Loans.com.au Car Loan Review: Features, Pros & Cons

Online lender, Loans.com.au, bills itself as Australia’s first online lender and was one of the early adopters of the digital-first personal loan application. It is backed by Firstmac, an Australian non-bank lender, with more than four decades of experience in the local market.

It launched in Brisbane in 2011 with its competitively priced home loans, and has since expanded into low-cost car and caravan loans. Loans.com.au also offers discounted car loans for green/hybrid cars or EVs, and promotes its fast turnaround time for loans, with full approvals possible “within 24 hours”.

Pre-approvals can be obtained in “around 30 minutes”, according to the company, and the loan can be settled, with funds administered, in between two to four business days, “pending all the lending criteria is met”.

In 2022, Loans.com.au launched a sister company and car buying service, OnlineAuto.com.au, pairing borrowers with cars and caravans for sale.

Loans.com.au’s personal loans are confined to cars and caravans—borrowing for other purposes, such as a holiday or home renovations, isn’t possible. The terms of your loan will stipulate this, and the car or caravan will be used as collateral in case you cannot meet your repayments, making this what is termed a ‘secured’ loan.

Borrowers can access finance for:

• New cars (which also includes demonstration cars up to 5,000km)
• Used cars up to 12 years old
• New caravans
• Used caravans up to 8 years old
• Fuel-efficient “green” cars
• Electric cars or EVs.

Although customers can borrow up to $150,000 on cars less than eight years old, cars that are between eight and 12 years are capped at a $50,000 loan.

You can choose between a fixed interest rate so there are no sudden surprises or you can opt for a variable rate for the length of the loan team, which means the interest rate you are charged may rise or fall depending on the cash-rate movements of the Reserve Bank of Australia (RBA).

For those on fixed-rate loans, Loans.com.au also offers a “balloon payment” option, which is a one-off lump sum that borrowers pay at the end of the loan term. The advantage is that by agreeing to pay this lump sum, you will only pay interest on the remaining balance, saving you in weekly repayments. This balloon payment can be as high as 50% of the amount borrowed, and borrowers will need to ensure they have sufficient funds to meet the cost.

It is not immediately clear what the difference is between the company’s green and EV loan products. Loans.com.au is clear in its definition of an EV loan product pertaining to an EV car, but its green loans are described as for cars that are “usually very fuel-efficient and often have lower running costs”.

The company describes a green car loan as a “different type” of car loan product that is offered at a discount to encourage borrowers to opt for a more environmentally friendly choice of car. It adds that “at this stage, Loans.com.au will only consider electric cars to be eligible for the green car loan discount.”

Considering that EV loans and green car loans offer the same interest rate, and the confusing definition of what constitutes a green loan, consumers would be safe to approach each loan as if they were the one product.

The starting rate you received will depend on your loan type. As of October 24, 2024, the following interest rates apply to car loans:
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As you can see from the above table, only fixed rate loans are available for cars older than five years.
Caravan interest rates follow a similar pattern: while it is possible to obtain a variable rate on a new caravan and those that are less than five years old at 8.24% (comparison rate 9.35%), you will need to fix the loan to obtain finance for an older caravan.

You’ll pay more, too: while a caravan less than three years old will attract a competitive rate of 8.09% (comparison rate of 9.20%) this jumps to 9.49% (comparison rate 10.60%) for fixed-rate loans on caravans between six and eight years. The maximum you can borrow on a new caravan is $100,000 and loans are only possible for caravans up to eight years old.

Borrowers can elect between weekly, fortnightly or monthly payments across all loan categories.

Whether you’re buying a new car, an old caravan or investing in a Tesla, say, via the EV loan, the fees and charges levied are the same:

• Application fee: $400
• Monthly fee: $8
• Discharge fee: $0
• Early termination fee: $700 in the first and second years of the loan term. $500 in subsequent years of the loan term (excluding final year).

That means that borrowers won’t be charged for paying off their loan in the last year of the term, but will be hit with a sizable charge if they pay it off in the first two years.

To be eligible for a loan, you will need to be:

• An Australian citizen or permanent resident
• Over the age of 18
• Employed.

While Loans.com.au says that it can take 24 hours for approval, in some case it can take up to four days for a loan to be approved, and the swiftness of the process depends on the borrower’s preparedness and how quickly he or she can upload documents to the company’s portal, onTrack.

If you have all of the relevant documents close at hand, it can take less than four days. If you prefer one of the loan specialists to fill out your application for you, you can call the company and they will complete it on your behalf.

These documents can be summarised as:

• Personal information and identification
• Proof of income
• Proof of assets and liabilities
• Information about your car and any relevant insurance.

After the documents are uploaded, you will be connected for an appointment with a loan specialist to organise the preliminary approval. If you’re in a hurry to buy, you can take this pre-approval document to the car dealer as a bargaining chip. It vouches for a certain amount of money arriving (pending successful outcome of the application) and allows you to budget and bargain confidently before the money arrives.

The final stage, known as settlement, is when you receive the loan funds to pay for your new car or caravan.

Although the company offers loans on new cars up to $150,000, not all applicants will qualify for that amount.

In order to determine how much you can borrow, Loans.com.au has a Borrowing Power calculator that gives you an estimate of your borrowing capacity.

You’ll need to punch in your:

• Gross annual salary
• Monthly living expenses
• Total credit card limits
• Annual rental income (if applicable)
• Debts or other loan repayments (if applicable).

Can I Make Additional Repayments on my Car Loan?

There is no penalty for making additional repayments into a redraw facility, and variable-rate borrowers can draw on up to $5,000 per day.

There are, however, penalties for paying out the loan prematurely, as mentioned above. Depending on the size of your loan, this may be a cost worth bearing, as it will save you more money down the track.

Note that if your car loan is fixed, you will not have access to a redraw facility.

There are a number of ways to get in touch with Loans.com.au. You can book an appointment with a loan specialist; send a question via chat seven days a week between 7am and 12am; or phone them on 1300 721 847 between 7am to 7pm, Monday to Friday.

Note that if you’re experiencing hardship repaying your car loan, Loans.com.au is obliged to help. You can phone their payments team on 1800 651 898, where you can complete a hardship application and return it with all the relevant supporting documents within 28 days.

Reviews skew overwhelmingly positive, with the company’s car loans receiving an average of 4.5 stars out of more than 700 reviews on Product Review.

Loans.com.au offers an appealing car financing option for Australian consumers, with low interest rates and largely positive customer reviews.

There are steep discounts for EV or green loan products, however, the interest rates on older cars and caravans are high—the rate on a used car older than eight years is 12.69%, almost double the 6.89% rate of a new car—making Loans.com.au most affordable for those after new wheels or EVs.

Refreshingly, Loans.com.au will vet applicants for their ability to borrow up to a set amount rather than impose a higher interest rate on consumers that are considered less credit-worthy. This contrasts with payday lenders, or fast loan specialists, that offer eye-watering rates as high as 20% to applicants who have been likely turned down by traditional lenders.

We also like the fact that consumers can choose between a fixed-rate loan and variable, as well as the company’s focus on customer service across multiple channels.

Nevertheless, the early termination fee is significant and there is an ongoing monthly account-keeping fee to be mindful of.