Manual on how to finance a vehicle with credit or negative

People decide to buy a car for a variety of reasons. Ease of getting anywhere, social status, freedom for family car rides, avoiding public transport and much more. But not everyone can buy a new car in cash.
With a wide range of car financing options, buying a car is no longer an unattainable dream. In this guide, we look at car finance options, as well as tips on how to make choosing an auto loan less stressful and fun.

What is an auto loan?

You take out the car loan for the purchase of your vehicle, and pay monthly installments that are defined at the time of the car loan, which usually lasts from 1 to 7 years.

Different types of auto loans

Before applying for an auto loan to purchase a vehicle, you need to know what types of auto loans are available and what is best for you. Also, you need to compare different auto loans before applying.

Auto loans fall into the following categories:

  • Fixed Auto Loan: This type of vehicle purchase loan has a fixed interest rate and long repayment term. You have a clear idea of ​​how much you need to pay per loan installment each month. Car dealerships often offer this type of auto credit.
  • Variable Auto Loans: These auto loans have variable interest rates. The payment term depends on it. When interest rates go up, so do your payments. On the other hand, if interest rates go down, your payments will go down too. Prepayment for this type of auto loan may be advantageous. This can be a good option if you plan to prepay your car loan, with an upfront/additional payment.
  • Secured auto loans: Many lenders offer secured auto loans, where your car is used as collateral for your auto loan payment. In other words, if you don’t pay your installments on time, the lender can repossess your car and sell it on the market to recover the loan amount.
  • Unsecured Loans: As the name suggests, auto loan applicants do not need to provide any assets or collateral to obtain this type of loan. Therefore, these loans attract higher interest rates. This type of loan is primarily for “used” cars.
  • Car rental: This type of “loan” is for companies that use the car for business purposes. Here, a company takes out an auto loan and pays it back during the term of the loan.
  • Vehicle leasing: The car remains in the name of the bank/lender for the entire duration of the lease. You make an advance and then pay the car leasing in installments. After the payment period ends, you will receive full ownership of the vehicle purchased. This is a great financing option to spread the total cost of the vehicle over several years. You can get some flexibility in the payment terms of the Leasing, such as reducing the installments with an advance of some amount and frequency of payment: weekly, monthly or fortnightly.
  • Vehicle purchase with direct discount on payment: it is an agreement between the employee, the employer and the car finance company. An employee sacrifices part of his salary to buy a new car. This lowers their take-home pay and reduces their tax liability when they pay for your car.

Tips for financing a car in Australia

Buying a car is one of many financial decisions in life. Finding the best way to finance a car is no easy task.

You need to research, study and compare different factors to determine the best financial deal. Here, we list the top six auto finance options:

Step 1: Understand the basics of car financing

To find auto finance that meets your needs, it’s important to understand the different components of finance.

Components of a car loan:

  • Interest rates;
  • Comparison of values;
  • Term of financing (shorter term has lower interest rate and vice versa. While longer term payments are lower, you will end up paying more interest);
  • Bank or Automotive Credit Provider;
  • Financing installments;
  • Vehicle financing conditions (whether the car loan will be for used or new cars only and age limit);
  • General Vehicle Financing Fees: Initial Fees, Monthly Service Fees, Continuing Fees, Interruption Fees, Unpaid or Default Fees, Handling Fees, Late Payment Fees;
  • Other costs: Stamp duty, car insurance, registration, maintenance, operating expenses such as gasoline and maintenance;

Step 2: Compare the auto loan using the parameters above

Before going to any vehicle lender or dealer, it is important to research and compare to find the lender that offers the best auto deal. Reputable comparison portals can also help you compare and rate auto loans related to the above.
Also, you should check your credit history as good credit can help you lower interest rates and qualify you for higher loan amounts. Visit an Australian credit bureau to check their creditworthiness.
Tip: Making payments and paying off debt on time is the best way to improve your credit score over time.

Step 3: Discover the best way to finance your car in Australia

There are a variety of car finance options in Australia for purchasing a new or used car, such as:

  • Take out a personal loan;
  • Borrow money from trusted friends and family;
  • Use your credit card (a good option when the cost of the car is very low);
  • Loans from financial institutions such as credit unions or banks;
  • Pay for the car with a direct discount on your salary;
  • Low Interest Auto Loans from Online Lenders;
  • Choose a dealer vehicle financing option;

Overall, financing through a non-bank lender or car dealership is the best option for quick and hassle-free execution, lower interest rates, simplicity, lower monthly payments, and flexible deals.

Step 4: Understand the requirements for car financing in Australia
Now that you know what type of loan you want and where are the best places to apply, the next step is to understand the eligibility criteria for applying for a car loan.
Regardless of the auto finance option, the auto loan application process requires you to fill out some forms and submit documents.

Here are the most common documents and vehicle details you will need when applying for a car loan:

  • Be 18 years of age or older;
  • IDs, including your driver’s license, Medicare card, passport, etc;
  • Information about your vehicle: make and model, engine number, license plate number, purchase price, condition (new or used);
  • Active employment or receiving a pension. Centrelink can be considered as secondary income along with stable income;
  • Proof of Income: 90-day bank statement (3 most recent paychecks), proof of employment and employer information. If you are self-employed, you must submit tax returns for the last 2 years;
  • No default loans or assets paid or unpaid;
  • Not bankrupt or accused of any wrongdoing;
  • Good reputation;
  • Possess a valid driver’s license or passport;

Step 5: Use the loan calculator to calculate your monthly payment;

Use a car finance calculator to determine if you can afford a specific car. This car finance calculator is easy to use and is available on most websites that offer auto loan.

You will need to enter some details to find out how much you can borrow and the car loan payments:

  • How much do you want to borrow?;
  • Loan Term (years);
  • Payment frequency (year, month, fortnightly and weekly);
  • Interest rate;

Step 6: Apply for a car loan

Submit the required documents along with a completed and signed auto loan application. Your application will be checked for eligibility for an auto loan. The process includes the following steps:

You complete and submit the online auto loan application form;

  • A loan officer will review your application;
  • It will verify the authenticity of your documents and decide if you meet the standards;
  • If they give you a car loan, you must sign the loan acceptance form;
  • Your loan is approved and financed by check or directly through the dealer where you purchased the car;

What is Dealer Financing?

Car dealerships offer car financing options for people looking to take out a loan to buy a new or used car. The loan application process is very similar to other lenders.
The loan process starts by checking credit, payroll, savings and discussing the possibility of making monthly payments with the applicant. The dealer will handle all aspects of credit, including contacting your preferred bank to arrange an auto loan.

Why finance a car through a dealer?

Are you looking for the best place to finance your car? Consider financing your car through a dealership as it offers many advantages over other financing methods:

  • Simple: no need to fill out lengthy loan applications with financial institutions like credit unions or banks. If your loan application is rejected, you will need to start the entire loan application process all over again. On the other hand, the dealer handles the entire loan application processing, making the process easier and less demanding.
  • Low Interest Rates: Dealer loans have easier credit terms and lower vehicle finance rates than other financing sources. This cheap loan can save you a lot of money over time.
  • Lower monthly payments: Many merchants offer “balloon payments” that allow you to lower your monthly fees over the course of the financing period. Here, the borrower makes a fixed-rate balloon payment after the auto loan term expires.
  • Flexible Offers: By choosing to finance your car through a dealership, you can negotiate the loan terms and receive numerous financing offers that suit your needs.
  • Fast execution: Dealer financing is faster than financing your vehicle through a personal lender, credit union, or bank. In most cases, you can buy a car, fill out the loan application, and drive your new car all in one go.

What is the minimum wage needed to buy a car?

With this type of financing, you can talk to your employer to see if they are willing to use your pre-tax salary to pay off your auto loan. You can borrow from a finance company if your employer agrees.
This type of credit can have some disadvantages. You may owe the residual value at the end of the lease and pay higher administration fees and interest rates, including liability if you change jobs or lose your car.

How to finance and buy a car?

Buying a car in another state in Australia is like buying a car in your hometown.
However, you will be required to pay additional fees and charges, including vehicle transfer fees, stamp duty, title and registration fees.

Best place to finance a car

Here are some of the best car lenders in Australia:

  • No ongoing or monthly fees;
  • Possibility of advance payment;
  • Flexible installment payment options, such as weekly, monthly and biweekly;
  • Fast approval within 24 hours;
  • Refund options for balloons;
  • New and used cars available at dealerships;
  • Available for a term of 3, 4 or 5 years;
  • Credit approval threshold: $5,000 to $100,000;
  • Choose between variable and favorable fixed rates;

OMM (our money market)

  • No hidden fees;
  • No monthly account maintenance fees;
  • No exit fee;
  • No advance fine;
  • Flexible and simple;
  • Loans available with payment of up to 1 to 7 years;
  • Options to pay installments weekly, monthly or fortnightly;
  • Fast paperless application;
  • 100% online application;

IMB Bank

  • No ongoing fees;
  • No early departure penalty;
  • Apply online;


  • Fast application process;
  • No monthly fee;
  • low flat rate;
  • Payment term of up to 7 years;

What should I pay attention to when buying a car?

Motor vehicles are depreciable assets whose value decreases over time. The first rule is to avoid using debt to buy these assets. Using financing is the most common way for Australians to buy a car.
Don’t be fooled by marketing gimmicks like “0%” or “1%” interest offers, as you could end up paying more for your car overall.
Pre-approval can increase your bargaining power.
While buying a new car is more expensive, you can get better rates from lenders because of its value, public benefit, and reduced risk.
Make larger initial (down payment) payments to reduce payments and increase your chances of being approved for a low-interest loan.
Check your credit history and understand your financial situation before contacting a lender. Make sure you correct any defaults in your credit history to increase your chances of getting loan approved.

What factors create a good auto loan?

Here are the elements that differentiate a good car loan from a bad car loan:

  • Zero or negligible rates (lowest comparison rate);
  • Availability of additional features;
  • Pre-approval option;
  • Flexibility to prepay the car loan;
  • Flexibility to switch between weekly, monthly and biweekly payments;
  • Balloon payment methods;
  • Possibility of renegotiating the loan;
  • Continuous support;

Don’t settle for your first dealer financing offer. Instead, check and compare other options for great deals.

What is an undocumented auto loan?

Low Document Auto Loans are available for loan applicants who cannot provide the documents required to apply for the loan. Self-employed workers fall into this category because they cannot provide proof of salary.
Proof of company ownership and good credit are enough to approve a car loan with little or no documentation. Notably, this type of loan has a higher interest rate than a traditional car loan.

What are the general conditions of a car loan?

The term of a car loan is the amount of installments you have to pay to pay off the full amount. Auto loans have different terms.
However, most reputable lenders allow terms between one and seven years, with a maximum of ten years.

How to get a low interest auto loan?

Small changes in interest rates can lead to big savings in the long run. People should pay special attention to the interest rate when applying for an auto loan.
Here are a few ways to show car lenders that you are a reliable borrower to offer lower interest rates:

  • Maintain a clean credit history;
  • Always opt for a secured loan;
  • Use a guarantor;
  • Have a steady income stream;
  • Request a low value;
  • Buy an ecological or used car;

What are the factors that affect the payment of auto loans?

The loan amount, loan term, and interest rate are three key factors that affect your auto loan payments.
A installment payment calculator is a useful tool for understanding the cost of your car based on these three variables.

What is the required amount of costs to apply for an auto loan?

Knowing the rates when taking out a car loan will help you find the cheapest and most suitable loan. Some of these fees include:

  • Registration fee;
  • Monthly service fee;
  • Prepaid fine;
  • Late Payment Fee;

Can auto credit improve my credit history?

Taking out an auto loan and paying it off on time is recorded as positive behavior on your credit report. It can improve your overall score.

What is a green car loan?

The government encourages people to buy green cars.
Green car loans are government loans at lower interest rates intended to encourage people to buy green cars.

How do I finance a car with bad credit?

Bad credit car loans are ideal for those who are unable to finance their car due to bad credit, bad debt, bad credit history, bankruptcy or short term employment.
Rapid Finance is a car loan company with over 19 years of experience helping countless Australians with bad credit find the right loan.
Your team of experts will work to assess your financial situation and identify all available financing options. Through their comprehensive assessment, they find the financing solution that best fits the borrower’s goals and situation.

The interest on the loan is significantly higher due to the higher risk of the applicant. Some of its service features are:

  • Fast application and approval;
  • Financing of new and used cars;
  • Customized car loan solutions;
  • Financing a private car or a dealership car;

How do I finance my car on Centrelink?

To qualify for a loan product, you must have regular income. Some lenders treat Centrelink services or payments as revenue for approving secured car loans.

Here are the eligibility criteria for a car loan through Centrelink:

  • You must be at least 18 years old;
  • You must be an Australian citizen or an Australian permanent resident;
  • You must use internet banking;
  • Have regular income in your bank account in the last 90 days;
  • No more than two payroll loans in the last 3 months;

Centrelink customers can access auto financing of up to US$10,000. To approve loans of this size, lenders often place cars as collateral to protect them from borrowers defaulting.
Before applying for a car loan with Centrelink payments, you need to determine a realistic budget and total monthly repayment capability. A car loan calculator can help you calculate the estimated amount you can afford.
If you’re having trouble getting an auto loan approved for Centrelink payments, a guarantor (someone with good credit and credit history) can improve your chances of getting a loan.

Steps to finance your car with Centrelink payments

Create a realistic budget. Once you’ve paid all the monthly fees, determine what you can afford each month. Consider more things like loan amount, interest rate, loan term and payment period.
Contact a broker who can do all the work for you to get your auto loan approved.
If for some reason you cannot repay the loan, find a guarantor (a trusted friend or family member) who will be responsible for repaying the loan. It protects lenders from risk and improves your chances of getting a future loan.
Gather your credit documents and financial statements and submit your application


There are many things you need to consider before applying for an auto loan to finance your car. Doing enough research and organization will give you more confidence and put you in a great position to negotiate and find the best deal.
Additionally, maintaining a strong financial profile, good credit history, and low debt will increase your chances of getting loan approval and qualifying for more competitive interest rates.