Used Car Loans Australia
Used car sales have increased dramatically, making the right used car loan even more important.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Looking at how you can finance the purchase of a used car? You might want to consider getting a used car loan. This guide will help you understand everything you need to know about buying a second-hand car with used car finance.
What is a used car loan?
Used car loans come in two main types: secured and unsecured. With secured car loans, the vehicle you purchase is held as collateral against the finance. As a result, lenders will offer a more competitive interest rate – which can help save you money. 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 rate. From fixed rate From comparison rate 100% confidential application Get access to a car loan from $2,000 to $100,000 on terms of 3, 5 or 7 years. Rates are tailored to your loan term and securing the loan is optional.
Plenti Car Loan
100% confidential application
Get access to a car loan from $2,000 to $100,000 on terms of 3, 5 or 7 years. Rates are tailored to your loan term and securing the loan is optional.
Used car loans in Australia
You can compare up to four car loan providers on your PC or Mac and up to two providers on your mobile phone when you check 'Compare'. You can get more information about each provider when you hit 'View details'. Clicking 'Go to site' will securely take you to that provider's website.
How do used car loans work?
A used car loan is a straightforward agreement between you and a lender. They'll advance you up to $100,000 to put towards the purchase price of a second-hand car and you pay them back according to a pre-agreed schedule. After the final used car loan payment clears, the car is 100% yours.
How can a bank reposes a car?
With a Secured used car loans, your chosen lender registers a security interest with the Personal Property Securities Register. In the event you fail to meet the loan repayment schedule, they can claim possession of the car and recoup their losses. With less risk involved, the lender will give you more competitive interest rates.
Unlike new car loans, there are vehicle age requirements applied to used car loans.
How does it work with an unsecured used car loan?
With an unsecured loan, you don't need to offer your used car as security and there are less age and value conditions your car needs to meet. You're also free to spend money on related costs like rego, CTP or modifications, as well as unrelated expenses.
Lenders give you the option to pay back the loan over terms between one and seven years.
3 used car finance options and their differences
What type of finance is available for purchasing a used car?
- Secured loan. Certain vehicles, under a few years old, may qualify for this type of loan, which usually offers the most competitive interest rates.
- Unsecured car loan. These loans have higher interest rates, but fewer restrictions attached to them.
- Dealership finance. Car dealers will likely offer some attractive rates with their chosen finance partner. However, often these agreements are subject to hefty deposits and balloon payments, which require you to make a final payment of several thousand dollars. This way, the repayments are smaller and seem cheaper.
What age car can I buy with a used car loan?
It depends on the lender and the type of loan you're taking out. If it's a secured car loan, the finance company is looking to make sure they always have a plan B. That way, if you breach your contract or suddenly stop making repayments, the company is legally able to reclaim the car and sell it, to offset their losses.
That means, they'll require that the car being purchased is under seven years old. Generally, they tend to be looking for the car to be no older than 12 years by the end of the loan period.
Here's a table of the maximum ages of cars accepted by different loan providers.
|Lender||Product name||Maximum age of car||Loan amount||Find out more|
|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||$10,000 to $100,000||Details|
|CUA||CUA Secured Fixed Car Loan||7 years||From $5,000||Details|
|Driva||Driva Car Loan||7 years||$2,000 to $250,000||Details|
|loans.com.au||Loans.com.au - New and Dealer Used Car Loan||7 years||From $5,000||Details|
|IMB||IMB Secured Personal Loan||6 years||$2,000 to $60,000||Details|
|NRMA||NRMA Used Car Loan||10 years||$5,000 to $130,000||Details|
|OurMoneyMarket||OurMoneyMarket 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 $100,000||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 $80,000||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||Details|
|Westpac||Westpac Car Loan||7 years||$10,000 to $100,000||Details|
Used car loans Australia
- IMB Secured Personal Loan: 6.8% p.a. comparison rate. A car loan with a competitive rate that allows you to finance a used vehicle up to 5 years old.
- RACV Personal Loan: 7.19% p.a. comparison rate. A personal loan that allows you to finance a used vehicle up to 7 years old.
- NRMA Used Car Loan: 7.19% p.a. comparison rate. A used car loan with no monthly fees.
- Bank Australia Car Loan: 6.66% p.a. comparison rate. A car loan suitable for used vehicles that also offsets your carbon emissions.
Pros and cons of buying a used car
|If you (or someone you're acquainted with) knows a bit about cars, you can save yourself tens of thousands of dollars purchasing a used vehicle||Without doing your research, you could buy a lemon with premature failures, defects or dodgy repairs|
|With warranties lasting up to seven years, you could still buy a used car with a decent chunk of its factory warranty and roadside assistance left||Takes time browsing the Internet and picking up the phone to find a car you want to test drive|
|Let someone else pay for the first few years' depreciation (according to RACQ, it could be as much as $299.12 per week, worst case)||Previous owner might have neglected to maintain the car or driven it hard|
|Less likely to encounter a salesperson using high-pressure selling strategies||Car could be out of factory warranty|
|No waiting for a car to be built at the factory, you can purchase a car there and then||Limited by what's currently on used car market|
|You could get a hybrid or electric car for a significant discount||Tighter financing conditions|
|Buying private cuts out dealer, meaning you're not paying a margin to cover their overheads||Certain vehicles might need a roadworthiness certificate or safety inspection|
|Used high-end models could be within your budget|
|Sellers expect to haggle and negotiate|
|Lower value can mean lower car insurance costs|
How to find the perfect used car loan
Here's what you need to consider when shopping for a used car loan:
- Interest rate. Generally speaking, you want as low an interest rate as possible. The lower this number, the more you'll save. The difference can be quite stark. Suppose you want to borrow $10,000 over 3 years to purchase a second-hand car. If you took out a loan with an interest rate of 4.5%, the loan would cost you $709 in interest. If the rate was 7%, you'd pay $1,116 in interest, a difference of $407. Due to the potential risk of a used car failing prematurely, interest rates will likely be higher for a second-hand car.
- Payment flexibility. It's always nice if a loan fits in with your budget. If you get paid weekly, you'll no doubt prefer a used car loan lender that offers weekly repayment schedules. If you're paid monthly, you're probably more used to making larger payments, 12 times a year.
- Loan term. The longer you borrow the money over, the more potential risk and the more you'll spend in interest. On the flip side, the repayments will be smaller, as the cost is spread across a longer period. For example, a used car loan with an interest rate of 4.5% over 3 years costs $709 in interest, with monthly repayments of $297. Over 5 years, the monthly payments are just $186, but the amount paid in interest jumps to $1,186, or a $477 difference. Deciding on how long to take out your used car loan comes down to balancing affordability and expenses.
- Charges and fees. Many loans require application fees, which can vary from $200 to $800. Other loans may charge a service fee, which could be as much as $10. As a result, you need to factor in these costs. A loan with a $10 monthly service fee, over 3 years will cost you $360. However, if the loan has a low application charge, it could still work out as the most cost-effective solution for you.
- Vehicle criteria. This seems obvious, but you'll want to pick a lender that's prepared to offer you a used car loan for the age and model of vehicle you're looking at.
- Pre-approval. This is a big one if you're buying a used car. Conditional pre-approval means you know how big a loan you can get. This puts you in a great place when haggling.
- Early payment fees. It's nice to have options like the ability to pay back your used car loan early, without termination fee penalties (for example, if you traded your old car in for another and want to clear the outstanding balance, or you come into some money).
- Other features. A redraw facility, where you can claim back any money you've overpaid, might be useful.
Watch: Should you get a loan for a used car?
Used car buying money-saving tips
As well as shopping around for a great used car loan deal, you can save yourself even more money with these tips.
Consider less popular brands and models
The bestselling new cars will almost certainly become popular used car models. As a result, sellers can set their prices accordingly. Rather than getting fixated on one brand or model and trim, be open to rival models. You'll benefit in several ways. First, car manufacturers that are trying to compete with a sought-after and established marque might introduce longer warranties, better standard specifications and even drop prices. You could swoop in and take advantage of this by purchasing the rival brand on the used car market.
To save money, buy privately
Used car dealers are a middle party. Yes, they might offer attractive things like short-term warranties, but in reality, they can add a couple of grand onto a car's sticker price to cover their costs.
If you have a car enthusiast friend or family member, take them along to a private sale and you could end up with a much cheaper used car. If you don't know a car expert, consider paying for a pre-purchase inspection, which can help you avoid buying a lemon.
Some people hate haggling, it makes them cringe. Most second-hand car dealers and private sellers will expect you to at least try. Some may even mark their car up a little, with the expectation that buyers will try to knock them down. Remember, this is a business transaction, so stay friendly and emotionally detached from the car.
Haggling doesn't have to become a verbal slanging match. You can be polite and negotiate – sometimes even being a bit cheeky might get you some money slashed off the deal. If you smile while you're doing it, that goes a long way. A common technique for bartering is to simply point out things you're not happy with, for example the tyres are heavily worn and need replacing, the windscreen is scratched or there are stone chips in the paint. If you are sincere and genuine, a lot of sellers will relent and meet you halfway. Spend some time researching the car model; find out if it needs any major scheduled work soon like timing chain/belt replacements or complete fluid renewals.
Phrase things in a positive way. Instead of saying "I want some money off", try asking "How much money are you willing to knock off?".
Equip yourself to haggle like a pro by looking up the market values of the car you're viewing. This can be done on sites like redbook.com.au. That should help you cut through the chancers who are trying to flip a car by buying it, giving it a valet and selling it on.
Never, ever let the seller know your budget. Also, remember that a lot of private sellers need to sell their car. They might have bought a new one and are currently paying for two vehicles!
If you're buying from a used car dealer, it helps to know the prices of similar or exact models on sale by their competitors. Then you can say "Company X is doing this car for this amount, can you match it?" Some people suggest even printing out the sales listing to show them.
The most powerful negotiation technique is always being prepared to walk away. Sometimes, you'll get a call later and suddenly the seller can meet your offer. If something's not right about the car or the seller, cut your losses and move onto the next prospective used car.
Above everything else, stay calm and never rush into things!
Consider a previous generation model
If the car you're after has recently received a facelift or been replaced with an updated model, the previous generation might drop in value. That means you can cash in by purchasing the older car.
Step down a trim level or two
It's tempting to want every creature comfort on offer in a used car, but if you're willing to step down a trim grade or two, you can save hundreds, if not thousands of dollars.
Be flexible on the odometer
You might see a used car that's covered thousands of kilometres more than a similarly aged vehicle. Don't discount the higher mileage model outright, because modern engines work better when up to full operating temperatures.
Around town driving, with short intermittent runs, the car doesn't always get up to temp. Plus, those urban roads are covered in potholes that really hammer the car's suspension and bushes.
If a car has covered 20,000km, but this was all around town, while another has done 50,000km (with a lot of motorway driving and excellent maintenance), then the higher clock reading car should be cheaper and potentially be in just as good (if not better) mechanical condition.
Used car loans frequently asked questions
Should I buy a car that's under finance?
We've written an entire guide covering the topic of whether to buy a car under finance (known as an encumbered car). Though there's nothing wrong with buying a second-hand car that's financed, you need to be extra cautious and make sure you do your due diligence before buying.
Are used cars safe?
You're probably familiar with the ANCAP crash testing and rating scheme in Australia. These star ratings are for new vehicles. For used cars, you'll want to refer to the Used Car Safety Ratings, or USCRs. These are published over at howsafeisyourcar.com.au. Bear in mind that the condition of the vehicle's bodywork and mechanical components plays a big part in its crash safety. Also, the level of corrosion is a key factor. Don't forget to check for any outstanding recalls on the vehicle make, model and build year.
How do I inspect a used car?
In short, very closely. Don't take the seller's word as gospel. Prove to yourself the car is in sound condition and working order. To help, we've created a used car buying guide checklist.
Are used cars reliable?
It depends not only on the model, but also on how well it's been maintained and how hard the car has been driven. One unique thing about buying a used car is that time has passed since the launch and a lot of the common mechanical faults have been discovered. You can check for these online and also read verified owner reviews.
I've previously declared bankruptcy; can I get a used car loan?
Some lenders are open to considering a person who has previously petitioned for bankruptcy. Check out our loans for bankrupts guide.
I'm a student and want a used car loan
If you need to buy a car and you're a student, see if you're eligible by visiting our student car loans page.
I'm self-employed and want to purchase a used vehicle
More guides on Finder
Coles No Annual Fee Mastercard – Exclusive Offer
Enjoy 10,000 bonus points and 12 months interest-free on balance transfers and purchases. Plus, an ongoing $0 annual fee.
Car loan statistics 2021
Finder research shows 2.7 million Australians have a car loan. Find out how much Aussies are borrowing, and how this has changed over time.
86 400 Neat home loan – variable
This flexible variable rate home loan offer from a digital lender is suitable for both home buyers and investors.
86 400 Own home loan – fixed
Check out this flexible fixed rate offer from a digital lender. Rates for home buyers and investors.
Citi Rewards Card – Bonus Points Offer
Earn flexible rewards points as you spend and enjoy a big 100,000 bonus points offer with the Citi Rewards Credit Card.
Toyota RAV4 car loans
Compare car loans and discover prices and specs of the Toyota RAV4.
7-Eleven Fuel Pass
Save on fuel at 7-Eleven with this fuel card you can use across the WEX Motorpass network.
HSBC Platinum Credit Card
This card offers 0% interest on balance transfers for 36 months, a discounted $29 first year annual fee and platinum benefits including airport lounge passes and complimentary insurance covers.
Citi Rewards Card – Velocity Points Offer
Enjoy 100,000 bonus Velocity Points, a reduced first-year annual fee and points per $1 spent with the Citi Rewards credit card.
Living DNA vs 23andMe
Choose between two leading DNA testing companies who can help you map your ancestry and genetics.
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.
Ask an Expert