How to Get a Car Loan: Explained

How to get a car loan with Savvy: the step-by-step process

1. Fill out our simple online application form: first and foremost, tell us about the size of the loan and how many years you’re after. We’ll then ask you some information about yourself, including your income, residency, employment and credit score.
2. Verify your account: to protect your personal information, we use an SMS authentication to verify your account. Enter your mobile number and we’ll text you a four-digit code so you can proceed with the application.
3. Supply your contact details: so we can create your customer account, enter your personal details and email address.
4. Review terms and conditions: read and agree to our terms and conditions and privacy policy.
5. Supply any required documents: after you complete your application, we may request further documentation to verify details such as your employment and income. These can be submitted online via our portal.
6. Discuss your options with us: once we have all the information we need, we’ll compare the offers available to you. Your consultant will reach out to you and talk you through your car finance options to get the all-clear.
7. 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.
8. 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. You can receive formal approval as soon as one business day after it’s submitted.
9. 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!

How long does everything take?

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?

A 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.

What to do before applying for a car loan

We’ve run through what you can expect from 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.
• Assess your current financial situation: if your finances or credit score aren’t great, your car loan 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.
• 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.
• 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?
• 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.

Do I need to pay a deposit?

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.

The amount you’re able to borrow depends on factors like your income, credit history and employment. So, 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.

Understanding car loan costs

Before committing to any loan agreement, 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):

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:

Expenses are for illustrative purposes only and do not necessarily reflect the amount you will be charged.