Apprenticeship Car Loans

In this guide, we’ll discuss how apprentice loans can be used for car purchases, and what you need to know if you’re thinking of applying for one.
No obligation. It won't affect your credit score.
Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on June 30th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Apprenticeship Car Loans

Beginning an apprenticeship is an exciting time, and there are many aspects to consider before starting out on your journey, particularly when it comes to finances. One thing you know for sure is that you’ll need a car to get to work – but how are you supposed to pay for one, when apprenticeship rates are notoriously low to begin with? That’s where apprenticeship car loans come in.

What is an apprentice loan?

Simply put, an apprentice loan is a loan offered by a lender to an apprentice, whereby the lender understands that as an apprentice, you’re likely to find it difficult to meet the minimum income requirements to qualify for a loan with other lenders. It recognises that when undertaking an apprenticeship, you’ll be better placed financially in the long term, giving the lender a sense of security in your overall ability to repay the loan despite your current level of income. Additionally, lenders who offer apprentice loans understand that as an apprentice, your expenses tend to be lower, making you less likely to spend beyond your means and reducing your riskiness as a borrower.

What are the benefits of getting an apprentice loan?

If you’re starting an apprenticeship, chances are you’ll be on very limited income, and it might become difficult for you to afford to purchase any big ticket items. So if you’re in the market for a car, or you need a vehicle to transport you to and from work, taking out an apprentice loan can ease the financial burden tremendously, meaning you can make your purchase without having to worry about putting food on the table while you complete your apprenticeship.

Additionally, if you’re starting an apprenticeship straight out of school, you might not have had a chance to build up any credit history, and getting an apprentice loan is the perfect way to get your foot in the door and establish a credit score, which will come in very handy if you need to apply for other loans or lines of credit in the future.

How can I find the best apprentice loan?

Loans aren’t one-size-fits-all, so the best way to find an apprentice loan that suits your needs is by identifying what you require, and then comparing different options to see how they stack up. You can start by using an online car loan calculator to estimate the monthly repayments you’ll be able to afford, and from there you’ll be able to determine how much you’d be looking to borrow.

You’ll also want to look into which lenders offer financing arrangements for apprentices, otherwise you may find that the loans you’re looking at when shopping around won’t actually be suitable for you. Engaging the services of a broker can help here, as they’ll be familiar with the market and can recommend the best apprentice loan providers for your situation.

Additionally, Interest rates can make a big difference to the financial impact of taking out a loan, and naturally, a higher interest rate will see you paying more over time for the same amount. For instance, if you decide to borrow $15,000 for a car during your apprenticeship, and choose a loan with a 5.5% interest rate over a five year term, you’ll end up paying a total of $2,191 in interest over the life of the loan. Hike that figure up to 7.5%, and you’re now paying $3,034 in interest – meaning that the $15,000 car you purchased is actually costing you over $18,000. And that’s not even including fees, which many lenders will pepper throughout the loan duration as a way of being able to offer lower interest rates while still making money.

For this reason, it’s important to look at comparison rates when choosing the best loan option for you. The comparison rate is essentially the loan’s interest rate, but with all fees taken into account as well. Let’s go back to the example of a 5.5% interest rate on a 5 year loan for a $15,000 car. If the lender charges an average of $20 per month in fees, such as establishment, repayment and administration charges, this will give the loan a comparison rate of 8.4%.

What do I need to qualify for an apprentice loan?

Lenders that offer car loans to apprentices have varying criteria to qualify, however they usually require that you:

  • Are between 18 and 25 years of age, and
  • Are enrolled in an approved Australian apprenticeship course

You may also have to submit the following documentation as part of your loan application:

  • A copy of your apprenticeship letter or statement
  • A copy of your registration confirmation from the training provider

What other options do I have, if I don’t qualify for an apprentice loan?

If you’re unable to qualify for an apprentice loan, you can apply for standard car loans from lenders that have less stringent income requirements. These will take a range of factors into account when assessing your eligibility and determining the amount you’re able to borrow, such as:

  • Your age, i.e. whether you’re over 21 and therefore qualify as an adult
  • How much you earn during your apprenticeship
  • Your credit history and any previous or current debt
  • Whether you have a deposit – while not necessary, this can be helpful.

Most standard car loans require that the car you purchase be held as security against the loan, meaning that if you fail to meet your repayment obligations, the lender can repossess your car and sell it to recoup their costs. For this reason, lenders will also consider the type and age of the vehicle you intend to buy, and may not offer financing for cars older than six or seven years, since these will be harder to resell without making a substantial loss.

You could also consider applying for a Trade Support Loan from the Australian government. These allow you to receive up to $21,078 over the life of your apprenticeship, and only require you to start making repayments when you earn over a certain amount. These loans are there to help support and meet any everyday costs that you may have during your apprenticeship. In the 2019-2020 financial year, the annual repayment threshold was $45,880. Trade Support Loans are interest free, and offer a 20% discount on the total loan amount when you have successfully completed your apprenticeship, as an additional incentive

Helpful guides on car loans

Car Loans Banner - Man standing against his luxury car looking into the sunset

Luxury Car Tax Explained

If you’re buying a valuable new or near-new vehicle, you may be required to pay the Luxury Car Tax (LCT) on the purchase. It’s important to understand what this is...

New cars Australia

Car Statistics Australia: Car Sales & Car Loans Report

As part of Savvy’s ongoing research into automotive consumer sentiment and broader financial landscape of Australians, we present the latest car finance statistics in Australia. Check back for new and...

Car Insurance Banner - Couple driving their vehicle on a short-term holiday with the sunset in the background.

Do I Need a Deposit for a Car Loan?

A car loan deposit is a lump sum contribution made towards the purchase of your vehicle, in conjunction with a loan from your car financier. While you don’t always need...

Car Insurance Banner - A young couple sitting in their car checking their car insurance policy on a tablet.

We'd love to chat, how can we help?

By clicking "Submit", you agree to be contacted by a Savvy broker and to receive communications from Savvy which you can unsubscribe from at any time. Read our Privacy Policy.