Are fixed rate car loans a good deal?
A fixed rate car loan is a type of finance that has a set or ‘fixed’ interest rate. This means you will be paying the same interest rate over the life of the loan. Your repayments will also stay the same regardless of outside market factors. Fixed rate car loans can be a good deal for some but not others; it all depends on what you want out of your car finance.
Some car loans are better suited for you than others. To make the most out of your car finance, you need to find one that meets your needs best. When choosing the right car loan, consider the following:
When is a fixed rate car loan a good idea?
Fixed rate car loans offer plenty of benefits, as well as drawbacks. Here are some examples of when a fixed rate car loan can be beneficial:
You want to easily manage your finances
A fixed rate car loan provides stability and predictability in terms of loan repayments and overall loan cost. You won’t spend time wondering how much your next repayment is going to be or how much the total cost of your loan will be. This can be a great comfort to those who are already juggling multiple payments at the same time.
If you’re already paying for a mortgage, credit card bills, utilities, insurance, and other debt, adding a potentially ever-changing car loan payment to the mix may make things much more difficult than it needs to be.
With a fixed rate car loan, you know how much you need to pay and can plan weeks or even months ahead of time. It also makes it easier to set up automatic payments to ensure you don’t miss anything and avoid incurring late fees.
Interest rates are at their lowest
Because the interest rate on fixed rate car loans don’t change, you’re safe from interest hikes. A great time to apply for a fixed rate car loan is when rates are at a record low or before interest rates are forecasted to rise.
Before applying for a car loan, always look at the interest rates from various lenders. This will give you a better idea of what the average rates are. Check the news to see if there are potential rate hikes or drops in the near future. Knowing if and when rate changes happen can help you decide when best to take out a fixed rate car loan.
You could save hundreds if not thousands of dollars by locking in a low interest rate for the entirety of your loan. This is especially true if you do it before a forecasted rate hike.
What should you look for in a fixed rate car loan?
Not all fixed rate car loans are the same. You need to keep an eye out for car loans that offer not only competitive rates but also useful features that can help you make the most out of your car finance.
Keep these in mind when searching for the perfect fixed rate car loan:
Low interest rates
The interest rate is a deciding factor for many as it affects your repayment amount and the cost of the loan. The lower the interest rate, the less expensive your car loan will be and vice versa. You can use an online car loan calculator to better understand how interest rates affect the cost of your loan.
When shopping around, don’t be too taken with car loans that offer extremely low rates or claim to provide zero percent rates. These deals may seem like a steal and could save you tons but often they’re hiding incredibly steep ongoing fees and charges.
Minimal additional fees
Another important factor you must consider is the additional fees which include annual fees, application fees, settlement fees, and the like. The fees by themselves may not seem much but when added together they could get out of hand.
Check out a loan’s comparison rate to get a more accurate look at its total cost. Comparison rates calculate the interest rate together with loan fees to display the true cost of a loan. Loans with high comparison rates cost more overall than those with lower rates.
Useful loan features
One of the drawbacks of a fixed rate car loan is the lack of flexibility. This is why having a fixed rate car finance with useful features like balloon payment becomes especially important. Also, consider the lender and what type of amenities they provide when you take out a loan with them. At loans.com.au, for example, borrowers can expect a streamlined online application and convenient loan repayments.
Looking for a low-rate fixed rate car loan?
Check out our range of fixed rate car loans, whether you’re buying a brand new car or a used vehicle, we have a car finance that’s perfect for you. Learn more by speaking with our friendly lending specialists—simply call 13 10 90.
If you want to jumpstart your car loan journey, apply online today!
Find out in under 2 minutes if you qualify for one of our car loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
