If you are in the market for a new set of wheels but don’t have enough cash saved up to purchase it outright, you may be considering a car loan to help fund your new car purchase.

It’s common to have a number of questions regarding the ins and outs of car loans, particularly when it comes to obtaining approval. To help take out the guesswork and get you pushing the pedal to the metal sooner, you’ll find some key tips to obtaining car loan approval below.

Save up for a deposit

Saving up for a deposit can not only provide a greater chance of your car loan being approved, it can mean paying a lower amount of interest over the course of your loan and making repayments more manageable. In essence, having a sufficient car deposit shows the lender that you’re financially responsible as a borrower.

Use a car loan calculator to help determine how much deposit you may require to help fund your new car dreams.

Budget accordingly

Sure flashy wheels may look good, but it is important to assess the practical needs of a new car against your desires. This is to ensure you are not extending yourself beyond your means when it comes to paying off your new car over the life of the loan.

There are also many expenses involved in owning a car aside from simply paying the purchase price - these include maintenance and petrol. You will need to pay for things like stamp duty, car insurance and registration, which all add up. Budgeting can help in the process of saving up for a deposit as you can ensure you place enough money aside to cover these expenses.

Improve your credit score

Bad credit history is a major red flag for many car loan lenders. However if your credit score is not where it should be, fear not as you can improve your credit score by clearing any debts against your name and paying off your loans on time.

Ultimately in order to get your car loan approved, your goal is to have as little debt as possible so you can show your lender you can make the necessary car loan repayments with ease.

What if I have defaulted in the past?

If you have been unable to obtain a loan previously as a result of a negative track record that may include a default, demonstrating even a short period of successfully paying your bills and other loan repayments on time can show that you’ve turned over a new leaf and improve your prospects of getting approved for a car loan.


Obtaining pre-approval for a car loan is a great way to test the waters before lodging a car loan application, since it gives you an idea of how much you can possibly spend on a car. Receiving pre-approval means the lender agrees in principle to lend you a sum of money to buy a car, subject to credit approval and an invoice from the dealership.

Organise your documents

To place you on the front foot from the start, having an understanding of the documents you are required to provide can speed up the loan process. You’ll find a quick checklist of some the documentation you may be required to provide below:

  • Identification - 100 points: This could be a combination of your driver’s license, passport, birth certificate, medicare card or other government-issued forms of identification.

  • Residential history: You will be required to provide a minimum of two years of residential history in order to meet lender requirements.

  • Proof of income: You will be required to provide a minimum of two of your most recent payslips. If self-employed, your last two tax returns are generally sufficient.

  • Assets and liabilities: You will be required to provide proof of properties, vehicles, cash savings, belongings or other investments like market shares that you may have. The same can be applied to liabilities such as debts including credit cards or other loans such as mortgages.

Understand car loan terms and conditions

Specific car loans come with certain strings attached. For example, if you’re applying for a green car loan, the car you want to purchase will have to be a hybrid or electric vehicle or be more fuel-efficient than average for a car of its size. If this isn’t the case, you are not likely to qualify for that particular loan. Another condition you might come across is a limit on the age of the vehicle.


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