When financing a used car, there are a few things to look out for to ensure you find the right lender for the vehicle and your personal circumstances.

Although there are quite a few lenders in the market and most of them will finance used cars, you would need to consider not every lender has the same criteria in regards to what used cars they would finance.

Check out our tips on how to get a car loan for a used car.

Set a budget

Prior to going looking for a vehicle, it’s vital you have an idea of the price you’re willing to pay. The used car market has been red hot of late, with prices going through the roof. Heading into the market with a dollar amount you won’t go over can not only save you money but also make you search far simpler and more efficient.

Get pre-approval

Getting pre-approval for a car loan is another great way to budget when searching for a used car. It’s not a guaranteed amount a lender will let you borrow, but it can give you an idea of what they may lend you. This can prevent you from looking outside of your price range and streamline the whole process.

Related: How much can I borrow for a car loan?

Pick a car

Picking a used car is arguably the most enjoyable part of the buying process. However, it can be easy to ahead of yourself if you immediately have a sentimental attachment to the vehicle. Remember, you’re buying a used car so it’s vital you get all the necessary checks done to make sure its roadworthy.

Additionally, financiers will compare the price you’re paying for your vehicle against the market value of the vehicle as calculated by an industry guide, such as Glasses Guide or Redbook.

This is because financiers don’t consider these factors when calculating your Loan-To-Value Ratio (LVR). A high LVR indicates a higher risk the financier wouldn’t be able to recover all of the money they loaned you if they had to repossess and sell the vehicle, which would be reflected in a higher interest rate.

Decide on a loan type

Typically, loans for cars are charged at a fixed interest rate. This means your interest rate is locked in for the loan term, which is usually no more than seven years. This means you have the certainty your car loan repayments won’t change in that period which provides cash flow certainty.

It is possible to access a variable rate interest when looking to buy a used car. This can be advantageous if you wish to make additional repayments and pay down your loan faster, and the lender may have the option to add a redraw facility.

It’s important you decide on which of these loan types best suits your needs. A professional can often help you with this decision.

Speak to a professional and apply online

The older a vehicle is the harder it will be to sell, which is why financiers will generally have certain restrictions for secured car loans, for example vehicles less than 12 years old at the end of your loan term. These age restrictions at times can be negotiated on a case-by-case basis with some lenders, depending on the type of vehicle and on the overall strength of the application.

There are some financiers that will flat out refuse to offer a secured car loan for any used car, and some will only allow finance for used cars that come from dealerships. That’s why it can be helpful to speak to a professional finance broker to ensure that you’re able to get the loan and interest rate you’re after on the vehicle you would like to purchase, otherwise you could face disappointment down the road.

Used car loans can be slightly different from a new car loan, so it’s always good to get assistance to find the right lender that would suit your proposed purchase and your personal circumstances, to not only increase the chance of approval, but to also ensure the best deal for the situation is obtained.

We can assist you with all of your used car queries and applications, so call us on 1300 889 669 or get a car loan quote online.


Can you get a loan for a second-hand car?

You can get a loan for a second-hand car, but how easy or difficult it is to do so comes down to the lender. Some lenders have restrictions on how old the car can be or how many kilometres it has done.

Can you get a loan for a 12 year old car?

Lenders will typically not grant a loan for a car that is 12 years or older. This is because it will be harder to sell due to its age in the event you default on the loan and the lender has to sell it to recover its losses.