Used Car Buying Guide

So, you’re looking to buy a used car. It’s as simple as heading out to the dealership and grabbing one or browsing online marketplaces for the model you’re after… right? Well, no. There’s a stack of things you’ll need to consider along every step of the way, from before you begin your search up until everything is signed, sealed and delivered.

What to like about buying a used car

Used cars are the most popular vehicles in Australia, with the Australian Automotive Dealer Association (AADA) reporting that 2,316,208 used cars were sold in 2025. That’s over 1.1 million more than the number of brand-new cars sold in that period. Boom.

There’s a bit more to digest when it comes to buying used compared to new, but before we get into that, here are the major benefits of buying used:

• Cheaper than new cars: perhaps the biggest benefit is its price. Once a car has been driven, even only a little bit, its value drops significantly. This means that if your car is three to five years old, you’ll likely be scoring a discount of thousands of dollars (if not tens of thousands).
• Cars are ready straight away: wait times? Don’t know them. Unlike a brand-new car, which may need to be shipped from overseas, quarantined and modified for Australian roads, used cars are already available for you to pick up and start driving virtually straight away.
• More seller options: you can purchase a used car from a dealership, private seller or from an auction in some cases, giving you more options to choose from than just your local dealer (more on that a little later).
• Option to trade in your car: if you’re buying from a used car dealership, you may have the option to trade in your current set of wheels in the process of buying your next one. This allows you to kill two birds with one stone, as well as cut down the cost of your used car purchase in the process.
• No need to worry about rapid depreciation: as mentioned, new cars will rapidly lose their value once you begin to drive them around, making them less suitable if you wish to sell your car after a while. In this situation, buying a car that’s a few years older and with the bulk of its depreciation already behind it could offer better value for money.

What about the potential drawbacks?

Buying used means you won’t necessarily have the same peace of mind about how the car was run by previous owners. You’ll have to do more of your own digging to find out the true condition of the vehicle.

You’ll also be more limited in terms of your choices. Rather than being able to pick and choose the model and variant you like, as well as its colour and specific features, you’re limited to what’s available right now on the used car market.

The most popular used cars to buy in Australia: 2025

What do I need to do before buying my used car?

There’s a set of questions you should be asking yourself before you start looking for (or even thinking about) your ideal car. Work out the answers to these and you’ll be off to the races:

• What’s my budget? How much money do you have to work with? Putting together a solid budget will help you determine the amount you can realistically spend without stretching your finances too much. If you’re shopping in the $30,000 to $35,000 price bracket, for instance, you obviously won’t be looking at large luxury SUVs.
• How much is it going to cost to maintain? It isn’t just the upfront cost you’ll need to consider. Car insurance, fuel, repairs and servicing will all cost you a fair bit over your time owning your vehicle. More fuel-efficient models will save you on petrol or diesel, while those that are cheaper and more common will often cost less in the way of insurance and maintenance.
• What am I using the car for? Think carefully about how you’ll be using the car day-to-day and on the weekends. If you’re ferrying your family of seven around, you won’t be looking for a hatchback, while if you want to be able to go camping on the regular, you might be keeping your eye on utes or off-roaders.
• What are my long-term plans with it? Are you planning to sell it after a few years or keep it indefinitely? For those looking to flip cars every few years, it’ll help to look for used models that have already done the bulk of their depreciation (value loss) or those with lower depreciation rates.
• Does it have the features I’m looking for? Cars these days can come with a wide range of advanced multimedia and safety technologies, so think about the features at the top of your list. Do you need a reversing camera, advanced cruise control or sophisticated Bluetooth connectivity? Prioritise the models packing your must-haves.
• What are the reviews like? See what others think about the car before you buy it. Test-driving is essential for used cars, but reading reviews opens you up to opinions from real people who can draw from more experience using the car each day.
• How am I financing the car? Are you paying for it with your savings, taking out a car loan or a combination of the two? If you’re only using the money you have in your account right now, you might want to cap your purchase price so you’ll still have a comfortable amount left. Equally, you’ll need to make sure that any loan you take out is affordable for you each week, fortnight or month.
• Which model is best for me? Ultimately, it’s important to do your own thorough research of different brands and models to help you determine which is most suitable for you. This will all come down to personal preference, as well as being guided by the answers to each of the above questions.

What do I have to budget for when buying my car?

The cost question is a crucial one to expand on a bit more. There’s a range of different expenses that go into buying and running your car beyond the purchase price of the vehicle. You should take care to ensure all of the following work for your financial situation and fit into your budget:

Base price

The most obvious outlay when buying a car is, well, the car itself. You’ll need to make sure you have some way to cover the significant upfront cost, first and foremost.

Extras

If you want any additional features that don’t come as standard, you’ll have to factor these into the purchase price as well. In some cases, they can add hundreds or even thousands to the final price of the vehicle. Common extras include:

• Paint and trim options
• Sunroof or moonroof
• Infotainment systems
• Advanced safety feature packages
• Leather upholstery

Stamp duty

Stamp duty is a tax charged by state or territory governments on certain transactions, including car purchases. The amount you’ll have to pay will vary depending on where you live, as it can be based on a range of factors, such as the car’s purchase price, engine power, vehicle type and environmental impact. You’ll still have to pay this when transferring a used car into your name.

Registration and CTP

Your car must be registered in your state or territory before you’re allowed to drive it, so you’ll have to pay an annual registration fee. Additionally, all cars must have comprehensive third party (CTP) insurance, also known as Green Slip insurance in NSW, to protect against injury or death caused by you on the road. Depending on where you live, CTP may be included as part of your rego.

Insurance

You have to keep your precious safe, of course, and one handy way to do that is with an effective car insurance policy. We go into more detail about car insurance in the post-car purchase section of this guide.

Maintenance and repairs

You’ll need to save room in your budget for ongoing maintenance and repairs. Whether that’s regular servicing or to help you cover the costs of fixing up your car after an accident, it’s essential to have cash in your back pocket to do this.

Fuel

Your car needs fuel to run, so this will be the most regular expense you’ll need to budget for. If you’re looking to minimise your costs in this area, consider fuel-efficient vehicles, as well as hybrid or electric cars that require little or no petrol.

Loan repayments

If you’re taking out a loan to help you pay for your vehicle purchase, you’ll need to consider the cost of paying this off every week, fortnight or month throughout your term. We’ll talk more about car loans and how they work later on.

Dealership vs private seller: which is better for buying a used car?

As mentioned, you’ll have several options to choose from in terms of where to get your used car, but which is the best?

Dealership

Private seller

What questions should I ask before buying a used car at a dealership?

• Is that the best price you can offer? No different from a new car dealership, you should always look to negotiate the price down where you can. Consider your other options if you can’t.
• Can I check the car’s service and repair paperwork? A trustworthy dealership will have this information on hand and be happy to hand it over for you to inspect.
• Is the car still under warranty? It’s good to know whether potential faults can still be covered by the manufacturer's warranty, rather than having to fork out for them.
• What other extras can you throw in? Although you won’t be able to customise your car with optional extras in the same way you would a new model, it may be worth considering a servicing or roadside assistance package (if the terms are favourable).
• Can I take it for a test drive? Like with new cars, there shouldn’t be any issues taking a used vehicle for a spin before you buy it from a dealer.

What if I change my mind?

Well, you might be in luck! Throughout most parts of the country, used car dealerships are required to provide you with a cooling-off period. This means you can change your mind and hand back the car within a certain timeframe, provided you pay a fee and meet certain other conditions. Here’s how it works where you live:

• ACT: three business days
• NSW: one business day
• QLD: one business day
• SA: two business days
• VIC: three business days

As of February 2026, there aren’t any cooling-off periods required in the Northern Territory, Tasmania or Western Australia. If you live in one of these states or territories, you’ll have to be extra positive about your car being the one before signing the contract of sale.

So does that mean I’m stuck with a dud if it blows up straight after I buy it?

Fortunately, no! All states and territories in Australia require dealerships to offer what’s called a statutory warranty on used car sales. These aren’t as long as new car warranties, and what they cover may vary depending on where you live and your dealership. In all states and territories, this period reaches up to three months or 5,000km, with some attaching other terms and conditions to it.

A bit more peace of mind, right? It’s crucial to work out whether your car meets all the requirements in your state or territory so you know if any warranty applies once you buy it. Be sure to check with your dealership if you’re unsure exactly what your statutory warranty covers.

What questions should I ask before buying a used car from a private seller?

When it comes to purchasing privately, it’s crucial to ask more questions, as you won’t have the same safeguards in place as you would with a dealership. The key areas to cover are:

• Is that the best price you can offer? Don’t be afraid to make an offer you feel is reasonable. However, unlike dealers, disgruntled vendors may be more likely to walk away if they feel you’re wasting their time, so it’s important to approach it more carefully.
• Can I check the car’s service and repair paperwork? A seller who isn’t forthcoming with this information may be hiding something. It’s essential to be able to review this information to know exactly what you’re getting yourself into.
• Why are you selling the car? This will provide you with a clear insight into the seller’s mindset. An answer like upsizing for a growing family is better to hear than something vague, which may point to general dissatisfaction.
• Does it have any existing damage or has it been repaired? Look for honest answers here. This can usually be verified by an independent inspection.
• Has the car been written off or stolen? This information can also be checked independently through a PPSR check, so you can determine if the seller is being real with you.
• Is there any finance owing? The same applies here: if they don’t disclose a loan debt, which will show up with a PPSR check, it’s probably time to move on.
• How many owners has the car had? The more owners the car’s had, the harder it is to keep track of all the information you may need.
• Is the car still under warranty? Like any used car, being covered by the manufacturer's warranty is a bonus if any faults rear their ugly head.
• Has the car been modified? Aftermarket modifications are important to know about before you agree to buy, especially if they aren’t legally compliant.
• How many kilometres are there on the odometer? The lower the number, the better.

You mentioned a PPSR check a few times there. What’s that about?

The Personal Property Securities Register (PPSR) is a government register that keeps track of whether assets are debt-free, written off or stolen. It’s a helpful way to double-check the information provided to you by your dealer or private seller, though it’s generally more important for private sales.

As of February 2026, this service costs just $2 to use. If the seller is upfront with you about any past repairs, issues or outstanding finance and provides you with all the info you need, a PPSR check may not even be necessary.

Anything else I need to worry about when buying from private sellers?

If you’re looking at a used car from a private sale, it’s your responsibility to do all the checks to make sure you aren’t buying a lemon. That means you might have to get your hands dirty and poke around the car. Channel your inner Sherlock and crack out the magnifying glass, perhaps.

We’ve compiled a checklist for you to go through when inspecting your used car. You can also use this for vehicles purchased from a used car dealership:

Download your used car buying checklist

Why are inspections important for used cars?

While these checks are still important to do yourself, you won’t be able to pick up on everything if you aren’t a mechanic. That’s why, if you’re serious about that used car being the one, you should book it in for an independent pre-purchase inspection.

Your mechanic will be able to check everything more thoroughly and with a trained eye. There’s no need to be ashamed if something passed you by in the eye test; biting the bullet and getting an inspection could save you a stack of money down the track by helping you dodge a dud.

What about buying from an auction?

This one’s a bit less common, but still available across the country. Auctions are run in warehouses and online by specialist companies, typically looking to sell off used models that might be a bit left of centre. These can range from banged-up cars with existing damage to those previously used by government officials or police officers.

Some of the advantages of bidding on a car at an auction are:

• Potential to get a cheap deal: if you aren’t up against much competition, you could walk away with a very low price (provided it meets the reserve set by the auction house).
• Drive away after you buy: because the cars are available when you bid on them, they’re ready to drive away (or be shipped to your home) as soon as you seal the deal.
• Ability to find something a bit different: if you’re looking for something with a story or a bucket of bolts as your next fixer-upper, an auction could open doors for you.
• Get your car inspected on the day: you can arrange for your car to be inspected on the day of the auction or the day before. Be sure to check with the auction house, as some may not allow inspections on the day of the bidding.

So, are there any catches?

Well, a few. It’s important to be aware of these before you register for the auction and start bidding:

• No test drives: many auction houses won’t give you the option to test drive the car before the bidding begins, especially if they’re online (for obvious reasons).
• No cooling off period: the result of an auction is final, so you typically won’t be able to return it if you take it for a spin and decide it isn’t for you.
• Potential for a higher price: although we mentioned the potential for a cheap deal, the nature of the auction means that if multiple people are interested in the car, the price could be driven up beyond what the car is worth.
• Limited selection of cars: if the car you’re looking for is a more standard used model, it may be worthwhile checking out dealerships and private sales first, as these will give you more options to choose from than an auction’s comparatively limited choice.

How about ex-demo cars?

As the name suggests, these are the top-of-the-line beauties that dealerships use for test drives and displays in showrooms.

They’re used by sales executives or managers at car yards to drive around for a few weeks at a time. This is to allow them to try different makes and models and experience what they’re like to drive to ultimately make them more inclined to recommend that car to a potential buyer with more information at hand.

Because they’ve clocked up distance on the odometer, they can’t be classed as new, but they have so few kilometres (up to 5,000km but usually far less) and such little wear and tear that “used” just doesn’t do them justice.

What to like about buying an ex-demo car

There’s a wide range of benefits to choosing an ex-demo car. Here are just a few:

• Cheaper than new: the fact that the car has been driven means you can potentially score a juicy discount of up to $5,000 or $10,000 on the price of a car that is, for all intents and purposes, new.
• Kitted out with all the best stuff: because this model is intended to show off the best of what the car has to offer, it’ll usually have all the bells and whistles included.
• Kept in very good nick: further to the point about showing off the best of the car, dealerships will be more aware of ensuring it’s in spanking condition.
• Ready to drive away: like other non-new cars, demo cars are kept on-site or at another location somewhere in Australia, meaning the wait time is drastically reduced.
• Still under manufacturer warranty: ex-demo vehicles will usually be no more than a year old when you buy them from a dealership, so you should still have plenty of time to run on your warranty in case you experience any hiccups down the road.

Just because it’s near-new doesn’t mean you can forget about doing all the used car checks and inspections, though. There could still be underlying issues hiding beneath the surface. Above all else, these checks will bring you greater peace of mind when parting with tens of thousands of dollars.

Any downsides?

Well, there aren’t too many, really. The main one is that you don't get much control over what the car comes with in terms of colour, type of wheels or additional options (as is the case with used cars). Essentially, it comes as it is. That being said, if there's something you really need, such as a tow bar, dealers can usually arrange for it to be added on for you as well. They’re also more expensive than used cars, as they’re still near-new.

Is there a particular time I should be looking for an ex-demo model?

Ex-demo models are available all year round. If you have a particular car in mind, it's often a great idea to keep visiting that dealer or check online for ex-demo models regularly.

If you don't have a particular car in mind and can spend more time looking around to find that perfect bargain, though, the end of the financial year is the perfect time to win big.

Car dealers at this time of year are trying to get rid of as much stock as possible, often turning a recently introduced demo car that only has a few hundred kilometres on the odometer into a ‘sellable demo' car. This is where the almighty ex-demo car bargains are at their best!

Can a car broker help me find my ideal vehicle?

They certainly can! A car broker is a business that specialises in finding and buying cars on behalf of its customers. In many cases, these brokers have established relationships with dealerships throughout their state or territory or Australia as a whole.

There are several key benefits of working with a car broker to buy your new or used vehicle, including:

• Discounted prices: car brokers may have access to fleet discounts and are often in a stronger position to negotiate a favourable price than what you’d be able to do on your own.
• Convenience: rather than spending hours scrolling through Facebook Marketplace yourself, your broker will do the hard yards for you to find the car you’re after or the next best thing.
• Organising car purchases interstate: some brokers may be able to help you buy a car located across state borders and have it shipped straight to your door.

Finding a car broker you can trust is also important. Fortunately, Savvy’s in-house car broker team, Vehicles Direct, has a network of dealerships all around the country, so we can help you source your car if you aren’t sure where to look!

Financing your car purchase

Now that you know everything about the different car options available to you in Australia, it’s time to unpack the ways to actually pay for them.

So, how can you pay for a car?

I’ve got the cash to buy it upfront, so… should I just do that?

If you’re in a position to pay cash for your car with no sweat, that’s great! Paying cash means no interest, fees or repayments to worry about, but you might look to avoid doing this if it eats into your savings more than you’re comfortable with or puts too much immediate pressure on your budget.

Okay, I might not quite have enough to buy in cash. How about a loan?

You aren’t short on options when it comes to car loans. Let’s just break down the basics before we go full steam ahead on this one:

• A car loan is a finance product designed specifically to help you purchase a vehicle.
• When buying a car with a loan, you own the vehicle from the outset.
• Once you’re approved for your loan and it’s paid to the vehicle seller, you’ll repay it over a set period along with interest and fees.
• You can take between one and seven years to repay your loan, with instalments coming on either a weekly, fortnightly or monthly basis.
• Depending on your lender and borrowing power, you may be able to borrow up to 100% of the purchase price (or sometimes even more) or make a deposit.

What to like about taking out a loan to buy your car

• Buy your car with no cash upfront: if you want to keep your savings intact when buying your car, a loan is the way to go.
• Pay for it at your own pace: a loan also allows you to take your time paying it off. You can choose your preferred schedule and chip away at it at a more leisurely pace.
• Build your credit: even if your credit score is already good, paying off your loan each week, fortnight or month helps build out your profile and can potentially boost your rating even further.
• Potential to expand your price range: while you may not be in a position to comfortably buy the car you’re after with cash alone, taking out a loan instead can bring it within your grasp.
• Business tax benefits: we’ll talk more about business car finance later, but those taking out a commercial car loan can take advantage of several key tax benefits along the way.

Types of car loans available

Secured car loans

The standard, quintessential car loan. These use the car you’re buying as collateral for the loan, thereby securing it (hence the name). It’s the most common way to finance a car, with a variety of loans on offer from lenders of all shapes and sizes.

Unsecured car loans

The main alternative to a secured car loan is taking out an unsecured loan. These are essentially personal loans, as they don’t use your car as collateral for the agreement. While this is a much less common option, there are certain situations where an unsecured loan might come in handy.

When should I use an unsecured loan to buy a car?

The most common situation for using an unsecured loan for a car purchase is if the car you want to buy doesn’t meet your lender’s eligibility criteria relating to its age or condition. This is the only way to finance a car like this if you need a loan to seal your purchase.

If you’re in the market for a car that does meet standard lender criteria, though, secured finance is generally the way to go to avoid paying more than you need to on interest or fees.

Green car loans

If you’re on the hunt for an environmentally friendly used vehicle, such as an electric (EV), hybrid (HEV), plug-in hybrid (PHEV) or low-emissions model, you might qualify for a green car loan. These are essentially the same as secured car loans but offer a rate discount for eligible eco-friendly cars, making them a tantalising prospect if you’re shopping in that market.

It’s important to note, though, that not all lenders offer green loans, nor will all “green” cars qualify for the lower rate offered by such a loan. It’s worth comparing your options carefully to help you net the best deal available, which Savvy can help you do through our vast panel of trusted lenders and our team of experienced consultants.

Bad credit car loans

You can probably guess how these loans roll based on their name. While those who’ve struggled with their credit in the past and have an imperfect score may not meet many lenders’ minimum credit requirements, there are many more that specialise in finding solutions for people in this predicament.

Bad credit secured loans come with higher rates and fees to compensate for the fact that lenders will see you as more of a risk, particularly if you have past loan defaults on your file. However, the main thing is that these lenders offer a solution that the big banks aren’t willing to.

So, how should I compare my car loan options?

Comparison is key when talking about your car loan options. One of the simplest ways to find the best loan for your needs and save money is to take the time to compare the options available to you on the market.

But how do you do that? We’ve put together our top tips for what to consider when comparing car loan offers right here:

• Interest rates: it’s crucial to find any way to lock in the lowest possible rate, as even small discounts could save you big time (we’ll unpack interest more in a little bit).
• Fees: there’s a range of other charges your lender could tack onto your loan, so it’s important to think about these when doing your research (you can also read about fees further down).
• Borrowing ranges: as mentioned, loans come with minimum and (in some cases) maximum amounts, so you’ll have to make sure you’re applying to a lender who actually offers what you need.
• Term lengths: while many lenders offer the option of taking between one and seven years to repay the loan, some may enforce longer minimums or shorter maximums. If you want to take seven years, for example, you can rule out lenders who cap out at five.
• Repayment flexibility: you should look for lenders who not only allow you to pay on your preferred schedule (weekly, fortnightly or monthly) but also those who offer you the flexibility to make additional payments at no extra cost if you want the freedom to do so. This isn’t super common for car loans, but some lenders do allow it.
• Eligibility criteria: of course, you should make sure you’re eligible to apply in the first place. Each lender will have its own minimum requirements that everyone must meet before applying, so make sure you aren’t barking up the wrong tree.
• Car eligibility criteria: it isn’t just you, but also your car you should worry about. If you have a car picked out, choose a lender that can accept it. If you find a lender you like before your car, this might help you choose a vehicle that meets their criteria.
• Residual or balloon payment: some lenders may give you the option to include a residual payment as part of your loan. This is a lump sum that’s paid at the end of your loan agreement, resulting in lower repayments (but more interest). If you want one, look for lenders that offer them.

Let’s talk about interest

Interest is one of the most important aspects of your car loan. Let’s break down how it works:

• Your lender will offer you a loan with either a fixed or variable interest rate (more on that in a bit)
• Each repayment you make will be a portion of your loan debt plus interest and any applicable fees

The way interest is calculated is based on your outstanding balance, or the principal, by using the following formula:

Total balance outstanding × (interest rate ÷ number of repayments per year) = interest payable

We can work out the amount of interest you’d pay in the first fortnight of a $30,000 car loan with a 7.50% p.a. rate using this formula:

$30,000 × (0.075 ÷ 26) = $86.54

This amount will change as you continue to pay your loan down, meaning the percentage of your repayment taken up by interest will gradually decrease over time until it’s almost 100% principal by the end of your term.

When you’re dealing with loans worth potentially tens of thousands of dollars, even seemingly small differences in the rate can result in significant savings. The table below lays this out for you:

What’s the difference between fixed and variable interest?

The two options available for types of interest are fixed and variable. Here’s how they’re different:

Fixed interest

Fixed rates are by far the most common when it comes to car loans. These rates remain the same throughout your term, regardless of whether rates as a whole go up or down during this period.

The main benefit of fixed rates is that they’re easy to budget around; you’ll know exactly how much of your pay is going towards your loan each week, fortnight or month. It also protects you from increases in your lender’s rates.

However, the flip side of that is that you won’t be able to take advantage of any rate movement in the opposite direction, cutting off a potential avenue for savings. Additionally, many fixed rate agreements come with early repayment fees, further limiting your ability to cut back on interest.

Variable interest

Variable rates are open to fluctuation throughout your term, meaning you could be paying different amounts from one month to the next.

The obvious benefit of this is that if rates start to fall, you’ll be the beneficiary and potentially save hundreds of dollars overall if conditions are right. Additionally, most variable agreements allow you to pay off your loan early without being charged for it, opening another door to savings.

Unlike fixed rates, variable rates aren’t as quite useful when it comes to budgeting, as they could go up or down. Additionally, they won’t shield you from rate hikes, potentially exposing you to a greater overall spend.

So, I should just aim for the lowest rate available?

Well, yes… but there’s a bit more to it. Interest is the main cost factor when it comes to car loans, so it’s worthwhile focusing your attention on getting the best possible rate. However, it’s important to acknowledge that the amount of interest you’ll pay overall will be based on a range of factors. Let’s have a look at a few of them:

Loan amount

The more you borrow, the more interest you’ll pay overall. That’s because, as we’ve established, interest is calculated based on your outstanding balance. Check out our table below to see this in action:

Loan term

Because interest is based on your outstanding balance, your loan term will also have a direct impact on the cost. The faster your balance falls as you repay it, the less interest you’ll need to pay overall. Let’s see the table on that:

Additional repayments

Some lenders may allow you to pay more than your set instalment for free. The effect of this is that you can clear your debt sooner, cutting down on the amount of interest you need to pay in the process. Here’s how it works:

As you can see, paying only $50 extra each month, which equates to around $12 per week, could see you save almost $500 in interest overall and have your debt cleared five months ahead of schedule.

However, many car loan providers will charge fees for early settlements, meaning the benefit of paying off your loan early could be largely or entirely cancelled out. Be sure to check with your lender to see if free early repayments are a possibility.

What if I pay a deposit as part of my car loan?

A car loan deposit is another quick and easy way to reduce your interest bill. This means that you only take out a loan for part of your car’s purchase price and pay the rest upfront in cash. The larger your deposit, the less interest you’ll pay, as the following table shows:

As you can see, in this example, even a deposit of just 10% of your car’s value ($3,000) will help you save over $600 over the life of your loan. If you’re in a position to pay a deposit, it’s something worth considering to cut down on your interest bill.

What interest rate will I actually get?

Now, the answer to this question is a bit less straightforward. Your lender will assess the level of risk in your application as part of its process, with higher overall risks reflected in higher interest rates. Let’s take a look at some of the key factors that can impact what you’ll be charged:

• Your credit score: a higher credit score will often result in a lower rate, as it shows you’re trustworthy when it comes to repaying debts on time. This is a large part of why interest rates for bad credit customers are higher.
• Your history of repaying similar loans: beyond your score itself, lenders will be keen to see a track record of repaying a similar loan on your file. If you’ve tackled a car loan in the last few years and paid it off with no issues, you could be rewarded with a better rate.
• Your income and expenses: how much you earn and how stable your earnings are can also boost your chances of a lower rate. Having reliable cash available after expenses are deducted will give your lender more confidence in you.
• Your job and residential history: the ideal applicant will have several years in the same position and at the same address. Lenders look for stability in all aspects of your life, so displaying this will help you lock in a lower rate.
• Your assets: lenders look kindly on borrowers who are asset-backed, particularly people who own a house. If you’re in this position, you might just score a better deal.

Any other costs I should keep an eye on?

Unfortunately, you might run into a few more little gremlins in your loan contract in the form of fees. Although interest is the main area to worry about, these fees are also really important to consider before you apply for your car loan. These include:

Establishment fee

This is a one-off fee charged by your lender to open your loan account. It can vary widely in cost depending on your lender, with some charging around $150 and others setting this at upwards of $600 (although some may not charge this fee at all). It’ll be built into your repayments, rather than being payable upfront.

Ongoing/monthly fee

As the name suggests, this fee will be tacked onto each repayment for the duration of your loan term. They’ll also vary in price depending on your lender, often between $5 and $15. However, like establishment fees, some lenders may waive this charge entirely.

Early repayment fee

We discussed this briefly in the additional repayment section above, but it’s worth looking at this one more closely. The amount your lender will charge for early repayment (if they choose to charge for it at all) will depend on the size of your loan and the amount of time left to run on your term. For instance, you’d likely pay more for clearing a $75,000 loan debt two years early than a $25,000 loan paid off six months ahead of schedule.

Late payment fee

You’ll be slugged a fee if you miss a repayment or submit it late, usually by at least seven days. The amount you may be charged can range from $15 to $35 or more. However, while some lenders will charge this as an individual fee, others may set up their late fees to compound if you continue to not make your repayments.

What are my business car finance options?

You’ll have a wide range of options to choose from if you’re looking to either buy or lease a car for your business. Let’s take a look at how each of these options works:

Chattel mortgage

This is the most similar product to a standard car loan. It, too, is a loan of up to 100% of your car’s value to be repaid with interest and fees over between one and seven years. However, as mentioned above, the interest charged on your chattel mortgage is tax-deductible, as is the GST on the purchase price of the car.

Chattel mortgages can often come with residual payments at the end of the agreement. However, these are typically customisable to fit your preferences and aren’t compulsory in all cases.

Low doc car loans

Want to buy a car for your business but don’t have all the documents for a chattel mortgage? A low doc loan could also be an option. These loans come with lighter documentation requirements, opening doors for more businesses to access the cash they need for their vehicle.

The exact documentation requirements may vary depending on your profile and the lender you’re applying with, but you can be approved with the following information:

• An ABN in your name (as new as one day old)
• Identification, such as a driver’s licence
• Details of your business’ current assets (equipment and property) and liabilities (other loans)
• Details of your personal assets and liabilities
• Business Activity Statements (BAS) and business and personal bank statements may be required in some cases, but not all

The stronger your profile in the eyes of your lender, the less documentation you’ll have to provide in most cases. For example, if you’re a property owner with an ABN that’s at least 12 months old, the documents you’ll be asked to provide will be minimal.

Finance lease

The most common alternative to buying a business vehicle is leasing it, either with a finance or operating lease. Under a finance lease (also known as a non-maintained lease), your business rents a vehicle for a set term of one to five years. Your lease payment doesn’t automatically include on-road costs like registration, insurance and maintenance, and as much as the full amount is tax-deductible.

At the end of your lease, you’ll have to pay the residual value set by your leasing company. This can be done either by paying it out of pocket and taking ownership of the car, selling it or trading it in to cover the residual (and potentially starting a new lease) or refinancing the residual and extending your current lease by up to two years.

Operating lease

Operating leases (also known as fully maintained leases) are different from finance leases in that all the on-road costs mentioned above are included in your payment, potentially resulting in a higher overall outlay. However, you won’t need to worry about organising any of these things yourself.

The other key difference between the two is that operating leases come without a residual value, instead enabling you to simply hand the car back at the end of the term. This means the risk of obsolescence falls on the leasing company, not your business.

The differences between finance and operating leases

If I’m buying a car for business purposes, does that mean I can make tax deductions?

Cars being purchased for commercial use are typically eligible to have part (or all) of certain costs claimed as a tax deduction. The amount that can be claimed is only proportional to your business usage, meaning if the car is used for business purposes 60% of the time, you may be able to claim up to 60% of the eligible costs.

Here’s a quick rundown of expenses that are claimable:

• GST: businesses can claim a full or partial GST credit on commercial-use vehicles.
• Depreciation: you can also claim for the gradual decline in the value of your car, subject to the ATO’s car depreciation limit (in 2025-26, the maximum value you can use when calculating depreciation is $69,674).
• Insurance: the premiums you’re paying to cover your car are tax-deductible.
• Car registration: you’ll always have to have your car actively registered to legally drive it, of course, so registration is tax-deductible.
• Servicing, repairs and maintenance: you need to keep your car on the road, too, so the cost of getting it serviced or repaired can also be claimed.
• Fuel and oil: getting from A to B requires fuel, whether petrol, diesel or electric, while oil is also essential to keep all the magic happening under the bonnet. These are claimable expenses.
• Loan interest and lease payments: if you’ve financed your commercial vehicle, some of these costs can be claimed too (more on that later).

It’s crucial to stress that we aren’t your accountant and don’t know your individual circumstances, so you should seek advice from them or a tax professional if you’re unsure what tax deductions you can make.

How do I work out how much I can claim back on tax?

Well, if you’re using the car exclusively for business purposes, it’s a pretty simple calculation: 100%. The complicating factor comes if it’s partly used for personal reasons, like driving the kids to school. There are three methods listed by the ATO to help you determine business usage:

Cents per kilometre method

This method is the least labour-intensive and is suitable for sole traders and partnerships (with at least one partner being an individual). Under the cents per kilometre method, you can claim for up to 5,000km worth of business usage per car, per year, based on the cents rate in that financial year.

In 2025-26, this rate sits at 88 cents per kilometre. This means that if you were claiming 3,500km, you would simply multiply this distance by the rate (3,500 x 0.88) to work out your claimable amount. In this instance, the amount you’d be eligible to claim is $3,080.

While you don’t need to supply written evidence of the exact distance driven, the ATO may ask to see how you worked out what you’re claiming.

Logbook method

There’s a bit more involved with the logbook method. This requires you to keep track of all car usage (business and private) over a minimum of 12 continuous weeks in the first year, which should be representative of your overall usage across the year. It’ll remain valid for five years after you submit it (during which you’ll need to maintain odometer readings each year).

For instance, let’s say you kept a logbook for 13 weeks, which showed a total distance of 5,000km. Of these 5,000km, 3,400km were recorded as business trips, resulting in an overall business usage of 68%. Your total vehicle costs across the year add up to $10,500, after which you simply multiply this amount by your business percentage. This gives you a claimable amount of $7,140.

You’ll need to ensure each logbook entry covers the reason for the trip, kilometres travelled, odometer readings and dates from the start and end of each journey. This method is also suitable for sole traders and certain partnerships.

Actual costs method

The final method is required for companies or trusts, as well as sole traders or partnerships claiming for non-car vehicles (such as a van, truck or motorcycle). The actual costs method allows you to calculate your claimable amount based on receipts you’ve kept throughout the year.

All claims must be backed up by receipts and you’ll also need to keep track of your vehicle usage if it’s being split between business and private purposes.

I’m ready to apply for my car loan. What now?

Now it’s go time. Once you’ve compared your options and settled on the best loan option for your situation, you’re ready to jump into the application.

Many lenders offer 100% online car loan application processes, making them more convenient than ever to complete. Before you get started, though, it’s important to consider two key things: the eligibility criteria and documentation requirements.

So, how do I actually qualify for a car loan?

It’s important to first establish that each lender has its own minimum requirements when it comes to approving applications. These can vary depending on who you apply with, but they largely remain consistent across the board. The eligibility criteria you’ll likely need to meet include the following:

• You’ll have to be at least 18 years old when you apply
• You must be an Australian citizen, permanent resident or eligible visa holder
• You must be employed and earning a stable income that meets your lender’s minimum requirements, which can start from as little as $480 per week
• Your credit score will need to meet your lender’s minimum requirements (these will be lower or not enforced with bad credit lenders)
• Your car must meet all lender and loan requirements for age, condition and model (not required for unsecured)

And what documents will I need to submit for my application?

Once again, the specific information and documents you’ll need to supply may vary depending on your lender, as some may ask for more than others. The main things you’ll likely be asked for can include a combination of some, or all, of the following:

• Your name and date of birth
• Your citizenship status (whether you’re a citizen or permanent resident, for example)
• Your contact details (such as your email, phone number and address)
• Proof of identity (typically a driver’s licence, but passports and Medicare cards can also be accepted)
• Proof of address (such as a recent utility bill)
• Your two most recent consecutive payslips
• Tax returns or Business Activity Statements (BAS) if you’re self-employed
• 90 days of bank statements (isn’t always requested but may be in some cases)
• Information about the make, model and age of your vehicle, as well as its Vehicle Identification Number (VIN) or chassis number
• Information on any assets (such as property) and liabilities (such as outstanding loan debts) in your name

What is the actual car loan application process?

Here are the steps you’ll be taking when you apply for a car loan through Savvy:

1. Do everything you need to do beforehand

   We’ve spoken about all these things at length throughout this guide, but making sure to compare your options, think about your budget and gather all the required information all need to be ticked off.

2. Fill out the application form

   Tell your lender about yourself and your finances, as well as the loan you’re after and (if you’ve already chosen it) the car you want to buy.

3. Supply any further information or documents

   Once you proceed with the formal application, your lender may ask for more information or documentation, so be sure to send this through promptly.

4. Speak to your Savvy broker

   Once we have all the information we need, a member of our friendly and experienced broker team will compare the options available to you and give you a call to discuss the next steps in the process.

5. Receive pre-approval

   Before formal approval, most lenders will offer a conditional pre-approval. We go into more depth about what this is and how it works in the next section.

6. Choose your car (if you haven’t already)

   If you were waiting for pre-approval before selecting your car, now’s the time to pick one. We can help you do this through Vehicles Direct, our in-house car broker.

7. Have your application submitted and receive formal approval

   Your broker will submit your formal application to your lender once it's ready. If they’re happy with everything, they'll formally approve it. They’ll send through a loan contract and other forms for you to sign.

8. Sign off and buy your car

   Sign everything and return it to them. We’ll handle the settlement of the loan. Once this is all done, the funds can be sent to your seller, who can then hand your new or used car over to you.

What is pre-approval and why is it so important when applying for a car loan?

Almost all lenders out there will be able to offer pre-approval on a car loan before going through the formal process. This is a conditional approval based on the information you provide your lender related to your current financial profile. It isn’t a guarantee of formal approval, but it’s an indication of the amount your lender would be willing to approve and the interest rate you’re likely to receive.

There are plenty of benefits of opting for pre-approval before your proper application, including:

• Sets you a budget to work with: your pre-approval will tell you what market you can shop in based on your borrowing power, so you can determine which models are off-limits in the eyes of your lender.
• Strengthens your hand in price negotiations: whether you’re buying new from a dealership or used from a private seller, pre-approval gives a clear ceiling you won’t be able to go above when buying a car. On top of this, it shows you mean business.
• Valid for up to three months: if you want to take your time finding the right car, pre-approvals can be valid for between 30 and 90 days (depending on your lender).
• No obligation to apply: once you’re ready to apply, you don’t necessarily have to do it with the lender you were pre-approved with if you find a better rate or deal somewhere else.

How does my lender work out my borrowing power?

Part of the application process will be your lender determining what your borrowing power is; in other words, whether the amount you’re applying for is realistically something you can afford. If a lender doesn’t think it’s comfortably affordable, you won’t be accepted for the amount you’re asking for.

There are several key factors that help lenders decide on your borrowing power, including:

• The price of your car: car loans are tied to the value of your vehicle, with lenders offering amounts up to 100% of its purchase price (plus on-road costs in certain cases).
• Your income and expenses: the more money you have left over after expenses are deducted, the more cash you’ll be able to splash on your car loan.
• Your employment stability: even if you’re earning enough right now to cover your loan, lenders will want to see stability in your working life.
• Whether you have dependants: having kids will obviously be a drain on anyone’s finances. They’ll be factored into your lender’s calculations.
• Your credit score: higher credit scores indicate to lenders that you can be trusted to repay your debts, so the better your score, the better your chances of approval for greater sums.
• Your history of repaying similar loans: if you’ve paid off another car loan in the past without any issues, that’s as good as gold in the eyes of a lender.

How is it possible to borrow more than 100% of my car’s value?

That’s a good question. In some cases, lenders may allow you to include certain on-road costs in your loan agreement, with some of the most common being stamp duty, registration and car insurance. This means that, in certain situations, the amount you can be approved for exceeds the purchase price of your car.

How long does the whole car loan application process take?

You could have your car loan application approved and funded as soon as 48 hours after you first apply. However, it’s worth understanding that there’s a range of factors that could speed up or slow down the speed of your application, including the following:

• The time of day you apply: applying in the morning gives your lender more time in the business day to look at your application. Applying late at night or outside business hours means it won’t be looked at until the next business day at the earliest.
• The day of the week you apply: the same logic applies here as above. Sending your application through on Monday gives your lender up to five full business days before the weekend. A Friday afternoon application means it’ll almost certainly drag into the next week.
• The complexity of your profile: if you have perfect credit, no outstanding debts and are earning a comfortable living, you’re more likely to sail through the process. If you’ve had past troubles with your credit or are working multiple jobs, though, it may take longer to verify your details and make a call on your application.
• Your lender’s caseload and process: how quickly you’re approved may simply come down to the number of applications your lender has to sift through at the time. Alongside this, the steps they take to assess applications may simply be longer than others.
• How quickly you send the required info: car loan applications can easily be held up by applicants not sending through the correct information or leaving out key pieces of documentation. This is easily avoidable, so be sure to read through what your lender is asking for carefully.
• Your bank’s transfer speed: how quickly your funds reach your car’s seller might simply come down to a slow day at the bank. For example, funds sent late at night will often take longer to arrive than those sent during your bank’s opening hours.

How is applying for a loan with a car finance broker different from doing it myself?

A car finance broker is a licensed, accredited person or company that helps you get approved for a car loan by acting as the middleman between you and your lender. This means the first key difference is that you won’t be applying to, or interacting with, any lenders directly; it’ll all go through your broker.

The other key difference is having an expert in your corner. Applying for a car loan in Australia has never been easier than it is today, but enlisting a broker to tackle your application for you can make it even easier. As one of Australia’s leading asset finance brokers for over a decade, Savvy knows a thing or two about what goes into the process.

The benefits of applying through a car finance broker

It’s important to understand what the benefits of going through brokers like us are, as they could just be your ticket to a top loan deal.

• Save on time and effort: when you apply with a broker, they’ll handle all the comparisons and prepare and submit your application on your behalf, saving you the hassle of doing everything yourself.
• Diverse lender network: many brokers have a wide panel of partnered lenders that they can run your application past to maximise your chances of being approved for the best available deal.
• Negotiation on your behalf: as a business with established industry relationships with lenders, your broker is often in a stronger position to negotiate cheaper deals than you would be on your own.
• Answers to any of your questions: once you’ve engaged a broker, they’ll be just a phone call or email away if you have any questions about the process. In most cases, they’ll have years of experience to draw upon.
• Solutions to complex financial situations: many people around the country have profiles that don’t meet standard lender requirements, such as low incomes or bad credit. Fortunately, there are many brokers (like Savvy) who can match you with flexible specialist lenders that are ready to work with you.

Will I have to pay a fee for my car finance broker’s services?

In some cases, your broker may charge you a fee for their services. However, this will typically only happen if your application is approved by your broker’s lender, after which they can build this charge into your overall package.

It’s important to note, though, that this isn’t the case for all brokers. Some will only take a commission from the lender instead of a fee from you. You should always ask your broker straight away what the charges are to avoid confusion down the track.

You should also ask any potential broker how many lenders they have on their panel. It’s all well and good to offer the service, but if they only have five lenders on their panel, you might get better results by comparing on your own. For reference, Savvy is partnered with over 40 lenders nationwide, giving you bang for your buck when it comes to comparing options.

My dealership is advertising 0% p.a. car loans! Should I apply for one of those?

Even though it might look like a great deal, dealership finance often isn’t all it’s cracked up to be. It’s essential to understand why that is, which we’ve outlined below:

• 0% p.a. doesn’t always mean 0% p.a.: the 0% p.a. offer on the table from your dealership might only be for an introductory period of six to 12 months, after which it reverts to a higher rate.
• Other fees will likely be included: you’ll have to ask for clarification from your dealership regarding what fees will be charged as part of the agreement, as there are likely to be multiple.
• Your car’s purchase price may be higher: to compensate for the lack of money coming from interest, dealerships may inflate the sale price of the car and be less willing to negotiate.
• Your trade-in car’s price may be lower: on the flip side, if you’re trading in a vehicle as part of the agreement, the value assigned to your current vehicle may be lower than what you’d get elsewhere or under another agreement.
• It may come with a mandatory balloon: we’ve spoken about balloons earlier as an option on car loans, but dealerships may not give you a choice and add one to your 0% p.a. deal.
• Other conditions may apply: a common part of a 0% p.a. finance deal is a mandatory shorter loan term, often of two to three years. This could make your loan much less affordable, as your repayments will be higher over shorter terms.

0% p.a. finance is a common sales tactic employed by dealerships to not only boost their sales and shift old stock but to make more money on the side. Be sure to exercise caution when scoping out your options to make sure you avoid being locked into a bad deal.

What to do after you've bought your car

The main things you’ll need to sort out once you buy your car are all things we mentioned earlier in the piece when talking about the expenses to budget for. These are:

• Car registration: all cars that traverse our Australian roads must be registered. How much you’ll pay will depend on where you live, as each state or territory government has its own system for charging registration fees.
• Motor vehicle duty: most new or used car purchases will come with the requirement to pay motor vehicle or stamp duty. Like registration, each state and territory does things differently, so it’s important to check what the laws are where you live to see how much you owe or if you qualify for a partial or full exemption.
• Car insurance: knowing your vehicle is covered for a range of different events can bring peace of mind to any driver. We go into more detail about the types of insurance available in Australia in the next section.

How do I pick the right car insurance?

There are four types of car insurance in Australia, one of which is mandatory regardless of where you live (compulsory third party insurance) and the other three being non-compulsory (unless under certain circumstances). These are third party property damage (TPPD), third party fire and theft (TPFT) and comprehensive car insurance.

Here’s how each of them works:

Just like car loans, it’s important to take the time to consider which car insurance policy is best suited to your needs. Here’s what you should do:

• Think about how much cover you need: do you want the highest possible level of protection, or would you rather stick to one of the third party policies?
• Compare the coverage offered by different policies: not all policies are made equal, so be sure to check the covered events and claim limits to see which offers the most.
• Look at the price: pay close attention to the cost of different policies to see whether you’re getting value for money.
• Consider optional extras: there might also be optional extras you can add to your policy, such as windscreen replacement or roadside assistance, so work out which ones you want and whether they’re worth the added price.
• Be aware of claim limits: certain claimable events may come with a cap on the total you can ask for from your insurer, so be mindful of this too when comparing policies.
• Read the terms and conditions carefully: although establishing what’s included is essential, it’s arguably just as important to be clear on what isn’t. Take note of all the key exclusions so you know exactly what you can be covered for.

It’s never been easier to compare policies than it is right now, with all the information at your fingertips online. With a variety of leading insurance companies to choose from, you can see which ones offer the best coverage and lowest prices through Savvy before buying your cover.

Should I go with the insurance policy offered by my dealership or recommended by my lender?

The most important thing for you to do is take the time to decide which insurance policy is best for you. Dealerships and lenders may offer policies as part of the car buying process, but you generally won’t have a choice of lender if you choose one of these. Additionally, when it comes to dealership policies, they’re often much pricier than what you’d find yourself on the market.

It’s also worth noting that some dealerships offer extra insurance policies that may not be worth it for you. Tyre and rim insurance is a prime example of this, as it’s a policy designed to protect you against damage to your tyres due to punctures and road hazards but may end up being more expensive than fixing or replacing them.

Wrapping things up

Well, if you’ve made it this far, all we can say is congratulations! We really put it all on the table in this one, so you’ll have picked up plenty of nice tips and handy titbits about how to approach buying your new or used car.

As you can see, there’s probably a bit more that goes into buying your car than you might initially think. Wherever you are in the process, good luck and happy buying!