Financing your first car? Tips to get approved.


When you purchase your first car, its something to get really excited about. But if you are financing it, then it potentially adds a layer of complexity to the purchase. There are so many options out there in this world of connectivity. So many Brokers, and so many Lenders vying for your business.

So where do you start and what should you expect? Here are some considerations to improve your chances of approval:

  1. Work out your budget. Be realistic with what you can afford as a monthly repayment. Lenders will form their own assessment of your position but you should understand your own affordability.

  2. Do you have a deposit? Have you saved for a deposit towards your car, or do you have a trade in? For first time borrrowers, lenders often require a small deposit as a commitment to the purchase. This isn’t always the case, and it will depend on your overall profile.

  3. Ensure the Finance Broker you choose is reputable. Check out their Google and Facebook Reviews. Ensure they are members of either the MFAA or FBAA. As Members of these organisations, they must abide by a Code of Conduct and Code of Ethics. Ask friends or family for referrals. A good broker is priceless!

  4. The options to apply online for your loan are endless. But did you know that each enquiry could affect your credit score? Tread carefully when it comes to online enquiries, ensure they do not register a mark on your credit file. Lenders will review your credit file and if it is active, especially in the last few months; it can signal red flags. A reputable Broker will pre-qualify you without registering multiple credit enquiries.

  5. Be realistic with your level of purchase. As a first time borrower, don’t pay too much for a car. Start off at a reasonable level. By the time you add on Stamp Duty, Insurance, Interest and Accessories you will be amazed at how much you repay back over the term of the loan. Lenders prefer first time borrowers (with no previous credit) to purchase a car which is reasonable. For example, an 18 year old purchasing their first car for $30,000.00 with no deposit may be considered high risk by a Lender.

  6. Do not rely on Guarantors. Stand on your own two feet. Many years a go, Guarantors were relied up on by Borrowers and Lenders alike, especially for first time borrowers. Due to past issues (and financial abuse) relating to the use of Guarantors on a loan, most Lenders no longer consider this type of security as being acceptable.

  7. Consider delaying your purchase until you have been in your employment for a minimum of 3 months and/or not on probation. Although some Lenders will still consider employment terms of less than 3 months and probationary periods, your Lender options are reduced dramatically.

    Are you casually employed? If so, have you been in your role for more than 6 months? And have you been in the same industry/occupation? If you have been in casual employment for less than 6 months then you may consider holding off until you have.

    By meeting these requirements it also provides you with comfort that your employment is stable before entering in to a financial commitment. It may provide you access to more Lenders and therefore better interest rates.

  8. Apply for pre-approval before you purchase. This will ensure most of the necessary credit and lender checks are completed prior to your purchase. Your Broker or Lender will discuss your budget, repayment terms and objectives; during this process.

  9. Comprehensive Insurance costs. This cost should form part of your ongoing budget. If your vehicle is securing the new loan, then it is a requirement that the vehicle is fully insured. Third Party, Fire & Theft is not acceptable to lenders.

  10. Loan Protection Insurance is also an important consideration for your loan. Your Broker or Lender can discuss the options with you and you can read more here. These protections are generally added to the loan, and will therefore affect your repayment. Whether you choose to protect your loan or not, it will not affect the outcome of your loan. These products are optional.

  11. If you are unsure whether to use a Broker or the Dealers Finance, read our blog: Broker or Dealer’s Finance.

If you follow these tips you will be on your way to getting a great loan, an improved budget and a great experience. Happy motoring!

For more information, you can contact the team at

The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs.

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