender may be able to repossess your car.

If you’re using your car for business purposes more than 50% of the time, then a commercial business loan like a chattel mortgage might suit you better.

What else do I need to know?

  • Flexible contract terms ranging from 12 to 84 months (one to seven years)
  • Fixed interest rates mean you'll always know your repayments
  • You may qualify for a balloon or residual payment, which will reduce your monthly repayments
  • The loan is secured against the vehicle, allowing lower interest rates
  • A good option for you if you use your vehicle for personal use, but don't have the option of salary packaging through a novated lease

Common questions about your secured loan

car loan (also referred to as a secured car loan) involves a finance company lending you the money to purchase a vehicle for personal use. The loan is secured against the vehicle and, when the final repayment has been made, you will own the vehicle outright.

Benefits include:

  • Flexible loan repayment periods ranging from one to seven years.
  • You may qualify for a balloon or residual payment which will reduce your monthly repayments.
  • Fixed interest rates mean you'll always know your repayments
  • Improve cashflow
  • The potential to claim tax deductions if the car is being used for business purposes*
  • Lower interest rates, thanks to the loan being secured against the vehicle

*Check with your accountant for eligibility

Please visit the ATO website or speak to your accountant to find out about claiming vehicle-related tax deductions.

A car loan is a good option for someone who uses their vehicle mainly for personal purposes, but who does not have the option of salary packaging a car through a novated lease.

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