Car loans, explained before your coffee goes cold.
What lenders check and what to have ready, in plain English. No jargon, no hard sell.
General information only. Australian Credit Licence 509582.
The Car Loan Process: 6 Simple Steps
From application to driving away, here's exactly what happens when you get a car loan.
Assess Your Budget & Needs
Before applying, determine how much you can afford in monthly repayments. Use a car loan calculator to estimate costs. Consider not just the car price, but also insurance, registration, fuel, and maintenance.
Pro Tips:
- Aim for repayments under 15% of your income
- Factor in a buffer for rate increases
- Consider total cost of ownership, not just purchase price
Check Your Credit Score
Your credit score significantly impacts your loan approval and interest rate. Check your score for free through services like Credit Savvy or ClearScore. If your score needs work, consider improving it before applying.
Pro Tips:
- Scores above 700 typically get lower rates
- Fix any errors on your credit report
- Pay down existing debts if possible
Gather Your Documents
Having documents ready speeds up approval significantly. Lenders need to verify your identity, income, and assess your expenses to determine how much you can borrow responsibly.
Pro Tips:
- Driver's licence or passport
- 2 recent payslips (or 2 years tax returns if self-employed)
- 3 months bank statements (via our secure illion link, not manual uploads)
- Details of any existing debts
Get Pre-Approved
Pre-approval gives you a firm budget before car shopping. It's free, usually valid for 90 days, and lets you negotiate with dealers as a cash buyer. At Simple Loans, we compare 50+ banks and lenders with one application.
Pro Tips:
- Pre-approval doesn't commit you to anything
- You can shop around with confidence
- Dealers take you more seriously with pre-approval
Find Your Car
With pre-approval in hand, shop for your car within budget. Whether at a dealership or private sale, you know exactly what you can spend. Don't forget to get a vehicle inspection for used cars.
Pro Tips:
- Stick to your pre-approved budget
- Negotiate the car price separately from finance
- Get a pre-purchase inspection for used vehicles
Finalise & Settle
Once you've found your car, provide the vehicle details to your lender. Funds are paid directly to the seller once the lender gives final approval. Timing depends on the lender and your documents.
Pro Tips:
- Settlement follows final approval and signed documents
- Ensure insurance is arranged before pickup
- Receive your loan documents electronically
What Lenders Look For
Income Stability
Regular income and ideally 6+ months in your current job
Credit History
On-time payments, low existing debt, no defaults or bankruptcies
Serviceability
Income sufficient to cover repayments after expenses
Security Value
The vehicle's value and condition (for secured loans)
Common Car Loan Mistakes to Avoid
Frequently Asked Questions
How long does it take to get approved for a car loan?
Decisions can be available the same day. Timing depends on the lender, how complete your application is, and when your documents arrive. More complex situations may take a few business days.
What documents do I need for a car loan application?
You'll typically need: valid ID (driver's licence or passport), proof of income (2 recent payslips or tax returns for self-employed), bank statements via our secure illion link (read-only, not manual uploads), and details of the vehicle you want to purchase.
Can I get a car loan without a deposit?
Yes, many lenders offer no-deposit car loans for borrowers with good credit. However, a deposit (even 5-10%) can help you secure better rates and reduce your overall borrowing costs.
Does applying for a car loan affect my credit score?
A single car loan application has minimal impact on your credit score. However, multiple applications across different lenders can affect it. Using a broker like Simple Loans means one application is compared across 50+ banks and lenders, protecting your score.
Should I get pre-approved before car shopping?
Absolutely! Pre-approval is one of the smartest moves you can make. It gives you a clear budget, lets you negotiate as a cash buyer, and prevents pressure from dealer finance offices. Pre-approval with Simple Loans is free and doesn't commit you to anything.