Used Car Loan

Used car loans are designed specifically to help car buyers fund the purchase of a used car. They include many of the features of personal loans, with secured, unsecured, variable rate and fixed rate unsecured car loans widely available.

Used car loans do tend to have interest rates higher than new car loans and if you are considering the secured loan route you’ll need to review the strict criteria the lenders have in place regarding the age of the vehicles that they will accept as security.

  • Fixed Rate - The secured loan offers fixed interest rates from 8.99% p.a. to 13.99% p.a.
  • Loan amount - Borrow a minimum of $5,000, and $3,000 for motorbikes
  • Loan term - The loan terms range from 1 to 7 years
  • Online application - You can apply for this loan online and the application process is quick and easy. 
  • Application fee - One off upfront fee of $295
  • Older cars accepted as security - Cars up to 20 years of age at end of loan considered as security

Read the full loan review >>
Featured Product

Guide to selecting the best used car loan

Used car loans are designed to lend funds to help purchase a pre owned vehicle, the vehicle can be bought from a private owner or a car dealer though the age of the vehicle bought must fall within the strict ranges which each of the lenders have, for example RACV’s used car loan can only be used too purchase vehicles which are less than 10 years old.

Used car loans tend to feature interest rates which are higher than those offered on new car loans based o the lenders risk assessment of used versus new car loans


How do used car loans work?

A used car loan is essentially a personal loan which you are choosing to use to buy a used car, as a form of personal loan used car loans include many of the features and options of personal loans.


The features of a used car loan

Credit Contract - A used car loan is credit contract that you will need to sign to agree to the terms of the loan. This contract will stipulate the amount of money you are borrowing, over what period you are agreeing to repay it and if your loan is secured it will include details of the vehicle which has been put up as security.

Secured Car Loan - When you select the secured car loan option you will need to offer an asset, which will generally be the car you are purchasing, as security for the loan. The presence of this security will generally mean the interest rate on the loan will be less than those available from unsecured car loans. Failure to make the repayments on a secured loan can lead to the lender taking action to repossess and sell your asset in order to settle the outstanding debt on the loan.

Unsecured Car Loan - These are a popular option when purchasing a used car as they require no security, though the maximum amount you wil be able to borrow will be significantly less than with a secured loan. Interest rates are also usually higher for unsecured loans as the lender is taking a bigger risk.

Fixed rate used car loan - By choosing a fixed rate car loan the interest rate will remain fixed for the full term of the loan, as will your repayments.

Variable rate used car loan - The interest rate on these car loans can move up and down at the discretion of the lender. Generally these rate changes are in synch with the reserve bank interest rate changes that occur from time to time as economic conditions change.

Loan term - Used car loans can be repaid over a 1 - 7 year term with variable rate loans offering the longer terms up to 7 years, whilst fixed rate loans tend to be capped at 5 years.

Extra Repayments - many of the unsecured personal loans offer the ability to make extra repayments to your loan.

Redraw facilities - the majority of the used car loans which offer the extra repayment feature also offer a redraw facility under which you can aces these extra repayments, though tis may attract a n additional redraw fee.

Pre approval - this handy feature enables you to apply for the loan ahead of commencing your vehicle search. This upfront knowledge of what you able to borrow will help you set your budget for your vehicle purchase and may assist with your negotiations as the seller can be assured that you are a qualified buyer who can make the transaction happen quickly.


Understanding dealer car finance  

If you are considering buying your car from a car dealership, be it an independent car yard or the used car section of an established car brand it is likely that the salesperson will offer to organize finance for your purchase, with the proposition that this will make it simple and quicker for you to buy your vehicle of choice. The convenience of getting your finance organized by the dealer can be a very tempting option, though it would be wise to compare the finance offered from the dealer with a range of banks and building societies to ensure the finance being offered is competitive.


Secure loan car age criteria

Each of the lenders has strict criteria on the age of the vehicles they are willing to accept as security on a secured used car loan, if the car your are purchasing does not meet these criteria your any loan application will not be accepted, regardless of how good a credit risk your are. These criteria are previewed in the table below:


Car Loan Provider Criteria for a vehicle to be accepted as security
   ANZ    The vehicle must be less than 7 years old
   Westpac    The vehicle must be less than 7 years old and worth more than $10,000
   RACV    The vehicle must be less than 10 years old
   IMB    The vehicle must be less than 5 years old
   Suncorp    The vehicle must be less than 12 years old
   St George    The vehicle must be less than 12 years old at loan expiry
   CUA    The vehicle cannot be less than 2 years old
   Beyond Bank    The vehicle must be less than 6 years old


Frequently Asked Questions

Can I get pre approved for a car loan?

Yes. Pre-approval is a good way to establish how much you can comfortably borrow and what your repayments will be before you start looking at cars.

I’m on a Learners Permit, am I eligible to apply for a car loan?

As long as you’re 18 years old & you meet the lenders other guidelines you are OK to apply for a car loan on a Learners Permit.

I am in Australia on an overseas visa – can I apply for a car loan?

If you are living and working in Australia on a 457 Visa, you can apply for a car loan. Please note that the term of your loan does need to end before the expiry of your visa. You can compare car loans designed for 457 Visa holders each of which specifically cater for temporary residents.

Can I use a car loan to buy a used car privately?

Yes, You can use a car loan to purchase a car from a private seller. When you apply for the car loan the lender will require some details on the car, such as registration number and vehicle identification number (VIN) for the loan to proceed.

How is the interest calculated on a car loan?

Interest is calculated on your outstanding loan balance on a daily basis and charged to your loan account monthly in arrears. Our car loan repayment calculator is designed to help you calculate what your repayments and also indicates what portion of each payment is interest on the loan and what portion is repayment of the loan principal.