ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

A straight talking guide to Car Loans

Updated on December 27, 2013
Yep, we needed a new car, thankfully that was all we needed.
Yep, we needed a new car, thankfully that was all we needed. | Source

My car loan story

Over a year ago we were in the position where we desperately needed a new car, well a newer model than we had. All the money we had spent on maintaining and running our previous car had become almost double the weekly repayments a new car would cost to obtain on loan.

New car vs. Used Car

We chose this way as cars almost lose half their value when they leave the factory floor. We didn’t have the money up front to accept that loss.
The car we chose was 3 years old, with less than 60,000kms on the clock. A perfect service history and tidy interior. I was almost brand new.

New cars have glitches that need ironing out and not much is known about those issues. Factory warranty is good, however you need to prove it is a factory fault.

My Experience with Car Loans

We went to the used car dealer, after checking out the website. My husband found the car as mentioned above, and thought it was too good to be true however He wanted to see to be sure. We organized a time to go down, have a test drive and look at the car. We looked at another car too.

We ended up seeing the finance people and accepting the 3 year old car. The repayments were less than I had worked out we could afford in the budget and this was fantastic. So I didn’t look very hard at the fine print or the fees and charges. We chose to pay weekly, as this assists in lowering the amount of interest you pay. I didn’t check out the fees and terms as I usually do. After all it was less than I had budgeted.

About 6 months after that we needed yet another car. Our circumstances had changed and I was driving 3750 kilometers’ per month and the car that my husband drove did nearly the same amount of kilometers, even after all the time and money spent fixing it was starting to show signs of unreliability.

It took us longer to find the next car. However we found one in another state with less than 30,000km on the odometer. Another too good to be true car. My husband spent hours talking with the dealer. He decided to go up and purchase the car, based on seeing and driving.

Again he signed up with the dealer recommended finance company.

I was talking with somebody about the car loan and informed that we were paying around 15% for our secured car loan. A secured car loan is when they will take the car, if you default on enough payments. Unsecured car loans, generally for cars that have little resell value, have a higher percentage. On top of the 15% percent, they were also charging a $3.00 account keeping fee, every time I paid them money.

I ended up discovering that I could get a loan for around 9-10%. With no penalties for paying my loan. Which would mean that if I kept my repayments as I could afford; as was already budgeted - I would pay of the cars quicker. I started researching and found a loan company with low interest rates, completed all the paperwork. Which was rather difficult as the car loan companies we were originally with would only issue a payout figure with a one day expiration.

Once it was all sorted, I called the insurance company to inform them of the change in financier, and was informed I would get money back from my insurance premiums.

Dumbfounded, I asked why? As I had never considered that who I got the loan with would affect my insurance premiums.

The insurance company informed me that the financiers I had been with were considered high risk, those finance companies were big brand names. The company I swapped to was a small credit union, but it ranked as less risk. This didn't make sense to me, although I thanked her for the surprise money.

I guess its just some of the things I had never considered when looking for a car loan, and getting the loan at the car yard is incredibly convenient, although it was costing us so much more than had we taken the time to research.

Used car, less than 60,000kilometers on the odometer
Used car, less than 60,000kilometers on the odometer

Researching car loans – Fees and Charges

As with any loan, I know that when I went for my home loan, I read the fees and charges pages as well as the interest rate. Even with researching a bank account, credit card – know the hidden fees and charges.

What’s the point in paying less interest if you have – statement fees $15.00 per quarter. Account managing fees of $3.00 every time you pay the loan. And a host of other fees and charges that are written somewhere but not advertised. I’d say there is little point and won't pay off the loan as efficiently as possible.

Know exactly what the fees will be as these are taken in to account in the Comparison Rate, but when you look at that, it only one or two percent higher you may not care as much as you should, as your repayment is generally only based on the actual interest rate.

Now both my loans have comparison rates that are almost on par with each other. I know how to avoid the fees and charges.

As all loans have a fee for late payment – I set up direct debit, or direct payment from my account. I check my bank frequently to ensure all the payments are going through and there is enough money in my bank account.

Car Loan Definitions

Abbasangel's understanding of a secured car loan: They are going to take the car if you miss to many repayments, however this will make your interest rate lower and expect you to keep paying for it!

Abbasangels' understanding of a unsecured car loan: The car isn't worth enough to take so they will make you pay for a cheaper car with a high interest rate.

Abbasangel's understanding of interest: interest on a car loan is higher than a mortgage, less than a credit card, sometimes around the same interest rate. I believe this to be that cars, a riskier loan for companies to provide as they can be involved in accidents, stolen or maybe it is just that not many people take out a $200,000 loan for the latest Ferrari.

Abbasangel's understanding of fees: There are start up fees that are unavoidable, otherwise these should be avoided at all costs, by paying on time, try to get one without account keeping fees. The only other fee you should be happy to pay is a "ending the contract early" if it will save you more interest than the fee itself.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)