Why Your Application Matters
When it comes to car loans, lenders donât hand out their best offers to just anyone â they reserve them for borrowers who look strongest on paper. Your income, credit history, deposit size, and even the type of car you choose all play a role. The good news? You have control over many of these factors. A quick eligibility check can show you where you stand and what steps could help. It only takes 20 seconds â no impact to your credit score.
What Lenders Look At Before Offering Competitive Rates
Credit Score and Credit History
Lenders assess your credit file to understand your past borrowing behaviour. A strong credit score and a clean repayment history suggest you're a lower-risk borrower, which may help you access more competitive offers. Even minor improvements to your credit can make a big difference.
Stability of Employment and Income
Consistent, stable income gives lenders confidence that you can meet your loan repayments. Full-time employment, longer job tenure, and verifiable income sources all strengthen your application. Casual or short-term employment may still be considered but could impact the range of offers available.
Deposit Size
The bigger your deposit, the better your borrowing position. A larger upfront contribution reduces the lenderâs risk, which may open up access to more favourable car loan options. Even a modest deposit can help lower your repayments and improve your overall loan terms.
Vehicle Age and Condition
Newer vehicles are seen as less risky for lenders, while older or high-kilometre cars may attract stricter conditions. Choosing a vehicle that is newer, reliable, and still under warranty can help you qualify for better loan options with more flexible terms.
Other Existing Loans and Credit Commitments
Lenders review your current financial obligations to ensure you can comfortably afford a new loan. High levels of existing debt â including credit cards, personal loans, or BNPL services â can reduce your borrowing power. Reducing other debts before applying can strengthen your position.
Loan Term (Shorter = Potentially Lower)
Shorter loan terms usually mean lower overall risk for the lender, which can sometimes result in more competitive options. While a longer loan term may offer lower monthly repayments, it often leads to higher total interest paid over time. Finding the right balance is key.
6 Ways to Boost Your Chances of a Low Rate
Save a Larger Deposit
A bigger deposit reduces the lenderâs risk and shows youâre financially responsible. Even saving a little extra before applying can significantly improve your borrowing position. Many lenders favour borrowers who can contribute at least 10% to 20% of the vehicleâs purchase price upfront.
Choose a Newer or Reliable Vehicle
Newer or well-maintained vehicles hold their value better and are viewed more favourably by lenders. Choosing a car that is still under manufacturer warranty or has low kilometres can help you access a broader range of loan options with potentially more flexible terms.
Review and Clean Up Your Credit Report
Before applying, check your credit file for any errors, outstanding debts, or defaults. Paying off overdue accounts and reducing credit card balances can quickly strengthen your profile. Small improvements to your credit report can lead to better car finance options down the track.
Show Stable Employment History
Lenders prefer applicants who have been in the same job or industry for at least six to twelve months. Stability signals lower risk. If possible, avoid changing jobs or industries just before applying for a car loan, as it may complicate the approval process.
Minimise Other Outstanding Debts
Reducing or eliminating existing loans, credit card balances, or buy-now-pay-later services can improve your serviceability â your ability to afford new repayments. Lower debt levels often lead to stronger applications and a higher likelihood of accessing more competitive car loan offers.
Opt for a Shorter Loan Term
Choosing a shorter repayment term not only reduces the lenderâs risk but also lowers the total interest you pay over the life of the loan. While monthly repayments may be slightly higher, shorter loan terms often unlock more attractive finance options.
