How much can I afford to borrow for a car loan?
Get a car loan that works for you by finding out your borrowing limits.
We’re committed to our readers and editorial independence. We don’t compare all products in the market and may receive compensation when we refer you to our partners, but this does not influence our opinions or reviews. Learn more about Finder.
Your borrowing power is how much money you’re able to borrow without putting too much pressure on your finances. This guide will take you through how to work out your own borrowing power and how lenders determine your borrowing limits when you apply.
💰 Why is it important to understand your borrowing power?
Calculate your car loan borrowing power
You can use the calculator below to get an idea of your borrowing power.
📝 How do lenders determine your borrowing power?
These two values are added together to get the HEM, a number that changes and is updated each year. The number is adjusted in a particular way depending on your location, whether you’re part of a single or partner household and whether there are any children.
- The lender will ask you what your monthly expenditure is, and then look at the HEM. The higher of the two sums is used as your monthly expenditure when determining your borrowing power.
- The HEM is based on the Australian Bureau of Statistics spending data. It is regularly updated based on the more recent information.
Not all lenders use the HEM. Some have their own formulas or use similar alternatives like the older Henderson Poverty Index (HPI).
🧾 How to work out your monthly expenditures
- Consider how much you spend on essentials. This includes housing, food, utilities, transport and other things you can’t live without.
- Factor in how much you tend to spend on discretionary costs and luxuries each month. Resist the urge to exclude these from your calculations. An ideal loan won’t require you to make significant lifestyle adjustments, although this isn’t always possible.
- Remember to consider the cost of owning and maintaining a car. There are numerous one-off expenses as well as ongoing costs. These include vehicle registration, licensing, compulsory insurance, additional insurance, petrol, repair and maintenance costs and countless others. However, do not include these in your monthly expenditures unless you already have and are paying for a different car, because your lender will factor them in for you. Do bear this in mind, however, and leave yourself some financial leeway for the costs.
Compare your car loan options
- No monthly fees
- No early repayment fees
- Borrow up to $75,000
100% confidential application
IMB New Car Loan
A low rate loan to finance new vehicles or cars up to two years old. Borrow up to $75,000.
- Interest rate: 4.99% p.a.
- Comparison rate: 5.34% p.a.
- Interest rate type: Fixed
- Application fee: $275.12
- Minimum loan amount: $2,000
- Maximum loan amount: $75,000
More guides on Finder
How to save for a house deposit while still paying rent
SPONSORED: Saving enough for a house deposit while you're paying rent is challenging, but it can be done.
What is a credit score?
Find out what a credit score is and what it can do for you.
Brighte Personal Loan
Looking to renovate your home? Find out more about Brighte's personal loan for home improvements and ways in which it may be able to benefit you.
Free Loan Agreement Templates (Australia)
Learn how to write a loan agreement and find out where you can get free legal templates.
Can I still get life insurance if I’m overweight?
Find out if you can still get life insurance if you’re overweight, what your options are and where to get cover.
How will proposed “simpler credit” rules affect Australian borrowers?
The federal treasurer has announced plans to make it easier to get credit cards, home loans and personal loans. But it's borrower beware.
ebroker Business Loans review
Whatever your business loan requirement, ebroker may be able to help. With a range of loan options from over 70 bank and non-bank lenders compared on-site, could you find the right loan for your business?
The home loan hedge: Aussies prefer split rate mortgages
Finder research shows that 1 in 5 Aussies would prefer to split their mortgage between fixed and variable if they were to refinance. Find out how a split loan can benefit you.
nmoni Personal Loans review
nmoni is an Australian lender that offers personal loans to both good and bad credit applicants. Find out more about nmoni's rates, fees and features.
Athena’s new home loan rates get lower as you pay your mortgage off
As your equity grows to 30 and 40%, your rate drops, effectively rewarding you for paying off the loan.
Car Loan OffersImportant Information*
You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.
You'll receive a fixed rate of 4.89% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
Ask an Expert