Used Car Loans
Drive away with a competitive personalised interest rate on your next used car with Savvy.
Fact checked
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
A trusted brand
Our more than ten years in the industry has given us invaluable knowledge of loans and lenders, which we share with you.
Fast approvals and settlement
From quick quote to settlement, we can process your application in as little as 48 hours with our advanced digital platform.
More choice, better rates
We give our customers more choice when it comes to lenders, with over 40 of Australia’s top financiers on our panel.
How to apply for financing for a used car
Submit your application
The first step to take in this process is to fill out our application form. This lets us know more about you and the type of car you want.
Once you submit this, our advanced system pairs your details with a range of lenders which are the best match for your profile.
Your Savvy consultant then gathers a selection of the best offers and presents them to you to choose from. You can compare these options in areas such as interest rate, repayment flexibility and car age restrictions.
Have your formal approval organised
Once you’ve chosen your loan, we submit your formal application directly to the lender and ensure that it passes their qualification criteria.
Having your application and documents in your consultant’s hands is safer, as they understand the requirements of each of our lending partners inside and out, so they can help prevent your credit score from being affected by a rejection. For instance, you could be rejected for having a car that doesn’t fit with your lender’s age or manufacturing requirements.
Typically, you’ll receive a formal offer with in one business day from your lender.
Select the used car you want to buy
The next step is to find and select the car you want to purchase as part of your financing agreement. You can choose to buy your car from a used car dealership or private seller as part of this arrangement up to the age of 20 (at the time of purchase).
Realistically, you can choose almost any car you like for financing, as we can help you access funding for used cars beyond the upper age limit with an unsecured personal loan. This sidesteps the need for you to ensure your car is suitable as collateral and holds substantial resale value.
Sign your agreement and the car is yours
After everything has been confirmed between the two parties, your lender will send you a digital copy of the final loan agreement to sign.
You can do this via our platform, where we offer the chance for you to sign it electronically and have it sent straight back to the lender.
Once they receive this, your loan funds will be sent through to your seller and the ownership of the used car is transferred to you.
What our customers say about their finance experience
Savvy is rated 4.9 for customer satisfaction by 3545 customers.
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