Best way to finance a car in Australia

Buying a car is one of the most significant purchases someone can make, so spending enough time researching your purchase options and choosing the right one for your needs is highly important. Especially if you’re an on-demand driver, your car becomes your workplace on wheels and significantly influences the success of your driving career.

As with any other purchase, the most straightforward way to buy a car is paying for it outright — no interest, no hidden charges and owning the car from day one. However, as most Australians can’t take such a considerable expense all at once, there are plenty of options to pay gradually for a car, from car finance to car subscription. 

Let’s dive into the most popular car financing options to see which is better for on-demand drivers.

What options do I have for buying a car in Australia?

There are several car finance options in Australia to buy a new or used vehicle, these are the most popular:

• A personal or car loan 

• Dealer finance  

• Joining a rent-to-own car subscription plan 

Car loan

Applying for a car or personal loan is one of the most common ways to finance a car in Australia. You basically borrow the amount needed to pay for the car and repay it in monthly instalments over a fixed loan term (typically from one to seven years), plus interest. You also have to put a down payment at the begging of the contract — the bigger the down payment, the smaller your monthly repayments will be. 

IMPORTANT: Your interest rate depends mainly on your credit score, a higher credit score increases the chances of a lower interest rate. 

Another important aspect to consider when taking out a loan is choosing between secured and unsecured loans. The car brought is used as ‘collateral’ for a secured loan. These loans usually come with a lower interest rate and more flexible conditions, as your car acts as a security against the loan. 

Did you know? The interest rate isn’t usually fixed, which means you could start on a lower interest rate that could increase over time and result in higher repayments.  

Even if it’s a good option to buy a car if you don’t want to pay for it outright, car loans usually come with strict conditions to meet, little flexibility and going through a long, complicated application process.

Here are some requirements you'll likely have to meet to be eligible for a car loan:

• Good credit history 

• Be in active employment or obtain a pension 

• Share proof of your earnings – 90 days of bank statements (three recent payslips), proof of employment and employer information. If you’re self-employed, you must submit the last two years of tax returns 

• Have no paid or unpaid defaults or active payday loans 

• Share proof of the moveable or immovable assets and liabilities you own, such as real estate, existing loans, ongoing expenses and credit card debts 

• Not have been bankrupt or charged with a legal offence.

Dealership car finance

Another common way to buy a car is going straight to the car dealership, picking up your car and financing it directly through the dealership. This option is mainly used to purchase new cars, and its biggest perks are the ease and rapidity of the process and the convenience of using the dealership as a ‘one-stop-shop'. 

They also offer the possibility of lower monthly payments, introducing a ‘balloon payment’, a larger final payment you make to become the legal owner of your car at the end of the finance agreement. 

However, going straight to the car dealership for finance comes with some limitations, such as narrowing down your possibility to negotiate or shop around for a better price and interest rate. 

TIP: Take your time to review the entire agreement contract and check for any hidden charges before committing to this kind of car financing.  

Car dealerships often market themselves to offer lower interest rates but will compensate with additional charges you might not discover at first that can quickly add up even into thousands of dollars.

Some car dealerships will even offer a 0% or 1% interest deal. However, this usually goes on for a certain period, not for the entire length of the contract. Make sure to check when the interest rate will go up and how it will affect your repayments. 

Car subscription

Rideshare drivers have access to a more straightforward way to buy a car by progressively paying for it — a car subscription plan. You pay a weekly subscription fee to drive a brand new car for ridesharing and become its legal owner at the end of the contract. 

 At Splend, we offer on-demand drivers a rent-to-own plan specifically tailored to their needs, Flexi own. Unlike car loans or finance, Flexi own covers everything on-demand drivers need to get on the road within the weekly subscription fee. Splend’s Flexi own plan includes:

• Car paperwork 

• Loss & accident cover 

• Scheduled servicing and maintenance 

• 24/7 roadside assistance 

• Uber approved accident replacement car to keep you on the road and earning an income even after an accident  

• Up to 4 weeks annual payment holiday  

• Dedicated customer support 

• No long-term contracts and no exit fees once your minimum term is served 

• Splend’s referral program 

How does Flexi own work?

1. Complete the online enquiry form and visit our Hub 

Whether you’re already an Uber driver or want to become one and need our support, enquire here, and our team will contact you to schedule an appointment at your local Splend Hub. We consider all applications, regardless of your credit score.

2. Choose your car and subscription plan 

Depending on the car you pick, you can choose between a four- or five-year plan. Check out our Flexi own cars currently available.

3. Pick up your car and start driving 

Once approved, our team will get you all set up and help you complete the paperwork. Payments required on the day include the one-off setup fee and next week’s subscription fee plus the pro rata amount for the week you are collecting your car — if you collect it on a Thursday, you pay for the Thursday, Friday, Saturday and Sunday of that week. 

Starting the second week of the subscription, you’ll only pay the subscription fee for the next week. 

4. Become the owner of the car 

Normally, you own your car at the end of your agreement, after four or five years. However, with Splend’s Flexi own, you can own your car much sooner, even after as little as three years. Any excess km over the 1,000 weekly allowance goes towards paying your car. So, the more you drive, the sooner you can own the car.

What is the best way to finance a car in Australia?

There is no right answer to this question, as it depends a lot on your specific circumstances and needs. However, joining a car subscription plan might be the best choice in the long run if you're an on-demand driver.

Although your car finance monthly repayment might be lower compared to car subscription, after adding up all the expenses car finance doesn’t cover, you’ll see that you actually end up saving time and money with a car subscription plan. 

Moreover, with car subscription, since you have fixed weekly payments, it’s easier to manage your cash flow as opposed to car finance that comes with unexpected expenses, like servicing, new tyres etc. 

Don’t take our word for it — here is a breakdown of the estimated costs you must cover for car finance vs car subscription for the SUV Chery Omoda 5 BX.

*Car finance assumes an APR of 10% over 4-year contract as of May 2023

About Splend

Splend makes car ownership easier, more affordable and more accessible for rideshare drivers by building everything they need to earn more, pay less and worry less into one affordable weekly payment. It’s smooth driving, with no surprises and the lowest total ownership cost you’ll find – which is how car ownership for rideshare drivers should be. For more information about Splend, make an appointment and drop by to your local Splend Hub, email us, or say hello on 1800 775 363.