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Car Loan Guide

Planning on finally purchasing your dream car but don’t know where to start? Relax—to make the experience easier, we’ll show you all the details that you need to consider when choosing your car loan.

 Amount of the loan

When applying for a car loan, the first detail you need to look at is the amount of the loan. Over-borrowing may strain your finances, while under-borrowing may keep you from actually purchasing the vehicle. The amount of your loan should be based on the price of the vehicle and how much you can afford to give in repayments. You need to determine your monthly budget to find out how much you can allot during a specific period. Take note that certain institutions have a maximum and minimum amount that you can loan.

Type of loan

Here are the different types of car loans that you can apply for:


This type of loan requires the borrower to provide an asset as collateral for the loan. Secured loans mitigate the lender’s risk because the collateral can be repossessed in case the borrower defaults. As a result, secured loans have lower interest rates.


This type of loan asks for no collateral as security. Instead, you need to prove that you can settle the loan by showing your loan and/or savings history. Unsecured loans typically have higher interest rates. Unfortunately, some institutions provide no option to choose between secured or unsecured loans.


Fixed-rate car loans are named after its unchanging interest rate. Because of this, repayments stay the same for the duration of the loan, making it easier to budget. However, fixed interest rates are usually higher than variable-rate loans and impose penalties for extra repayments.


This type of loan’s interest rate changes, depending on the prevailing cash rate. Variable-rate loans let borrowers give additional repayments to settle the loan earlier and save money on interest.

 Age of the vehicle

The age of the vehicle would determine its price.

New car loan

This type of car loan is available to finance the purchase of a new car. While some institutions in Sweden offer such loans to brand new cars only, there are others that consider a “new car” no older than two years at a certain mileage. There are financial portals like Billån24 in Sweden, where you can get all the information needed for applying for a car loan.

Car Loans Online

Used car loan

This type of loan is more clear-cut: it’s for purchasing a used car. Sometimes, there are restrictions on the car’s age, depending on the lender. Used car loans typically have lower loan amounts.

Preferred loan features

Here are a couple of preferred loan features that you may want to look into:

Allows extra repayments

Additional repayments are usually allowed if you apply for variable-rate loans. If the loan allows extra repayments, find out if there’s a limit on how many repayments you can give during a specific period.

No early exit charges

Early exit means paying off the loan before the term ends. Making extra repayments allow you to pay out the loan earlier; however, some loans charge fees when this happens. Look for a loan with no early exit charges to get out of debt early and save money on interest.

Documentation checklist

Here are the documents you’ll need for your loan application:

Identification: This includes your driver’s licence, birth certificate and passport.
Contact details: Include details such as your address and phone numbers.
Bank statement copies: For showing your savings history.
Credit history records: To show that you can make repayments.
Proof of income: To prove how much you earn.
Car details: Includes registration and engine number.

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