What Makes You Eligible to Finance a Car?

By Alexi Falson on 21 Oct 2022
image for What Makes You Eligible to Finance a Car? Buying a new car is one of the most exciting purchases you’ll make in a lifetime. 

It’s also one of the most expensive purchases you’ll make, which is why the majority of Australians purchasing a new car turn to financing their purchase to help manage their payments over time. 

That brings up the question of exactly what makes you eligible to finance a car, and what you can do right now to help increase your borrowing power. Join us as we unpack all the things you need to know about financing a new car purchase. 

What Makes You Eligible to Finance a Car? 

There are a few basic criteria to meet to ensure a lender deems you eligible to finance the purchase of a new or even a used car. 

Car financing is determined by lenders on a case-by-case basis that might not require all of these criteria, depending on the type of vehicle finance your applying for. Some of the most important eligibility criteria includes: 

  • Age (Over 18 or under 75)
  • Citizenship or visa status 
  • Proof of address 
  • Proof of income to meet payments and interest rates 
  • Detailing personal assets and/or liabilities 
  • Employment history 
  • Type of employment (full-time, part-time & casual work) 
  • Monthly expenditure details 
  • A healthy credit score 
  • Deposit 
  • Car and insurance information

Am I Eligible For Car Finance? 

As a bare minimum, and depending on the amount of money you’re looking to borrow for your car purchase, lenders require applicants to be over the age of 18, either a citizen or permanent resident of Australia and earning a wage in order to pay off the loan. 

This means that eligibility to finance a car purchase is relatively simple, although the types of loans and subsequent interest rates and balloon payments will change depending on your financial history, how much money you’re earning or even your age. 

Checking Your Credit Rating 

A credit score or credit rating is a number that reflects your ability to borrow money and pay that money, including any interest payments, back to the lender as per originally agreed. 

It tracks your previous financial history and gives lenders a clear picture as to your reliability as a borrower, which gives them an idea of just how ‘risky’ it would be to lend you the money for your car purchase. 

In Australia, credit ratings are mapped on a scale between zero and 1,200. An excellent credit score translates to better interest rates and a higher borrowing capacity, while fair and poor credit ratings are met with higher repayments and less funds to borrow. 

To find out more about credit scores and what type of credit score can help you secure the best rate on your car loan, click here to read our comprehensive guide.

What is Borrowing Power, and How Do I Know How Much I Can Afford to Borrow? 

As the name might suggest, borrowing power is the amount of money that a financial lender is prepared to give you. 

There’s a complicated formula that varies from lender-to-lender, but in the majority of cases, borrowing power is set by things like: 

  • Your current credit score 
  • Current income 
  • Monthly expenditures 
  • Employment history 
  • The size of your initial deposit for the loan 
  • Number of dependents 
  • The type of loan (unsecured vs secured) 

General Job Requirements for Applying for Car Finance? 

While it isn’t always the case, most financial institutions require proof of your employment to help give them confidence that you are in a position to repay the loan amount, and any accumulating interest on the originally borrowed money. 

Some lenders will take a look at not only your current proof of income, but your employment history to check your ability to stay in a role and earn a steady wage, which translates to your capacity to meet a regular payment schedule.

Options for Casual Work, a New Job or Centrelink Payments 

These days, lenders are more flexible when it comes to part-time, contract and even casual work arrangements, so long as you can give them enough proof of your financial situation and confidence you can meet the loan’s terms.  

If you’re starting a new job, lenders are usually happy to take a look at your contract or a signed letter of employment in favour of payslips in order to get your loan across the line. 

If you’re receiving Centrelink payments, some lenders count these payments as income that can help get your application over the line, which is more likely if you’re able to find someone that can co-sign the agreement with you. 

Steps to Apply for a Car Loan

  • Check your current credit rating and take steps to improve ahead of application 
  • Research your dream car make, model and individual variant 
  • Compare rates and offers from all lenders 
  • Gather your documents, and proof of income & expenditures 
  • Try to secure pre-approval before your inspection of the car 

Request a Quote

Click here to get a quick and free quote on your dream car or to speak with one of our car-buying experts.


Alexi Falson

Alexi is an automotive journalist and road tester hailing from Byron Bay. He has an affection for both cars and motorbikes, a great admiration for the simplicity of old-school engineering, and a fascination of new technology making its way to modern cars. When he's not road testing, you'll find him surfing, hiking or helping people find their dream cars.

Have any questions? Call us on 1300 719 925

car icon
close sticky hub button


Maximum of 3 vehicles