Used Car Financing Options in Australia

Used Car Financing Options in Australia

Buying a used car can be a practical way to manage costs, but choosing the right financing option is just as important as selecting the vehicle itself. With several used car financing options available in Australia, understanding how each works can help you compare costs, risks, and flexibility before making a decision.

The most suitable financing option will depend on factors such as your financial situation, credit history, and the age or condition of the car. This guide explains common used car financing options, outlines key considerations, and explores how a Credit24 personal loan may be used to fund a used car purchase of up to $10,000.

Understanding used car financing in Australia

Used car financing in Australia is offered by banks, online lenders, finance companies, and car dealerships. Loan structures and pricing can vary significantly, particularly compared to new car loans.

Used vehicles often carry different risks for lenders due to depreciation, condition, and resale value, which can influence approval criteria and interest rates.

Why used car loan interest rates differ

Lenders may consider factors such as:

• Vehicle age and kilometres
• Overall condition and service history
• Estimated resale value
• Loan-to-value ratio (LVR)

LVR refers to the loan amount compared to the car’s assessed value. Older or lower-value vehicles may result in a higher LVR, which can affect pricing or approval outcomes.

Typical approval requirements

When assessing used car finance applications, lenders may look for:

• Stable and regular income
• Credit history and existing debts
• Vehicle details, inspection, or valuation
• Registration and ownership documentation

Current trends in used car financing

Based on general Australian consumer lending insights (including ASIC consumer lending reviews):

• More borrowers are comparing online lenders for convenience and faster assessments
• Demand for used vehicles remains strong due to higher new-car prices and cost-of-living pressures

Used car financing options

Below is an overview of common used car financing options in Australia, with key benefits and considerations for each.

Secured car loans for used vehicles

A secured used car loan uses the vehicle as security. If repayments are not met, the lender may have the right to repossess the car.|

Typical used car finance rates

Rates are often higher than new car loans due to increased risk. Loan terms commonly range from 3 to 7 years.

Who offers secured used car loans?

Banks and large finance providers often offer secured loans, though eligibility criteria may be stricter. Some online lenders may offer more flexibility for older vehicles.

Pros

• Usually lower interest rates than unsecured loans
• Higher borrowing limits
• Longer repayment terms available
• Suitable for newer used vehicles

Cons

• Vehicle must meet age and condition requirements
• Risk of repossession if repayments aren’t met
• More documentation required
• Comprehensive insurance may be required

Unsecured car loans for used vehicles

Unsecured loans don’t use the car as security, allowing more flexibility in what you can purchase.

Pros

• No collateral required
• Can be used for any car, including private sales
• Faster online application processes

Cons

• Higher interest rates than secured loans
• Lower borrowing limits
• Shorter loan terms
• This option may suit buyers looking to purchase older vehicles that secured lenders may not finance.

Dealer finance for used cars

Some dealerships offer finance through partner lenders at the point of sale.

Pros

• Convenient, one-stop experience
• Quick approval process
• Promotional offers may be available

Cons

• Rates may be higher than external lenders
• Add-ons can increase total loan cost
• Fewer options to compare

Comparing dealer finance with independent lenders can help ensure you understand the full cost.


Credit card financing

In some cases, buyers use a credit card to purchase a used car, usually for lower-priced vehicles.

Pros

• Useful for smaller amounts
• No formal loan application
• Reward points may apply

Cons

• High interest if not repaid quickly
• Surcharges may apply
• Not accepted by all sellers

Home loan redraw or offset accounts

Homeowners may consider using available redraw or offset funds to buy a used car.

Pros

• Lower interest rates compared to personal loans
• No separate car loan
• Flexible repayment structure

Cons

• Extends the effective life of your mortgage
• Reduces financial buffer
• May increase total interest paid over time

This approach may suit some borrowers but requires careful consideration.


Novated leasing for used cars

Some employers allow novated leases for used vehicles as part of salary packaging arrangements.

Pros

• Potential pre-tax benefits
• Running costs bundled
• Simplified budgeting

Cons

• Not available through all employers
• Limited vehicle age eligibility
• Can be complex to exit early

Tips for getting the best used car loan rates

To compare used car financing more effectively, consider the following general tips:

• Improve your credit profile – stronger credit history may result in better pricing
• Compare multiple lenders – rates and criteria vary widely
• Seek pre-approval – helps set a clear budget
• Increase your deposit – reduces loan size and overall cost
• Choose shorter terms where possible – often lowers total interest

Learn more about credit scores here:
https://www.credit24.com.au/blog/what-is-a-good-credit-score-australia

Consider Credit24 for used car purchases

Credit24 personal loans offer a flexible way to finance a used car, with loan amounts from $500 to $10,000. Funds can be used for vehicles purchased privately, through dealerships, or online.


Credit24: Personal loans for used cars

A Credit24 personal loan can be used to fund a used car purchase without restrictions on vehicle age or type.

Why choose Credit24?

• Use your personal loan for any used car
• No vehicle age or value restrictions
• Fully online application process
• Fast assessment and funding via OSKO (if approved; bank processing times vary)
• Fixed, predictable repayments
• No early repayment fees

Whether you’re buying your first car or upgrading, understanding your financing options can help you make a more informed decision.

FAQs about used car financing

What’s the difference between new and used car loan rates?

Used car loans often have higher rates due to lower resale values and increased lender risk. Rates depend on the car’s age, condition, and loan structure.

How old can a used car be to qualify for financing?

Many secured lenders prefer vehicles under 7–10 years old. Older vehicles may require unsecured finance. Personal loans can be used for cars of any age.

Can I get used car finance with poor credit?

Approval depends on your income, expenses, and overall financial position. Some lenders may assess applications with less-than-perfect credit, subject to responsible lending checks.

Should I use dealer finance or an external lender?

Dealer finance is convenient, but banks and online lenders may offer different rates or terms. Comparing options can help you decide.

How much can I borrow for a used car?

Secured loans may range widely. With Credit24, personal loans are available from $500 to $10,000, subject to assessment.

What documents are usually required?

Applicants generally need ID, bank statements, income details, and vehicle information.

How long does approval take?

Timeframes vary by lender. Online lenders often assess applications quickly, and if approved, Credit24 funds may be transferred via OSKO (processing times vary).

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839.

The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.