student-car-loan

Student guide to car loans

Ready to get behind the wheel of your own car? Find out how you can get a loan as a student.

Having a car can make student life a lot more convenient, but it's also an expensive endeavour to undertake. If you're not able to save the money or you can't ask your mum and dad for help, you can consider a car loan. Find out about your car loan options in the guide below.

CUA Fixed Rate Car Loan

CUA Fixed Rate Car Loan

from

6.79 % p.a.

fixed rate

from

6.92 % p.a.

comparison rate

  • No monthly fees
  • No early repayment fees
  • Flexible repayment options
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CUA Fixed Rate Car Loan

Apply for a CUA Fixed Rate Car Loan and enjoy a great low fixed interest rate with no ongoing fees.

  • Interest rate from: 6.79% p.a.
  • Comparison rate: 6.92% p.a.
  • Interest rate type: Fixed
  • Application fee: $0
  • Minimum loan amount: $15,000
  • Maximum loan amount: $100,000
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Comparison of car loans for students

$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment Product Description
CUA Fixed Rate Car Loan
From 6.79% (fixed)
6.92%
$15,000
1 to 7 years
$0
A competitive car loan that offers flexible repayment options and no account keeping fees.
IMB New Car Loan
From 5.99% (fixed)
6.34%
$2,000
1 to 7 years
$250
This fixed rate new car loans up to 2 years old features no early repayment penalties
RACV Car Loans
From 7.49% (fixed)
8.03%
$15,000
1 to 7 years
$378
Enjoy this fixed rate new car loan offer from RACV. No ongoing fees.
Bank Australia Car Loan
From 6.45% (fixed)
6.66%
7 years
$150
A competitive rate and the ability to offset your car’s carbon emissions for the loan term.
MyState Secured Personal Loan
From 7.99% (variable)
8.96%
$10,000
1 to 10 years
$200
Apply for a loan up to $75,000 and use the funds for any purpose.
NRMA New Car Loan
From 7.49% (fixed)
8.03%
$15,000
1 to 7 years
$378
Purchase a new car with an NRMA Car Loan with a fixed rate term and no monthly fees. NRMA Members could save 1% on loan rates.
IMB Secured Personal Loan
From 7.39% (fixed)
7.74%
$2,000
1 to 5 years
$250
A secured loan from IMB with flexible repayment features
Latitude Personal Loan (Secured)
From 12.99% (fixed)
14.2%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
9.39%
$3,000
1 to 5 years
$195
Get behind the wheel of your perfect car with a competitive interest rate from St.George. Get an application response within 60 seconds.
Bank of Melbourne Secured Car Loan
From 8.49% (fixed)
9.39%
$3,000
1 to 5 years
$195
A low rate personal loan from Bank of Melbourne with variable or fixed option.
BankSA Fixed Rate Car Loan
From 8.49% (fixed)
9.39%
$3,000
1 to 5 years
$195
Apply for a fixed rate car loan from multi-award winning BankSA.

Compare up to 4 providers

How does a car loan work?

A car loan is a financing option that lets you purchase a new or used vehicle. Car loans are typically secured loans. This means the vehicle you're purchasing is used as a guarantee for the loan. A secured loan will come with lower interest rates, but you will need to make sure the car you're looking to buy meets the lender's eligibility criteria. For instance, not all lenders will give you a loan if you're buying a used car.

What types of car loans are available to students?

There are two main car loan types that you can choose between.

  • Secured car loan. Usually, secured loans tend to have lower interest rates because the car you're buying is attached to the loan as a guarantee. Lenders will usually place restrictions on what kind of car you can buy. For instance, the car may need to be under a certain age or in a certain condition. Check that your car will be eligible before applying.
  • Unsecured personal loan. If you want to purchase an older car or also want to use the loan amount for something else, you can consider an unsecured personal loan. You will need to meet additional eligibility criteria for unsecured personal loans because they are more of a risk for lenders to take on. If you default on the loan, the bank has no security to possess. The interest rates are generally higher as well.

Compare what different lenders have to offer in terms of features, loan term and rates.

What criteria do car lenders have for used cars?

LenderCar loansVehicle requirementsMore information
ANZANZ Online Secured Car LoanCar needs to be under 7 years oldMore
Beyond BankLow Rate Car Loan
Flexi Loan
Car can be up to 6 years old
Car needs to be over 6 years old
More
CUAFixed Rate Car LoanCar can be up to 7 years oldMore
IMBSecured Personal LoanCar can be up to 6 years oldMore
NRMANRMA Car LoanNo set limitMore
RACVRACV Car LoanCar can be up to 10 years oldMore
St.GeorgeSecured Personal LoanCar must be less than 12 years old at loan expiryMore
SuncorpSecured Car LoanCar must be less than 12 years old at loan expiry
WestpacSecured Car LoanCar can be up to 7 years oldMore

How does the car loan process work?

Finding a car loan to purchase your vehicle is pretty straightforward. Here's how it works:

  1. Find your car. Look on car sales websites if you're interested in a private sale or head to a dealership. Find a car that's within your budget and of good quality. You can find out how to inspect your car in this guide.
  2. Compare your loan options. Once you have the car you want to buy, or even an idea of the sort of car you want, you can start comparing your loan options. Consider the interest rate, fees and features of the loan to find one that's right for you.
  3. Check the eligibility criteria. Even if the loan sounds right, you may not meet the eligibility criteria. Lenders usually require you to be over 18, earning a regular income and to have some form of employment. Your car will also have to meet eligibility criteria.
  4. Consider pre-approval. If you haven't decided exactly which car you want to buy, you can consider applying for pre-approval so you know how much of a budget you have to work with. This can also work well if you're buying a car at an auction.
  5. Get your documents ready. The next step is sending through your application. Gather all the required documents, which will include a form of ID, payslips as well as information regarding your employment and finances (income, expenses and debts). If you've chosen your car, you will need to submit the make, model and year, the VIN/chassis number, registration number and purchase price.
  6. Submit your application. Depending on the lender, you may receive an instant response. Other lenders may take a few days to review your application and fund your loan.
  7. Make your car purchase with the loan funds. This can happen in a few ways. The lender may pay the dealer/private seller on your behalf, you may be given a bank cheque to pay the seller or you may be given the funds to pay the seller directly. Cars bought from dealerships usually involve the lender paying on your behalf. If you're sending the funds to the borrower directly, the lender may need you and the seller to sign a form.

Tips for students on how to get a car loan

If you're a student, you may be working part-time or casually, be on a lower income and you may have limited credit history. This can make it difficult to get a car loan. Use the guide below to find out how you can secure finance.

  • Build your credit history

You will need to have a good credit history to be considered for a car loan. It’s important that you understand that your credit history is determined by your financial management skills.

There are a few ways to start building your credit history:

  • Pay your existing bills on time, including your phone and utility bills.
  • Order a copy of your credit file – you can receive it free in 10 days.
  • Don’t open and close credit accounts frequently; let your accounts mature.
  • Check that the lender accepts your income type

You can acquire a car loan as a part-time or full-time student, depending on your income. It's important to check whether the lender accepts your form of income, whether it be from casual work, permanent part-time work or Centrelink payments.

  • Confirm all the eligibility criteria

In most cases, you’ll need to be 18 years or older and a permanent Australian resident. The car you're purchasing will also need to meet certain criteria. For example, it may need to be under a certain age or it may need to be in a certain condition. You can look here to find lenders who will consider you if you're buying a used car.

  • Save as much money as you can for the deposit

Provide the biggest deposit that you can for your car loan. Financial experts recommend that you work on your upfront payment. A larger down payment demonstrates your financial ability and responsibility. It will also help reduce your monthly repayments and interest rates.

Consider opening a high-interest savings account to earn interest on your savings. Some of these accounts also have incentives for you to save regularly by awarding you bonus interest.

  • Consider a guarantor or co-borrower

Your guarantor will need to agree to take on the legal and financial responsibility for the debt incurred with your car loan if you fail to make the repayments. This is why it’s important for your guarantor to trust you and vice versa. You should make every effort to make your repayments, so your guarantor is never held responsible for the debt. If you're opting for a joint personal loan, both of you will be responsible for repaying the debt. To ensure that you make your repayments, use the finder.com.au repayment calculator for an indication of your costs.

How you can compare car loans

When comparing student car loans, there are various things that you need to consider:

  • Interest rate. Check whether the rate is competitive but also consider whether you want to opt for a fixed or variable rate. A fixed rate keeps your repayments the same for the entire loan team, but fixed loans tend to come with more restrictions on repayments. Variable rates may change, but you get repayment flexibility. For instance, with variable rates you can pay off the loan ahead of time or make additional repayments.
  • Fees. Take a look at the upfront and ongoing fees to get an idea of how much the loan will cost you. Then, use a car loan repayment calculator to see how much your repayments will be.
  • Repayment flexibility. Are you able to choose how often you make repayments? Can you make additional repayments without penalty? Can you repay the loan early without penalty? These are things to look out for.
  • Features. Does the loan offer any additional features? Some of these may include a redraw facility for additional repayments, pre-approval, online account management, a car-buying service to help you find your car, or discounts on other products and services.

Ready to choose the perfect car?

Since this is your first car purchase, you may want to stick to an economical car. It’s easier for a lender to give you a car loan for an economic car rather than a luxury model, not to mention the running costs.

Do

  • Shop around
  • Attempt to haggle or bargain with car yards
  • Ensure the vehicle you want meets the loan requirements

Don't

  • Buy the first car you see
  • Apply for the first loan you find
  • Apply for many loans at once

Picture: Shutterstock

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Related Posts

CUA Fixed Rate Car Loan

A competitive car loan that offers flexible repayment options and no account keeping fees.

Latitude Personal Loan (Secured)

Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.

RACV Car Loans

Enjoy this fixed rate new car loan offer from RACV. No ongoing fees.

NRMA New Car Loan

Purchase a new car with an NRMA Car Loan with a fixed rate term and no monthly fees. NRMA Members could save 1% on loan rates.

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