cars, utes

Chris Reid Jul 3, 2023

When browsing for any kind of loan package, the major thing you’re looking out for is the interest rate, right?

But what if we told you that the lowest interest rate doesn’t actually always mean it’s the best deal?


It’s true though.

In fact, there are several contributing factors that can cause a loan package offering a lower interest rate to end up costing you more:


Additional fees and charges

While the interest rate might be a fraction of a percent lower, fees and charges can most definitely add up and negate this lower rate. It’s important to read the terms and conditions so you’re aware of these additional costs and can factor them into the overall amount you’ll end up paying.


Variable vs fixed rates

There are two types of rates in the finance world; fixed and variable. Both have their pros and cons.

Securing a fixed interest rate means you know your repayment amount will never change, which can be a huge advantage when it comes to budgeting and peace of mind. However, you’ll find a fixed interest rate is higher.

Variable interest rates will be lower than fixed which, of course, will help you save money. But because it’s variable, the lender is free to change the rate at their whim (though it will be affected by the RBA’s rate decreases/increases). Due to its potential for fluctuation, your monthly repayments may change a fair bit over the life of the loan.


Length of the loan

The longer you’re paying off a loan, the more interest you’ll end up paying. And more often than not, a shorter-term loan will bring with it a lower interest rate, too. So while 5% over 5 years may seem like a great deal in comparison to 7% over 3 years, you’ll actually end up paying less interest in the latter scenario.

At the end of the day, if you’re weighing up which loan you should go for but aren’t 100% sure which is the right one for you that’ll offer the lowest overall cost, remember one thing: make sure you’re comparing apples for apples.

That is, break down each of the loan packages and lay it all out so you’ve taken all of the ‘ins and outs’ of each into consideration. Doing this can and will help you save (potentially a lot of) money.

Alternatively, you can speak with a quality car financing broker who’ll help you navigate these often-confusing waters and guide you through the process so you can feel confident you’re getting the best deal for your circumstances.


Talk to us about finding you the best finance deal for you

At Stratton Finance, we’re here to provide our expert assistance to ensure you’re getting the most ideal outcome possible. Backed by more than 20 years of experience in the financing industry, we’ve built up a huge network of lenders that we’ll engage with to make sure your monthly repayments are the lowest they can be.

Find out now how incredible your monthly repayments could be with our online finance calculator. We know you’ll like what you see, and when you do give us a call on 1300 787 288 to discuss the next steps in your loan application!

You can also reach us via our online contact form - leave us a few of your details and someone will be in touch with you soon.

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