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How to get a car loan in Australia: a 2024 guide

Posted on 18 September 2024

Buying a car is a significant milestone that requires careful research. You may already know the features you want in your car, but you must also pay close attention to how you’ll finance it.

In this guide, you’ll find all the information you need to understand how to get a car loan in Australia. From understanding the requirements to finding the best rates, we’ll walk you through the steps, including the benefits of applying for a Credit24 personal loan of up to $10,000 to finance your car.

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How to get a car loan in Australia: best tips

You’ll find many lenders and types of loans in the market for car financing. We have created a list of tips you can follow to get the best deal and secure approval for your car loan.

Compare interest rates and fees

Do thorough research and compare the combination of interest rates and fees offered by different lenders. The average car loan rate in Australia is 12.29% per annum and the lowest interest is about 5.566% per annum. The comparison rate, which includes interest plus definitely incurred fees is an average of 6.45%  in Australia.

Even though it’s good to get a low interest rate, it’s not the only factor you should be considering. You must pay attention to other fees like loan application fees, missed repayment fees and early repayment penalties. These extra costs can add up quickly and affect how much you end up paying over the life of the loan.

Check other loan conditions

You should also check for factors including:

  • Secured vs unsecured. Your car loan can be secured or unsecured. Secured loans require collaterals, whereas unsecured loans don’t. Car loans are usually secured loans with your vehicle as collateral, but you can also take unsecured loans to purchase your car. You should choose the loan based on whether you want to risk your assets or not.
  • Fixed vs variable rate. The fixed-rate loan stays the same for a fixed duration or the entire loan term, while the variable rate fluctuates. Choose the interest rate based on your risk-taking capability and market projections.
  • Loan Term. The average car loan term in Australia is around 7 years and the maximum loan term for a car is usually 10 years. You can choose the term as per your budget.
  • Year Limit. Some lenders don’t offer loans for cars that are older than 7 years. Also, loan terms may change depending on whether the car is new or old. Make sure to keep this in mind and discuss the specifics with the lenders before borrowing.
  • Flexibility. You should check if the lender offers the flexibility to switch between weekly, fortnightly, and monthly repayments. This can help you better plan your budget during the life of the loan.

Set your budget realistically

Before you apply for a loan, make sure you know how much you can realistically afford to pay back. Remember there are extra expenses that you need to factor in like stamp duty, registration, and insurance fees as well as running costs such as future services, potential repairs and maintenance. If you don’t budget well, the loan can make your life extremely stressful and your lender might even reject your application. Having some money for a down payment also helps. If you put down a large deposit as a down payment when buying a car, it’s more likely your loan will get approved. It shows the lender you’re good with money. Plus, a bigger deposit means your monthly payments will be lower since you’re borrowing less.

Improve your credit score

A good credit score shows the lender that you are likely to repay the loan. This can improve your chances of getting the loan approved and securing a good interest rate. You can improve your credit score by paying your bills on time, paying off or consolidating existing debts, and limiting the number of credit applications in a short amount of time.²

Make sure you have all the documents and meet the basic requirements

Before applying for a car loan, make sure you have all the necessary documents ready to speed up the process. Here’s a checklist of what you’ll typically need:

  • Identification documents, like your driver’s license, passport, or Medicare card.³
  • Show proof of residence by bringing council rates or a utility bill that confirms your address.
  • Provide proof of your income with recent payslips, tax returns, or bank statements. Your employer may also need to confirm your employment details with a letter.
  • Prove your savings capability with bank statements or investment documents showing regular savings from your income.
  • Have documents for any assets you own ready, including property and other vehicles.
  • Be prepared to discuss any debts or loans you have, including credit cards.
  • Show proof of comprehensive car insurance coverage to protect yourself against potential damages claims.⁴
  • Provide contact details for people who can verify these details, like your employer, landlord, or accountant.
  • Vehicle details like model, registration number, engine number, price, etc.

You can also get a low-doc (low documentation) car loan, which is offered to self-employed individuals by some lenders in Australia. It is also referred to as ABN car loans or self-employed car loans.⁵ If you’re a contractor, sole trader, startup, or small business, you can apply for a low-doc car loan. Ensure you’re eligible to take out a loan. Most lenders require you to be at least 18 years old and have Australian citizenship. Foreigners in Australia can also get a car loan, but they need to be permanent residents. Many lenders offer car loans to non-residents, provided they have a visa valid for at least two more years and confirmed employment in Australia.

Getting a car loan doesn’t have to be so difficult

A good way to finance your car is by applying for an unsecured personal loan to buy a car, especially if you’re looking for a relatively small amount. Credit24 offers personal loans of up to $10,000 with flexible repayment options tailored to your needs. Here’s why you should consider applying for a Credit24 personal loan:

  • Loans can be used for any personal need, including buying a car (up to $10,000)
  • Credit24 loans are unsecured, meaning you don’t need to put any asset, including your new car, as collateral.
  • Many lenders base the loan terms on the age of the car you’re purchasing. Credit24 only considers your needs, eligibility and financial standing to determine the loan terms.
  • Repayments are fixed upfront, so no surprises or extra costs. You can use our personal loan calculator to check your repayments here.
  • People with no credit history or not a great credit score can also apply. If you’re on Centrelink, you may still be eligible.
  • 100% online and easy application process

You get a quick response on the application and, if approved, you get the money in 60 seconds*

How to get a personal loan to buy a car

Credit24 makes it easy to get personal loans fast with flexible repayment options. You just need to follow these simple steps:

  1. Keep your documents handy.
  2. Apply online in just 10 minutes.
  3. Give us up to 24 hours to review your application.
  4. If approved, you can get your money in as little as 60 seconds*.

Get a personal loan to buy a car

Disclaimer:
IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is of general nature and does not take into consideration your objectives, financial situation or needs. Lending criteria, fees and charges apply. For more information about our products, eligibility criteria and terms and conditions, please visit www.credit24.com.au.

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