Car Finance Explained: A Sunshine Coast Local's Guide

Car Finance: Everything You Need to Know

Finance is where hidden costs often lurk. Dealerships make a significant portion of their profit here, so you need to be savvy. Here's a no-BS guide to car finance for Sunshine Coast buyers.

Understanding Interest Rates

Advertised rate vs comparison rate:

The advertised rate is what they show in big letters. The comparison rate includes fees and gives you the true cost of borrowing.

Example	Advertised Rate	Comparison Rate	Difference
Dealer finance	4.99%	7.2%	Hidden fees!
Bank loan	7.5%	7.8%	Transparent

Always ask for the comparison rate. It's required by law to be disclosed.

The "Weekly Payment" Trap

"It's only $150 a week!" sounds great, until you do the maths.

Example:

• $150/week × 52 weeks × 7 years = $54,600
• Original car price: $35,000
• You're paying $19,600 in interest!

Always ask for:

1. The total cost of the loan (principal + all interest + fees)
2. The comparison rate
3. The loan term (avoid 7+ year loans if possible)

Types of Car Finance

1. Secured Car Loan The car is used as security. If you default, they take the car.

• Pros: Lower rates, easier approval
• Cons: Car must meet lender criteria

2. Unsecured Personal Loan No security required, but higher rates.

• Pros: Can buy from anyone, no restrictions on age
• Cons: Higher rates (often 10-15%)

3. Dealer Finance Arranged through the dealership.

• Pros: Convenient, one-stop-shop
• Cons: Often higher rates, may be pressured into add-ons

4. Novated Lease Salary-packaged through your employer.

• Pros: Tax benefits, especially for EVs
• Cons: Requires employer participation

Balloon Payments: Friend or Foe?

A balloon payment is a lump sum due at the end of your loan, reducing monthly payments.

Example on a $40,000 car:

Option	Monthly Payment	Balloon at End
No balloon	$800	$0
30% balloon	$560	$12,000

The catch: At the end, you either:

• Pay the $12,000 in cash
• Refinance it (more interest)
• Trade the car (may owe more than it's worth)

Our advice: Only use balloons if you have a clear plan to pay them off.

Pre-Approval: Your Secret Weapon

Walk into a dealership with finance pre-approved and you have all the power.

Benefits:

• Know your exact budget before you shop
• Prevents emotional overspending on "upgrades"
• Can walk away from bad dealer finance
• Faster settlement when you find the right car

How to get pre-approved:

1. Apply online with banks, credit unions, or brokers
2. Provide income/expense details
3. Get conditional approval (usually valid 3-6 months)
4. Shop with confidence

Local vs Big Bank

Sometimes your local credit union on the Sunshine Coast has better rates than the big 4. Rates change constantly, and smaller lenders often have "specials" to attract business.

Current rate ranges (as at 2025):

Lender Type	Typical Rates
Big 4 banks	7-9%
Credit unions	6-8%
Online lenders	6-9%
Dealer finance	6-12%+

We work with a range of lenders and can quickly check who's offering the best rates this week.

Red Flags to Watch For

Dealer finance pressure:

• "This rate is only available today"
• "I need to check with my manager"
• Heavy push for extended warranty or insurance

Hidden costs:

• Establishment fees ($300-$600)
• Monthly account fees ($5-$15/month)
• Early termination penalties
• Documentation fees

Add-on insurance:

• Loan protection insurance (often overpriced)
• Extended warranties (compare to manufacturer options)
• Gap insurance (may be unnecessary depending on your deposit)

How Much Can You Actually Afford?

Don't just look at the monthly payment. Consider:

Total monthly car costs:

• Loan repayment
• Fuel (~$200-$400/month)
• Insurance (~$100-$200/month)
• Registration (~$60/month averaged)
• Servicing (~$50/month averaged)
• Tyres/maintenance reserve (~$50/month)

Total: Often $800-$1,500/month for car ownership

Rule of thumb: Car costs shouldn't exceed 15-20% of your take-home pay.

Getting the Best Deal

Step 1: Get pre-approved before shopping Step 2: Know the car's market value (Carsales, RedBook) Step 3: Negotiate the car price first (pretend you're paying cash) Step 4: Compare dealer finance to your pre-approval Step 5: Read everything before signing

How We Help

We work with finance brokers who can:

• Compare 20+ lenders in minutes
• Find the best rate for your situation
• Handle bad credit applications
• Explain everything in plain English

No obligation, no pressure—just honest advice on what makes sense for your situation.

Sunshine Coast Considerations

Distance from Brisbane: Some lenders prefer you're closer to their branches. Online lenders don't care.

Lifestyle factors: If you're a tradie on the coast, lenders may look more favourably at utes for business use.

Seasonal income: If you work in tourism and income varies, we can find lenders who understand this.