When it comes to financing your next vehicle, you’re often faced with a key decision: should you apply for a car loan or a personal loan? Each loan type has its benefits, depending on your financial situation, the type of car you’re buying, and how you plan to use the funds. At Get Approved Loans, we help you compare over 60 trusted lenders — including Australia’s Big Four Banks (ANZ, NAB, Commonwealth Bank, and Westpac) — to find the loan that best suits your needs.
Car Loans – Ideal for New or Near-New Vehicles
A car loan is specifically designed for purchasing a vehicle and is often secured against the car you’re buying. Because the car acts as security, interest rates on car loans are generally lower than unsecured personal loans. This makes them a great option if you’re buying a new or near-new car.
Some lenders may limit car loans to vehicles under a certain age — usually 5 to 7 years — so if you’re looking at an older model, a personal loan might be your better bet.
Pros of Car Loans:
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Lower interest rates than unsecured loans
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Tailored specifically for vehicle purchases
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Balloon payments may be available to reduce monthly repayments
Personal Loans – More Flexibility, More Freedom
A personal loan, on the other hand, offers flexibility. You can use the funds for a car and have some leftover for related expenses — like insurance, registration, travel, or even minor home renovations. Personal loans can be secured or unsecured, with unsecured loans typically attracting higher interest rates due to the greater risk to the lender.
Personal Loan Benefits:
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Borrow more than the value of the car
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Use the loan for multiple purposes
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Great for purchasing older vehicles or when no security is available
Comparing the Big Four Banks (ANZ, NAB, CBA, Westpac)
The Big Four Banks in Australia all offer personal and car loan products, but they often come with strict eligibility criteria, especially for applicants with lower credit scores. While their products are backed by strong reputations and service, you may find more competitive rates or flexible terms through smaller lenders or online platforms — many of which we include in our loan comparison service.
Getting a Loan with Previous Bad Credit
Worried about your credit history? You’re not alone. Many Australians have some form of credit hiccup on their record. At Get Approved Loans, we specialise in helping Aussies find lenders that offer bad credit car loans and bad credit personal loans — even if you’ve been turned down elsewhere.
We compare over 60 lenders, including banks, credit unions, and non-bank financiers, to match you with options suited to your credit profile.
Balloon Payments – Pros and Cons
Some car loans offer the option of a balloon payment — a lump sum payable at the end of the loan term. This can lower your regular repayments, but you’ll need to be ready to pay the large amount at the end, or refinance it. Balloon payments can be helpful if you plan to upgrade or sell the car before the loan ends, but they do require good financial planning.
Car Loan Vs Personal Loan Feature Comparison
| Feature | Car Loan | Personal Loan |
|---|---|---|
| Purpose | Used strictly for vehicle purchases | Flexible — can be used for cars and other expenses |
| Interest Rate | Usually lower (secured) | Can be higher (especially if unsecured) |
| Vehicle Age | New or near-new vehicles only | Used or older vehicles allowed |
| Loan Amount | Typically limited to car’s value | Can borrow extra beyond car value |
| Balloon Payment Option | Available on some car loans | Not commonly offered |
| Security | Usually secured against the car | Secured or unsecured |
Final Thoughts – Which Loan Is Right for You?
The best option depends on your needs:
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Buying a new or near-new car? A car loan might offer lower rates and tailored features.
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Need funds for a car plus extra expenses or buying an older vehicle? A personal loan could be the way to go.
Either way, use our loan comparison tool at Get Approved Loans to compare over 60 lenders and find the right option for your budget and lifestyle.
Is a car loan or personal loan better for buying a car?
If you’re buying a new or near-new car, a car loan may offer lower interest rates. Personal loans offer more flexibility and are suitable if you want to use extra funds for related expenses.
Can I get a car or personal loan with bad credit?
Yes. At Get Approved Loans, we compare over 60 lenders including those that specialise in helping borrowers with poor credit histories.
What is a balloon payment?
A balloon payment is a lump sum due at the end of a car loan term. It helps lower monthly repayments but requires financial planning to pay it off or refinance later.
Do personal loans allow me to borrow more than the car’s value?
Yes. Personal loans are often used when you need to borrow a bit extra — for insurance, rego, travel or even household bills.
