Used Car Loans

Drive away with a competitive personalised interest rate on your next used car with Savvy.

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on May 3rd, 2024       

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Car Loans Banner - Couple examining a used car for sale at a dealership

Most Australians prefer to buy used instead of new. After all, while a record 1,216,780 were registered as sold in 2023 (according to VFACTS data), the Australian Automotive Dealer Association (AADA) reported that 2,074,535 used vehicles were sold through dealerships or private sales over the same period.

This is for a range of reasons. For instance, they’re generally a fair bit cheaper and have less depreciation left in their lifetime than a new car. However, it’s important to consider a variety of factors before buying your used car. That’s why Savvy is here to help you find the best available car loan to suit your needs

Our diverse panel of lenders can finance vehicles up to 20 to 25 years of age, with other options available without any age restrictions. We take you all the way through the application process to help you find the right loan to finance your second-hand car. Get a free, no-obligation quote with us today!

What are used car loans and how do they work?

A used car loan is, as the name suggests, a finance agreement designed to help you purchase a used car. This loan can be for part or all of the vehicle’s purchase price. In most cases, it’ll be secured, meaning it utilises your vehicle as collateral.

Once you apply for your loan and receive formal approval, you’ll repay it on a weekly, fortnightly or monthly over a pre-determined period between one and seven years. As part of your loan, you’ll need to pay interest, as well as fees (which may be waived in some cases).

How are used car loans different from new car loans?

Car loans as a product have the same structure regardless of whether you’re buying new or used. However, there are some minor differences between the two:

  • Vehicle age limits: new car loans are often limited to brand-new vehicles or ex-demonstrator models, although some lenders may extend this to between three and five years of age. In contrast, used car loan age limits are higher, ranging from as little as seven years up to 20 or more with other lenders.
  • Interest rates: because new cars don’t have any wear and tear or the potential for a history of repairs, lenders may offer a better rate on these loans than for used vehicles. However, this is typically only marginal.
  • Loan size: new cars depreciate at a rapid rate, meaning the purchase price of a new car may be much lower. According to Budget Direct, between 10% and 15% of your car’s value drops as soon as you drive it out of the dealership, with a similar fall expected after 12 months. As a result, you likely won’t need to borrow as much.

What types of loan can I use to buy my used car?

There are several finance options to choose from when purchasing a used car. These include:

  • Secured loans: these loans utilise your car as collateral for the agreement. This adds a layer of security for your lender, as they can repossess the car if you become unable to repat your loan. These loans come with lower rates than unsecured loans, but require you to choose a car that meets your lender’s requirements.
  • Unsecured loans: another option for a used car is an unsecured loan. These don’t have any collateral attached, meaning there are no restrictions on the car you can choose. However, unsecured loans come with higher rates and lower borrowing caps, which can vary from $50,000 to $75,000.
  • Chattel mortgages: if you’re buying for your business, you can look for a chattel mortgage instead. These are essentially the same as a standard secured loan, but come with several tax benefits for business owners, such as claimable interest, depreciation and GST on the purchase.

How old can my used car be?

Different lenders have different age requirements when it comes to vehicle finance. As mentioned, some will limit their secured loans to cars up to seven or eight years at the conclusion of the agreement. Others may extend this to ten to 12 years, while there are also lenders out there with more flexible criteria that can finance cars up to 15 years or older.

At Savvy, we’re partnered with a wide panel of lenders, some of whom can offer secured finance for vehicles up to 20 to 25 years old. Alternatively, if you’re looking at purchasing a classic car, we can connect you with specialist financiers who deal with vintage, veteran and other modern classic vehicles. Speak with your consultant about your options if you’re looking to finance an older car.

How should I compare used car loan options?

There are many ways to compare different car finance options before you sign on the dotted line. These include:

  • Interest rates: even small differences in interest can have a major impact on the cost of your loan. For instance, on a $30,000, five-year loan repaid monthly, a rate of 7.50% p.a. instead of 8.50% p.a. would save you over $850 in interest.
  • Fees: lenders may charge establishment and monthly account fees, as well as early repayment fees, as part of your agreement, but this isn’t always the case. check with your lender to see what additional costs may apply on top of interest.
  • Loan terms: not all lenders offer loans as long as seven years or as short as one, so it’s important to consider this if you’re looking for a particularly long or short car loan.
  • Minimum and maximum loan limits: consider whether the lender you’ve chosen has a high minimum or low maximum loan amount, as this may impact your borrowing ability. For instance, minimum loans can vary from $5,000 to $10,000 or more, while some lenders may enforce a borrowing cap of $100,000.
  • Car eligibility: make sure the car you’re buying satisfies your lender’s criteria in terms of age and condition.
  • Applicant eligibility: of course, you’ll also need to ensure your profile aligns with these requirements. Lenders will have minimum income and employment criteria, as well as age, residency status and more.

When you apply with Savvy, we’ll do the heavy lifting for you. Once you submit your initial application, we can pair you with a lender best suited to your profile and handle the paperwork on your behalf.

Why so many Australians come to Savvy for used car finance

How to apply for financing for a used car

Frequently asked second-hand car finance questions

Can I get a used car loan with a bad credit score?

Yes – at Savvy, we can help you buy your new car even if you’re struggling with your credit score with a bad credit car loan. While not all lenders are willing to work with customers who have imperfect credit ratings, we partner with a range of lenders of different types to ensure we can cater to your needs.

Can I finance a car bought from a dealer or private seller?

Yes – at Savvy, we can help you access the finance you need to purchase your used car, whether that's from a dealer or private seller, provided you and your car meet lender eligibility requirements.

Can I borrow to cover my insurance policy?

Yes – some lenders may allow you to borrow more than 100% of your car's value to cover on-road expenses, including insurance. All cars bought under finance must have a comprehensive policy taken out to cover them and you can arrange for this cost to be included in your loan. You can also borrow to cover further costly vehicle-related expenses, such as registration and stamp duty.

How do I reduce my interest rate to find the best finance deals?

There are several key ways that you can reduce your credit score, even if you’re buying a second-hand vehicle.

Your credit score plays a major role in determining your used car loan rate, so the better your rating, the better your interest. Also, owning a significant asset such as property and having verifiable existing credit will help reduce your rate on your loan.

Can I buy a used car if I’m on government benefits?

Yes – we work with lenders who accept a diverse range of income streams as part of their car financing, including Centrelink payments, with used cars often being a preferred option due to their cheaper cost. Some of these include Age and Disability Pension, family tax benefits and Veterans’ Service Pension.

However, it’s important to note that not all income sources are eligible, such as Youth Allowance, JobSeeker and Austudy.  

Am I able to repay my car loan early?

Yes – some of our lending partners may be able to offer you free additional repayments on car loans, meaning you can contribute more to your loan and pay it off ahead of schedule. For example, if you contributed an extra $100 per instalment on your five-year, $50,000 car loan at a 5% rate, you can save over $700 in interest and cut down your loan term by six months.

Do demo cars count as used?

Yes – ex-demonstrator cars do count as used and come with a variety of benefits for buyers. These cars often come with little kilometrage, meaning that you’re purchasing a near-new vehicle for a used vehicle price.

Speak with your Savvy consultant about purchasing a demo car.

Can I finance an imported car?

Yes – you can finance manufacturer-imported vehicles through our trusted lending partners, as well as used Australian-made models. In most cases, your car mustn't have been written off in the past.

Brands you can trust

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