Can I get a loan based on my income?

Figuring out how much you can borrow for a car loan boils down to your income, monthly expenses, and spending habits. Essentially, it's all about understanding your borrowing capacity – how much you can comfortably repay each month.

Is it better to get a car loan from a bank or a dealership?

It depends on your financial situation and what’s being offered. Banks and credit unions often have lower interest rates and more flexible terms, while dealership finance can be convenient and may include incentives on new cars. Always compare the total cost of the loan-including fees, interest and any add-ons-before deciding.

Can I borrow more than the car’s value?

Some lenders allow you to borrow slightly more than the car’s purchase price to cover on-road costs, insurance or accessories. However, borrowing significantly more than the car’s value can increase your risk of owing more than the car is worth if it depreciates quickly.

How does my credit score affect how much I can borrow?

Your credit score helps lenders assess your risk as a borrower. A stronger score can help you qualify for a higher loan amount or a lower interest rate. If your score is lower, you may still be approved, but you might face stricter terms or a smaller maximum loan.

How long should my car loan term be?

Loan terms in Australia typically range from 1 to 7 years. Shorter terms mean higher repayments but less interest overall. Longer terms reduce your monthly repayments but increase the total cost of the loan. Choose a term that balances affordability and total interest paid.

Can I pay off my car loan early?

Yes, many car loans allow early repayment, but some fixed-rate loans may charge an early termination or break fee. Check your loan contract for details, as paying off your loan early can help you save on interest charges if fees are minimal.

What deposit should I put down for a car loan?

A deposit of around 10% to 20% of the car’s value can reduce how much you need to borrow and your overall interest costs. Some lenders offer 0% deposit options, but these usually result in higher repayments and interest across the life of the loan.

Can I get a car loan for a used car?

Yes, most lenders in Australia offer loans for used cars. Older vehicles or cars with high mileage may attract higher interest rates and some lenders set age limits (for example, the car must be under 12 years old at the end of the loan term).

Will I need comprehensive car insurance for a car loan?

Yes, most lenders require you to have comprehensive car insurance as a condition of the loan, especially for secured car loans. This protects both you and the lender if the car is damaged, stolen or written off.

Can I get a car loan if I’m self-employed?

Yes. Self-employed applicants can qualify for a car loan but may need to provide extra documentation like tax returns, BAS statements or business bank statements to verify income. Some lenders also offer low-doc car loans, but interest rates are usually higher.

What fees should I look out for when comparing car loans?

Look out for upfront application or establishment fees, ongoing monthly fees, early repayment or exit fees and late payment penalties. Factoring these into your comparison will give you a clearer idea of the loan’s true cost.

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