Hey! Is this your first car loan?

Don't stress - most people under 25 have never had credit before. Before you scroll below to the article, I'll give you few pointers on the loan process, so that you know what lenders look out for, and how to increase your chances of approval.

First, lets talk about your "profile"

Your "profile" is basically where you stand in your chances at approval and what rates you are eligible for.

A first time lend is not the strongest profile, BUT...

There are some ways to increase your chances of approval if you know what lenders look for to approve your loan.

What lenders look for:

You are stable in your job (click to read more)

Lenders want to see you have been in your job for a minimum period of 6 months. They love it when you have been in your job for over 1 year.

How do lenders check how long you have been employed for:

Lenders can verify by one of these ways:

- They see your Year-to-date (YTD) Income is in-line with you having worked at that company since July 1 at the very least.

- They see your annual leave balance is high (magic number is typically 60 hours + showing on your payslip)

- They could call your employer to verify how long you have been in the role for.

What if...

You are casual?

Lenders will most likely call your employer to verify tenure, and confirm your line of work is ongoing for the foreseeable future. Note that if you are employed casual, you need to at minimum be working near full-time hours to qualify for your first car loan.

What if your employer changed their company ABN / payroll system?

Again, same rules apply as above, the lender will most likely call your employer to verify the ABN / payroll system change.

You have good "rateable" credit (click to read more)

"Rateable credit" means you can prove you have been an on-time payer on other loans.

If you have never taken out a loan before, move to the next pointer. If you do have a current loan, read on below.

How do you prove you are an on-time payer on your other loans?

The most common way the lenders verify you are an on-time payer is through your credit file that the lender has access to. If you have paid your loans on-time, your credit file will show this to the lender, and this substantially increases your chances of approval, how quickly you get approved, and what rates you qualify for.

You decide to place a deposit on your car (click to read more)

Showing the lender that you are willing to put some money up-front on your first car loan, instantly tells the lender that you:

  • Are financially responsible
  • Are wanting to put skin in the game
  • Already have some savings (a fallback position) in your finances in case your source of income gets affected.

Just like if you have rateable credit or have been in your job for over 12 months, lenders see this as a major positive in your application and will increase your odds and speed of your approval.

If you are thinking of placing a deposit, consider placing 10% - 20% to increase your approval chances.

You are realistic with your requested loan amount and car (click to read more)

The first thing a lender sees when they pick up your application is the car you want, and the loan amount.

You may have ticked every other box above, however if you pick a sports or exotic car for $80,000, the lender will instantly throw your loan into the bin.

This is your first loan, you need to demonstrate to the lender that you are realistic with the car you are wanting.

Try to keep your first loan amount under $30,000 and only choose a standard everyday car that can get you from A to B.

All that sounds brutal...

You are not alone thinking the application process is daunting, however you have come to the right place.

Ready to See Your Chances? We Can Check It for You...

Buying your first car is a huge milestone - and you don't need to figure it out alone. If you want to know how strong your profile looks (and what lenders would think of your application), we can check everything for you without affecting your credit score.

Whether you're working full-time, part-time, casual, doing an apprenticeship, or in your first proper job - there are lenders who want first-time buyers.

You just need someone who knows which lender is right for your situation.

Here's what happens when you apply:

A broker reviews your application the same day

If you apply on the weekend, you will receive a call first thing next business day.

We match you with a lender who suits first time borrowers

Your application would be sent to one of over 60 lenders for the best outcome.

You get personalised tips to strengthen your profile.

If it's best for you to wait a little bit longer to strengthen your profile, we'll tell you.

You stay in control the whole way

Whether you want to proceed with your car loan now or later, it will always be up to you.

Car Finance Options for First-Time Buyers with Limited Income 🚗💸

As a first-time buyer with limited income, securing car finance might seem like a daunting task, but it’s not impossible. While you may not have a large income or extensive credit history, there are still options available to help you finance a vehicle. Understanding the various finance options and steps you can take to improve your chances of approval is key to getting the best deal for your budget.

🏦 Car Finance Options for Buyers with Limited Income

There are several types of car finance available for individuals with limited income, and the best option for you depends on your specific financial situation. Here’s a breakdown of some of the most common options and how they work for first-time buyers with lower income:

🔑 Finance Option What It Means How It Helps Buyers with Limited Income
💳 Personal Loan A loan from a bank or lender to purchase a car. Personal loans allow you to borrow money for a car purchase, even if you have limited income, as long as you have proof of consistent income.
🛠️ Secured Loan A loan that uses your car as collateral. Secured loans are easier to get approved for since the car itself acts as collateral. This reduces the lender's risk, making it easier for those with limited income to qualify.
💼 Hire Purchase (HP) A financing option where you pay for the car over time and own it once the loan is fully paid. HP allows you to break down the cost into manageable monthly payments, helping you spread the cost over a longer term and fit the payments within your budget.
🔄 Lease-to-Buy Similar to leasing, but with an option to buy the car at the end of the term. Lease-to-buy can offer lower monthly payments compared to a traditional loan, which makes it easier for those with limited income to afford a car.
🧑‍💼 Guarantor Loan A loan where someone with better financial standing acts as a guarantor. A guarantor with good credit can help you secure better financing terms, even with limited income. They agree to pay the loan if you default, giving lenders more confidence in your ability to repay.

💡 How to Improve Your Chances of Approval with Limited Income

Securing car finance with limited income may be more challenging, but there are ways to increase your chances of getting approved. Here are some tips that can help you improve your chances of securing financing:

1. Save for a Larger Down Payment

💰 The larger the down payment you can make, the less you need to borrow, which reduces the lender's risk. By saving up for a larger down payment, you show that you’re financially responsible and can afford the car purchase without overextending yourself.

A larger down payment can also lower your monthly payments, making the loan more manageable on a limited income.

💡 Tip: Aim for at least 10%-20% of the car's value as a down payment to reduce your loan amount and improve your chances of approval.

2. Consider a Co-Signer

🧑‍💼 A co-signer with a strong credit history can greatly improve your chances of securing car finance. If you have limited income, a co-signer provides reassurance to lenders that the loan will be repaid. This can help you qualify for a better interest rate and better loan terms.

💡 Tip: A co-signer can help you secure more favorable terms, but be aware that they are financially responsible for the loan if you fail to make payments.

3. Work with a Finance Broker

📑 A finance broker can help you navigate the process of securing car finance, especially when you have limited income. Brokers have access to multiple lenders and can match you with the best car finance options based on your specific financial situation. They can also negotiate better terms for you, increasing your chances of approval.

💡 Tip: Brokers can help you access loans designed for buyers with limited income, even if you have no credit history.

4. Ensure You Have a Steady Income

📈 Lenders want to see that you have a steady income to ensure you can make monthly payments. If you’re a first-time buyer with limited income, it’s important to provide proof of your consistent income, whether it’s through payslips, bank statements, or tax returns.

💡 Tip: Having a steady job with at least six months of employment history can improve your chances of getting approved, even with a lower income.

5. Keep Your Debt-to-Income Ratio Low

📊 Your debt-to-income (DTI) ratio is an important factor in determining your ability to repay a loan. A lower DTI ratio shows that you have enough income to cover your car payments and other financial obligations.

To improve your DTI ratio, consider paying off existing debts before applying for car finance. Reducing your monthly debt payments can make it easier for you to manage a car loan on a limited income.

💡 Tip: Keep your DTI ratio below 36% for the best chances of approval.

6. Look for Special Programs for First-Time Buyers

📝 Some dealerships and lenders offer special programs designed specifically for first-time buyers with limited income. These programs often come with lower down payment requirements and more flexible credit criteria, making it easier for you to secure car finance.

💡 Tip: Ask about first-time buyer programs when shopping for car finance. These programs can often offer competitive interest rates and favorable loan terms.

🧑‍💼 Why Use a Finance Broker?

A finance broker is an excellent resource when you’re working with limited income. They can help you find lenders who specialize in loans for first-time buyers or those with low income. Brokers understand the nuances of securing car finance in challenging situations and can help you navigate the process smoothly.

💡 Tip: Brokers can also help you negotiate better terms with dealerships and lenders, saving you money on interest rates and fees.

🔑 Final Thoughts

Getting car finance with limited income as a first-time buyer is possible, but it requires careful planning and preparation. By making a larger down payment, considering a co-signer, working with a finance broker, and ensuring you have a steady income, you can improve your chances of securing financing. With the right strategy and approach, you can drive away in your new car without putting too much strain on your finances.

 

DISCLAIMER

The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.

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All Your Questions Answered

What is a car loan and how does it work?

A car loan is a finance product where a lender provides funds for you to purchase a vehicle, which you repay over time with interest.

What’s the difference between secured and unsecured car loans?

Secured loans use the car as collateral, often leading to lower interest rates. Unsecured loans don’t, but usually have higher rates.

What loan terms are available for car finance?

Most car loans offer terms from 3 to 7 years. Find out what term suits you best.

How is interest calculated on a car loan?

Interest is based on the loan amount, term, and rate. Fixed-rate loans have predictable repayments, while variable rates can change.

Can I get a car loan for a private sale?

Yes, many lenders accept private sellers. You’ll need to provide extra documents.

Do government employees get lower interest rates on car loans?

Yes — many lenders offer better rates due to your stable income. Explore finance options for government employees.

Can I apply for a car loan while on probation?

Yes. Many workers are approved during probation.

What credit score do I need as a government employee?

A score of 650+ is ideal, but lower scores may still be considered.

Are corporate professionals eligible for low-rate finance?

Yes, especially if you're full-time with strong income.

Can I get car finance with a novated lease?

Yes, many government departments support novated leasing.

Can I get a car loan with no credit history?

Yes, it's still possible to get a car loan with no credit history.

What if I’ve been declined elsewhere?

A broker can help restructure your application for better results.

How do I check my credit score?

Use Equifax, Experian, or Illion for a free check.

Can I get finance if I have a current personal loan?

Yes, if your income supports both loans. A broker will assess your capacity.

What documents do I need to apply?

Typically: ID, payslips, and bank statements.

Can casual workers get car loans?

Yes, if you’ve worked consistently for 6+ months.

Can I apply if I’m self-employed with an ABN?

Yes. Consider a low-doc loan.

Can Centrelink be used as income?

Yes, when paired with PAYG income.

What’s the minimum income to qualify for car finance?

Most lenders prefer $30,000+ annually, but this varies.

Can I apply on a fixed-term contract?

Yes, especially if it’s government-backed.

Can I finance a used car?

Yes, most lenders allow used cars under 10 years old.

Can I get a loan for an SUV or family car?

Absolutely

Can I finance a caravan or motorbike?

Yes

Can I finance an EV or hybrid car?

Yes. You may even qualify for green car loan discounts.

Can I use my car for both work and personal use?

Yes you can.

What is a balloon payment?

It’s a lump sum due at the end of the loan term.

Can I make extra repayments?

Yes, many lenders allow this without penalty.

Can I pay off the loan early?

Yes — ask if there’s an early payout fee.

Is there a deposit required?

Not always.

What loan terms are available?

1 to 7 years is standard.

How long does approval take?

24–48 hours in most cases

Can I apply online?

Yes — most lenders and brokers accept online applications.

Is a broker better than going direct?

Often, yes. They can compare lenders for you.

Can I get pre-approved?

Yes — and it gives you better negotiating power at the dealership.

What happens after I apply?

Your documents are reviewed, and if approved, the lender issues funds to the seller.

Can I get a loan with a visa?

Yes, in some cases. see finance for visa holders here.

Do I need a driver’s licence to apply?

Yes, but learners may qualify with a co-applicant.

Can I apply with someone else?

Yes, joint applications are allowed.

Can I refinance my current car loan?

Yes — it can lower your repayments or get you a better rate.

Can I trade in my old car as a deposit?

Yes, many lenders accept trade-ins toward the deposit.

Can nurses get car finance?

Yes — see nurse-specific finance tips.

Can teachers apply while on contract?

Yes. Read how to get approved.

Do defence personnel get special car loan rates?

Yes, in some cases. Your job security is a major advantage.

Can FIFO government workers apply?

Yes — consistency in income matters more than job location.

Can I apply if I’m on maternity leave?

Yes, especially if you’re returning to work. Here’s how.

Can I use car finance to buy interstate?

Yes — just make sure the seller provides all required documents.

Can I finance a car from an auction?

Yes, but only through select lenders. Ask your broker first.

Will applying hurt my credit score?

Only if you apply to multiple lenders directly. Brokers help protect your score.

Can I get a car loan if I’ve been bankrupt before?

Yes — see bad credit car loan options.

What if I want to upgrade my car before the loan ends?

You can sell the car, pay off the loan early, or refinance.