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A student car loan is like any other car loan. It's a financing option that lets you purchase a new or used vehicle. You borrow money to cover the purchase of the car, then repay the loan over a set period of time, generally one to seven years. You are charged interest on the loan, and this is added to your regular repayments.
You'll have 3 options to choose from when it comes to financing your car as a student:
A secured car loan means the vehicle you're buying is used as security against the loan. So, if you can't make your repayments, the lender can repossess the loan to make back the costs.
Although most car loans are secured, you can also get an unsecured car loan where there is no risk to your car. However, because this raises the risk for the lender, you'll end up with higher interest rates.
If you're buying a car at a dealership, you might be offered finance through the dealer. This often comes with competitive interest rates, but you may be required to pay a balloon payment at the end. A balloon payment is a large payment at the end of your finance term. For example, you might want to buy a car for $30,000, but by paying a payment of $5,000 at the end you'll only pay interest on $25,000.
As a student, you're able to get a car loan provided you meet the lender's eligibility requirements. This means you'll generally need to be at least 18 years old, an Australian citizen or permanent resident and have a job or regular source of income.
Some lenders may have additional lending criteria and will generally not lend money to applicants whose primary source of income is Austudy, Youth Allowance or Newstart.
What if I'm an international or exchange student?
Unfortunately most lenders require you to be an Australian citizen or permanent resident. If you're on a study visa or other type of visa, it's unlikely that you would be eligible for a loan, but it may be worth checking with the lender directly.
| Response | Female | Male |
|---|---|---|
| Unsure | 42.07% | 28.38% |
| My bank | 34.31% | 37.59% |
| Cheapest rate on the market | 18.45% | 25.75% |
| A big 4 lender | 4.66% | 7.33% |
| Peer-to-peer lender | 0.52% | 0.94% |
You should keep the following in mind when comparing student car loans:
If you're a student, you may be working part time or casually, have a lower income and have a limited credit history, which can make it difficult to get a car loan.
So, here are some tips to help improve your chances of getting approved for a car loan!
Once you've chosen the car you want to buy, you'll need to find the car loan that best suits your needs. It's important to understand your loan options, and what you'll need to do to give yourself the best chance of being approved.
1. Compare your loan options.
You'll need to choose whether you want a secured or unsecured car loan and a fixed or variable interest rate. You should also compare a number of loans based on the rate, fees and features they offer. You might also think about a peer-to-peer loan.
2. Check the eligibility criteria.
You should ensure you meet the eligibility criteria before applying for a specific loan. If you don't, you're likely to be rejected, which can affect your credit score. Lenders usually require you to be over 18, have a regular income and have some form of employment to be eligible for a car loan.
3. Have your documents ready.
As part of your application, you will need to provide a form of ID, payslips and 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.
4. Submit your application.
Depending on the lender, you may receive a response within a couple of minutes. Other lenders may take a few days to review your application and approve or deny your loan.
If you're looking to get a car loan for a used car, you need to check that the car meets the age requirements of the specific lender.
| Lender | Car loans | Vehicle requirements | More information |
|---|---|---|---|
| Beyond Bank | Low Rate Car Loan Flexi Loan | Car can be up to 8 years old Car needs to be over 6 years old | More |
| CUA | Fixed Rate Car Loan | Car can be up to 7 years old | More |
| IMB | Secured Personal Loan | Car can be up to 6 years old | More |
| NRMA | NRMA Car Loan | No set limit | More |
| RACV | RACV Car Loan | Car can be up to 20 years old at end of loan term | More |
| St.George | Secured Personal Loan | Car must be less than 12 years old at loan expiry | More |
| Suncorp | Secured Car Loan | Car must be less than 12 years old at loan expiry | |
| Westpac | Secured Car Loan | Car can be up to 7 years old | More |
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