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.
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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).
Estimate your chance of approval with the Finder app!
Worried about getting knocked back when applying for a personal loan? Use the Finder app to estimate your chance of approval and apply with greater confidence. Pop in your phone number below to get your download link.
🧾 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
- Early payout available
- No monthly ongoing fee
- Borrow up to $100,000
100% confidential application
Loans.com.au - New and Dealer Used Car Loan
A competitive fixed rate to purchase a car up to four years old. Option to add on-road costs into loan amount.
- Interest rate: 4.67% p.a.
- Comparison rate: 5.22% p.a.
- Interest rate type: Fixed
- Application fee: $400
- Minimum loan amount: $5,000
- Maximum loan amount: $100,000
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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 4.69% 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.
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