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Each of these options will help to reduce your loan amount, which naturally keeps your monthly payments as low as possible. When you apply for a car loan that has a residual balloon payment remaining at the end of the term, you can drastically reduce your monthly repayments.

While this might end up much easier on your budget for monthly repayments, it's always important to check that the balloon amount owing at the end is likely to be repaid and covered by the trade-in value of the vehicle after that time. Otherwise, you're likely to be stuck with a debt that is due immediately. Another way to reduce your monthly repayments is to extend the loan term.

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When you choose a longer loan term, the amount you're required to pay each month is reduced. Unfortunately, the lender also gets to charge you interest on your debt for a longer period of time, so you could end up paying far more in interest over the term of the loan. Below is a checklist of some of the information and documentation you may need to supply for your cheap car loan application:. You will need to supply some form of identification when you apply for a car loan to verify who you are.

It might be enough to supply just your driver's licence with some lenders, but others may also ask for additional documents, such as a birth certificate, passport or Medicare card. When you apply for a loan you will also need to provide proof of how much you earn. This might be done by showing a couple of your recent payslips, tax return documents or group certificates.

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Self-employed borrowers may need to provide tax assessment notices for the past two years, along with current profit and loss statements. Some lenders may also ask to see business activity statements BAS for the past few quarters to further verify business revenue. Your car loan application will include a section for you to input your employer's details. This will include your employer's contact information and the length of time you've been employed by that company. If you've only worked in your current job for a short time, the lender may want information about your employment history for the past three to five years to show that you've maintained a steady job over this time.

Some banks may want to see some type of evidence of your savings history in order to qualify for a loan. This can be done by providing the past few months' worth of bank statements showing your income and savings amounts. In order to be approved for most loans, lenders may want you to have a good credit history.

If you're unsure what your credit history might look like, you may want to order a copy of your credit report to see if any defaults have been listed there. Of course, if you don't have any credit history at all yet, you might be able to show your ability to make payments on time by providing recent bills you've paid in the past few months. These might include phone bills, electricity bills or any other regular payments you need to make. Getting your car loan approval may seem like a straightforward process, but there are several stages your application needs to progress through before your money is released to the seller of the car.


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These are:. To get the approval process started, you will need to fill out and sign an application form. This can be done in person at the bank branch or at the car dealership, or alternatively can be filled out using the lender's online application form on the website. Once your application has been received, it's reviewed by a credit officer.

If everything is in order, you should receive your conditional approval almost immediately. The final approval stage is where the lender may request you to supply any documentation to support your application. This includes your identification, payslips or income verification, bank statements and any other pertinent information required. Once your final approval has been received, you'll be asked to sign your loan documentation.

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This is your agreement with the bank to repay the amount of money you're borrowing over a specified loan term at an agreed interest rate. When this has been done, the lender will release the money from the proceeds of your loan to the car's seller and you get to drive away in your new car.


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Yes, if you meet the eligibility requirements. As long as you are older than 18, a permanent resident of Australia and can verify that you earn a steady income then you should qualify. The amount you're able to borrow is determined by your income and current liabilities as well as the specific loan you apply for.

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A pre-approval is a great way to work out how much you can comfortably borrow and what your repayments will be before you head out car shopping. The approval process for car loans is usually very quick. In most cases you should get a conditional approval in a couple of hours. You should receive your final approval on the next day after submitting your application. Some lenders will allow you to include the costs of your car insurance premium and other costs associated with the purchase into your loan amount.

Always ask to be sure if this applies to your loan type. Some lenders will place restrictions on the age of vehicles and even some restrictions on some makes and models of cars. If you're in doubt with the car you want to buy, take the time to ask your lender some questions about whether it will be suitable for it to use as security for your loan.

Some lenders will allow you to borrow the entire purchase price of your car. This will depend heavily on the strength of your financial situation and your credit history. Your repayments can be made automatically via direct debit on a weekly, fortnightly or monthly basis with most lenders.

This is where an amount of money is debited from your regular transaction account each month to cover your payment. Some lenders will also allow you to make your payments via BPAY if you prefer. This will depend entirely on the lender you choose and the type of car loan you want. Some loans will charge you an early repayment fee for making extra repayments.

Others won't.

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It's always a good idea to check whether this fee will apply to your loan before you proceed with the application. Most lenders will allow you to make additional repayments in a variety of ways. You can choose to make a payment directly into your loan account using BPAY, transfer funds electronically from your regular transaction account over to your loan account or nominate to have each payment taken out at an agreed amount as part of your direct debit agreement.

Interest is calculated on your outstanding loan balance on a daily basis and charged to your account monthly in arrears.

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You are able to buy your car through a private seller if you wish. You will need to provide details about the car to the lender, such as registration number and vehicle identification number VIN for the loan to proceed. Any enquiries you make for any form of credit will be entered onto your credit report as an enquiry with that lender.

If your application is declined and you end up submitting another application elsewhere, your report will show two enquiries. Many banks may decline a car loan application from a borrower with a bad credit history. However, there are some lenders out there willing to let you borrow money even with bad credit. You may want to discuss your application with a car finance specialist before you proceed. This will help you to locate the appropriate lenders to help with your situation and improve your chances of getting your loan approved.

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A balloon payment is a residual amount of money that needs to be repaid at the end of the loan term. This type of loan lets you reduce your monthly repayments throughout the term of the loan and then you need to pay off the lump sum amount still owing at the end. You might choose to sell the car to pay off the lump sum amount due or trade it in on another vehicle and refinance that residual amount into your new loan.

In the event that you stop making your car loan repayments, the lender may choose to repossess your car. It will sell it in an attempt to get some of its money back along with covering any repossession fees it was charged. If the sale price of the car doesn't fully cover those costs or pay off your outstanding loan amount entirely, then you may still need to repay the bank for the remaining amounts owed.

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We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs. Interest rate: 5.