What are the restrictions on cars that can be financed

Not all cars will be deemed as suitable security for lenders to allow a secured car loan. The most common restriction is the age of the vehicle, where a quite common lender guideline will allow the car to be no older than 12 years of age at the end of the proposed finance term. That means if you wanted to apply for a 5 year loan, the car can be no older than 7 years old at the time of purchase as an example.

There are a couple of lenders that will stretch this as part of their standard guideline, but would insist that the car be purchased through a licenced dealer.

As these restrictions are “guidelines”, lenders may be more lenient on those conditions based on the applicants profile and also on the type of vehicle, as often some lenders would finance old classic cars, older ‘exotic’ or prestige vehicles for longer terms, if the applicant’s profile is strong. This is on a case by case basis and would need to be discussed in detail with a professional such as a Finance Broker to determine this.

You may also find it difficult to purchase imported vehicles, as most of their history is not registered in Australia and the lender could find they may be financing repairable write-offs imported from overseas. There are also lender guidelines in regards to these proposals which can be stretched on a case by case basis, if it is an import and being sold by a private seller, this makes things even more difficult, but may be still possible for the right client.

Any vehicle that has been declared a repairable write-off in most cases would not be able to be used as security for car loans. Most lenders would also not allow vehicles being used for motor sports, etc. to be used as security, as they are too risky in regards to the usage of the car.

Basically the lender is weighing up the risk involved with any application, as they need to look at things as a worst case scenario, so if they had to repossess the vehicle and sell it, how easy would it be to sell and how much would they lose from the financed amount in comparison to the wholesale price they would off load it for a quick sale?

Any good qualified professional broker should be able to determine whether your proposal outside the restrictions is feasible in regards to your own situation, so it may be worthwhile discussing this prior to committing to anything.

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