Used car loans can be used to completely or partially cover the cost of a used car. Once you get a loan approved, the lender hands over the money and you can purchase the car. Then you start making monthly repayments, plus interest, until you pay off the loan.
There are a few types of finance when you're buying a secondhand car.
With secured car finance, the vehicle you purchase is held as collateral against the used car loan. As a result, lenders will offer a more competitive interest rate – but you put your vehicle at risk if you can't make repayments.
With unsecured car loans, you have more freedom on how you spend the money and no collateral is taken but as there is more risk for the lender, you will get a higher interest rate.
As there is no security, the lender is less concerned about the age or condition of the car. This is why unsecured loans are more common with older used cars. They are essentially a personal loan.
You might find finance options through used car dealerships. They can offer some attractive used car finance rates with their chosen finance partner. However, these agreements often have hefty deposits and balloon payments, which require you to make a final payment of several thousand dollars. The repayments seem smaller and cheaper than they really are.
If you're buying a used car with a secured car loan, your lender has the right to sell your car to recover its costs if you can't repay the loan. This means the lender cares about the age of the car you're buying.
Many lenders only offered secured car loans for cars that are less than 7 years old. Some lenders accept cars up to 12 years old. The older the car, the higher your interest rate may be.
An unsecured car loan doesn't require the vehicle as security. So the age of the car is not an issue.
|Lender||Product name||Maximum age of car||Loan amount||Find out more|
|Macquarie Bank||Macquarie Bank Used Car Loan Fixed||6 years||From $10,000||Details|
|Beyond Bank||Beyond Bank Low Rate Car Loan||6 years||From $5,000||Details|
|Beyond Bank||Beyond Bank Flexi Car Loan||Over 6 years||From $5,000||Details|
|CommBank||CommBank Secured Car Loan||5 years||$4,000 to $100,000||Details|
|Great Southern Bank||Great Southern Bank Fixed Rate Car Loan||7 years||From $5,000||Details|
|Driva||Driva Car Loan||7 years||$1,000 to $250,000||Details|
|loans.com.au||loans.com.au - Variable Rate Used Car Loan||8+ years||From $5,000||Details|
|IMB||IMB Secured Personal Loan||6 years||$2,000 to $75,000||Details|
|NRMA||NRMA Used Car Loan||10 years||$5,000 to $130,000||Details|
|OurMoneyMarket||OurMoneyMarket New Car Loan||10 years||$2,001 to $75,000||Details|
|People's Choice Credit Union||People's Choice CU Discounted Personal Loan (Car Loan)||10 years||$20,000 to $120,000||Details|
|RACV||RACV Used Car Loans||10 years||From $5,000||Details|
|St.George Bank||St.George Secured Personal Loan - Fixed Rate||12 years at loan expiry||$3,000 to $100,000||Details|
|Suncorp Bank||Suncorp Bank Secured Car Loan||7 years||$5,000 to $80,000||Details|
|Symple Loans||Symple Loans Personal Loan||7 years||$5,000 to $80,000|
|Westpac||Westpac Car Loan||7 years||$10,000 to $100,000||Details|
Fill in our used car loan calculator to see how much your used car loan could cost you. You'll need to enter:
Then you can see see how much you'll end up paying.
|Years remaining||Principal remaining|
Once you've found a suitable used car loan, you can apply. Most lenders accept online applications. You will need:
There are plenty of benefits to buying a used car over brand new:
There are some downsides to buying used:
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