Variable Rate Car Loan

Variable rate car loans are popular with car buyers who are seeking low interest rates in combination with some flexibility around how they choose to repay the car loan. Variable rate loans can be used to purchase both new and used vehicles, and generally offer the choice of a secured or unsecured loan option. A selection of variable rate car loans are compared in the table below where you can also calculate your monthly repayment on your car loan for each of the loans using our car loan repayment calculator.

What is a variable rate car loan?

This type of car loan features an interest rate that may fluctuate across the term of your car loan at the discretion of the lender, so your repayments may change as and when the lender chooses to increases or decreases the interest rate on your car loan.

In general variable rate car loans offer rates that are lower than fixed rate car loans and include more flexibility with facilities to make extra repayments and repay off your loan at any time during the loan term, without incurring any fees.


Why should I choose a Variable Rate Car Loan?

Before considering the detailed reasons of why a variable rate car loan maybe a good option for you it is wise to assess whether a variable rate is in synch with how you manage your finances and your appetite for including a level of risk in your car financing. A variable rate approach may well suit you if you are comfortable with the risks associated with not knowing how the interest rate on your car loan may change over the course of you’re your loan and you believe you will be able to take advantage of the flexible payment options designed to reduce your interest payments.


Variable Rate Car Loan Types


Unsecured Car Loan

These loans do not require any assets to secure your car loan, so if you do have trouble making your car loan repayments and default on the loan the lender will not have the right to claim any assets to settle the outstanding debts. The absence of any security does tend to see these unsecured loans charging higher rates when compared to secured loans.


Secured Car Loan

To apply for this loan you will need to be prepared to provide security against your loan, which will usually be the vehicle you are intending to purchase. If you end up defaulting on this type of loan the lender has the right to repossess and then sell the asset to settle the outstanding debts on the loan.


Variable Rate Car Loan Comparison

When comparing variable rate car loans consider including the following factors in your research:

  • Variable Rate - The minimum rate in the table above represents the rate the lender is offering today, and so offers an indication of how competitive they are likely to be versus the other lenders.
  • Loan fees - It is likely your loan will include a number of fees such as an application fee, monthly account fee and potentially missed payment and early exit fees.
  • Extra Repayments - The flexibility to make extra repayments may not seem that important today but over the course of the loan your circumstances may change which will enable you to make such payments. The making of these extra repayments can save you significant amounts in interest so the inclusion of this facility is worth seeking out.
  • Early Repayment - It is now common for variable rate loans to allow borrowers to repay their loan in full prior to the end of the loan term, so saving on interest charges, though this feature may attract a fee.