What is a car loan and how does it work?
A 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.
What are the benefits of a car loan?
- Flexible loan repayment periods, ranging from two to 10 years
- The option to reduce monthly repayments by setting a final balance (Residual Value) payment
- Choice of a fixed or variable interest rate
- The option to put down either a lump sum or your current vehicle as a deposit to reduce the amount borrowed
- 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
- Quotes and approvals available online
What tax and GST can I expect to pay on a car loan?
A car loan is classed as a personal finance product, however, it may still be possible to claim a tax deduction on your payments, depending on how frequently you use your vehicle for business purposes. For more information about claiming vehicle-related tax deductions, please visit the ATO website.
Who should choose a car loan?
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.