Although applying for a car loan might seem daunting for some, the reality is that, with the right people handling your application, the process can actually be a quick and painless one. Whether you’re a high income earner with perfect credit, struggling with a few black marks on your credit file or buying a vehicle for business, this process remains more or less the same.
Before you dive head-first into your application, though, it’s worth understanding what’s involved, from getting your quote to signing your final loan contract.
How to get a car loan with Savvy: the step-by-step process
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Fill out our simple online quote form
Start by telling us a bit about yourself, your finances and the loan you’re after. This will give us enough detail to form an idea of what we might be able to do for you, which we’ll call you to talk about.
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Complete your application
If you’re committed to financing your next car, you can proceed with the full application. You can do this after discussing your quote with us or straight after your quote if you want your car loan sorted ASAP.
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Supply any required documents
After you submit your application, we may request further documentation to verify details such as your employment and income. These can be submitted online via our portal.
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Discuss your options with us
Once we have all the information we need, we’ll compare the offers available to you from our lender panel. Your broker will reach out to talk you through your car finance options before proceeding.
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Find your ideal car
If you haven’t already decided on (or found) your ideal car, our in-house car broker team, Vehicles Direct, can search our national network of dealerships to find the best available model for you.
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Have your application prepared and approved
Once we have all the info we need, your consultant will get to work preparing your application for submission to your lender. You can receive formal approval as soon as one business day after it’s submitted.
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Sign on the dotted line
We’ll send through your final loan documents and other forms to sign electronically. Once settlement is complete (which we’ll also handle for you), you’ll be the proud owner of your new or used car!
What to do before applying for a car loan
We’ve run through the application process itself, but what about the groundwork you’ll need to cover before you start? Here are a few simple things you should always do before you move ahead with your application:
- Work out your budget: have a close look at your income and current expenses, including any existing loan payments or regular bills, and come up with a car loan payment that you’d be happy with and can afford. Use our car loan repayment calculator to see how much you might be able to borrow within your monthly budget.
- Think about the car you want: within that budget, consider what you’re looking for in a car. Do you need a zippy coupe to get you to and from work or an off-roader to whisk you away on weekend adventures?
- Assess your current financial situation: if your finances or credit score aren’t great, your car loan interest rate won’t be, either. Think about whether it’s a necessary purchase right now or if you can tighten things up beforehand, such as consolidating outstanding debts. This will improve your chances of getting a lower rate.
- Understand car loans as a product: if you’ve never borrowed before and aren’t that familiar with car loans, it’s important to take the time to understand more about them. That could be discussing it further with your broker or lender or something as simple as reading through statistics to get an idea of what might impact your loan application.
- Consider the type of loan you need: are you buying for yourself or your business? The loan you apply for will depend on how you intend to use your car. Also, if your car is particularly old or not in great condition (or you’ve struggled with your credit), you may also have to consider an unsecured loan instead of the standard secured car loan.
- Shop around: don’t just settle for the first offer you see. Take the time to survey the market and see which lenders can offer the cheapest and best deal for your needs. Just ensure you aren’t submitting multiple applications, as that’ll affect your credit score.
- Read the fine print: make sure you’re all over the terms and conditions of any loan before you sign on the dotted line. Doing so will help you avoid any unwanted surprises like extra fees down the track.
How much can I borrow on my car loan?
There’s a range of factors that impact your car loan borrowing power, from your income to your employment, credit score, assets and liabilities and dependants. Here’s an example of how much you may be capable of borrowing based on your income and number of dependants:
| Income | 0 dependants | 1 dependant | 2 dependants |
|---|---|---|---|
| $70,000 | $25,207 | $15,497 | N/A |
| $80,000 | $63,873 | $35,780 | N/A |
| $90,000 | $102,549 | $74,455 | $42,808 |
| $100,000 | $141,225 | $113,131 | $81,484 |
| $110,000 | $150,000 | $126,695 | $95,102 |
| $120,000 | $150,000 | $150,000 | $133,777 |
| Calculations are based on a single applicant purchasing a new car who is paying $2,400 per month in home loan or rent payments with no other loans or debt. All figures are for illustrative purposes only. Your borrowing power may be different based on factors specific to you. | |||
As you can see, your borrowing power increases dramatically the higher your income is and the fewer dependants you have. Another thing that can drastically alter your borrowing power is having a credit card. Adding one with a $10,000 limit to a $100,000 salary with no dependants shaves over $22,000 off your borrowing power.
Do I need to pay a deposit on my car loan?
The short answer is no. You can finance your car with 100% LVR (loan-to-value ratio), meaning you don’t have to pay anything upfront for the purchase of the vehicle. However, paying a deposit can boost your chances of approval and, by reducing the size of your loan, will save you on interest in the process.
If you wanted to buy outside your approved borrowing range, a deposit would be necessary. As long as the vehicle you buy is within this range, you could have your car loan approved with no money upfront.
How long does it take to get a car loan?
When you apply for a car loan with Savvy, we can turn around your application as soon as 48 hours after you submit your initial enquiry (and sometimes just 24 hours). However, there’s a range of factors that can impact the speed of your application, including:
- The complexity of your application
- The time of day or week you apply
- Whether there are any errors in your application
- Whether your consultant requires more documentation to assess your application
- How quickly you can provide all the information required by your consultant
What about pre-approval?
Pre-approval is a conditional agreement between you and a lender that indicates how much they’d be willing to give you based on the information you’ve provided them. It’s basically your lender saying “Based on what you’ve told us, we’d be willing to approve you up to $X when you decide to formally apply”.
You can potentially be pre-approved for your car loan on the same day you apply with us. Pre-approvals, or conditional approvals, can last for up to 90 days, allowing you to shop around for the right car and negotiate the best price without any major time pressure.
Understanding car loan costs
Before committing to any loan agreement, though, it’s important to understand how the cost of car loans work in practice and to calculate them accurately. This involves factoring in all associated expenses, including interest rates and loan terms.
The following table showing repayments on a $30,000 vehicle gives you an idea of how they can be affected by various factors (to keep it simple, fees have not been included in the calculations):
| Scenario #1: low interest | Scenario #2: high interest | Scenario #3: shorter loan term | Scenario #4: longer loan term | Scenario #5: deposit | |
|---|---|---|---|---|---|
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Interest rate
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5.00% p.a.
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12.00% p.a.
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7.00% p.a.
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7.00% p.a.
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7.00% p.a.
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Loan term
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Four years
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Four years
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Two years
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Seven years
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Four years
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Deposit
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–
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–
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–
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–
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$8,000
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Monthly payment
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$691
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$790
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$1,343
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$453
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$527
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Total interest paid
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$3,162
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$7,921
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$2,236
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$8,034
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$3,287
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Of course, these are just example scenarios. To obtain a more accurate indication of what your car loan might cost, you can use a car loan calculator to work out how much loans of different sizes, lengths and interest rates would set you back overall.
It’s also important to budget carefully for on-road costs, as well as those related to your loan. There’s a list of expenses to keep in mind when buying your next vehicle, including:
- Car registration
- Stamp duty on the purchase (cost will depend on where you live)
- Car loan repayments
- Comprehensive car insurance (mandatory under all car loan agreements)
- Servicing and maintenance costs
- Petrol expenses
Here’s an example of how these costs can add up:
| Expense | Annual cost |
|---|---|
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Loan repayments
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$6,120
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Car insurance
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$1,440
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Fuel
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$3,200
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Registration & CTP insurance
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$800
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Service & maintenance
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$1,000
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Total annual cost
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$12,560
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| Expenses are for illustrative purposes only and do not necessarily reflect the amount you will be charged. | |
Car Loan Repayment Calculator
Your estimated repayments
$98.62
| Total interest paid: | Total amount to pay: |
| $1233.43 | $5,143.99 |
The documents you’ll need to submit with your car loan application
Although you might think we’ll need stacks of documentation when processing your application, that actually isn’t the case. Here’s what you’ll need to provide us with as part of your application:
- Driver's licence: front and back (or another form of government-issued ID)
- Payslips: your last two consecutive payslips (or your last tax return if you're self-employed)
- Savvy forms: your Savvy application, consent form and credit guide (supplied by your consultant)
- Car details: information about your car, such as its age, is handy to have
- Bank statements: 90 days of bank statements may be requested, but not always
