How Much Can I Borrow For My Car Loan in Australia?


If you are looking for a Car Finance Loan, often the biggest question you have is How Much Can I Borrow for My Car Loan? The amount that you can borrow will play a huge role in determining what type of car you can buy.

At the end of the day there is no one answer to how much you can borrow for your car loan. The amount you can borrow will differ from one person to the next. However, there are few things you can do to calculate how much you can borrow for my car loan in 2022.

Here’s how to find out how much you can borrow for your car loan in 2022.

Find out my borrowing power

Your borrowing power is how much money a lender will be willing to lend you to finance your next vehicle purchase. Your borrowing power will depend on your individual living circumstances. In a nutshell, things that will impact and determine your borrowing power include your income, any assets you may have, current expenses, any current debts, and any current loans you may have.

When you apply for a Car Loan, the lender will look at how much you can afford to pay with your current income and expenses factored in. One of the fastest ways to calculate your rough borrowing power is to calculate all your income minus your current expenses. Once you come up with either a positive to or negative value you should multiply that by 3. Some lenders may provider a greater buffer, but again will all depend on each individual circumstance and lender requirements.

Once you understand your current financial position you will be able to assess if you are lendable on the surface or not before you go to a lender. To maximise your chances of receiving finance approval, try to limit your current expenses and liabilities. Having large expenses or liabilities will make you look like a risk to a lender.

You should never apply for a car finance loan if you do not understand your financial position. The better your financial position is, the more likely you will be to receive approval from a lender.

Related Article: 5 Biggest Car Finance Mistakes Australians Make in 2022.

Car Finance

Use a Financial Institution Calculator

One of the fastest ways to identify your current borrowing capacity is to use a lenders borrowing capacity calculator. Most financial institutions like Westpac, NAB, Commonwealth Bank and ANZ to name a few will have a borrowing calculator available to use.

Using a financial institution calculator will give you an indication of your borrowing capacity and whether or not you are suitable for a loan. The benefit of using one of the big banks calculators is they are free and carry no obligations, which means you do not need to commit to anything in order to use the service.

Do I need a 20% deposit for a car loan?

Unlike what you may you do not necessarily need any deposit whatsoever to gain a Car Finance Loan. However, with that being said, it is always best to have some sort of deposit available for the purchase. Not only will it limit your loan amount, but it shows the lender you have the ability to save and prioritize your spending.

Another thing to consider when it comes to deposits is having a sizeable deposit can and often opens your doors to better interest rates. Loans are based on LVR (Loan to Value Ratio). LVR is the amount of money you are going to borrow to purchase a car, against the current total value of the vehicle. Having a larger deposit ultimately lowers your LVR. Having a lower LVR mitigates a lot of the risk to the lender and may help in obtaining a better interest rate.

How to Apply for the Cheapest Car Finance Loan?

Shop for Cars has made it fast and easy for Aussie motorists to apply for a Car Loan. In the click of a button, buyers have instant access to over 60 leading Australian lenders.

Using Shop for Cars, you can find the vehicle that you are interested in and apply for finance directly on the individual vehicle listing. In a few short minutes you can submit your initial application and choose the cheapest rate available to you. No broker, no manual shopping around!

To learn more about Car Finance on Shop for Cars click here, or search for a vehicle you are interested in on the Shop for Cars homepage here.

Related Article: Bank Said No to Your Car Loan? Here’s What You Can Do.

Final Word,

Determining how much you can borrow will have a major impact on your buying journey. Before you begin applying for car finance loans it is important that you understand your borrowing capacity and look for ways to improve your lending position to increase your chances of receiving approval.

We hope you enjoyed reading this article. To read more articles like this, please visit the Shop for Cars latest news page here.

About Shop for Cars

Shop for Cars is Australia’s first car dealership-only online classified. Shop for Cars brings you the best quality new and used vehicles from trusted motor dealers Australia wide. Shop for Cars currently has over 12,500 cars listed for sale all from licensed Motor Vehicle Dealers ONLY.

Click here to begin your search.

DISCLAIMER: This is all based on opinion please research and consult with all relevant parties to make the best lending decision.