You’ve decided it’s time to replace your car.
You start looking online and very quickly discover that the price range is enormous.
There’s a used SUV for:
$31,000.
Another one you like is:
$43,000.
Then you find a newer model with lower kilometres for:
$51,000.
Suddenly the question isn’t:
“Which car do I like?”
It’s:
“How much can I actually borrow?”
That’s one of the most useful questions to investigate before becoming committed to a particular vehicle.
Because the maximum amount someone may potentially be able to borrow isn’t determined by:
the price of the car they want.
It depends on:
the applicant,
their financial position,
the proposed loan,
the vehicle,
and the lender’s assessment.
There Isn’t One Car Finance Borrowing Limit for Everyone
Imagine two people both want to borrow:
$45,000
for a car.
The first earns:
$95,000 a year,
has relatively low existing financial commitments,
has been employed consistently,
and is buying a late-model vehicle.
The second earns:
the same $95,000,
but has:
a large home loan,
two credit cards,
an existing personal loan,
and other regular financial commitments.
Same income.
Same proposed car loan.
Potentially very different assessment.
That’s why asking:
“How much can someone earning $95,000 borrow for a car?”
doesn’t necessarily give you a useful answer.
Start With Your Actual Financial Position
Consider someone in Penrith who needs a larger vehicle.
Their current hatchback has become impractical for:
family life.
They’re looking at late-model SUVs between:
$38,000 and $48,000.
They haven’t chosen the exact car yet.
They want to know whether borrowing somewhere around:
$40,000 to $45,000
might be realistic before they spend every weekend inspecting cars.
That’s a sensible time to:
start investigating finance.
Income Is Important, But It Isn’t the Whole Assessment
One of the first things people focus on is:
income.
That’s understandable.
A lender needs to consider whether the proposed finance can be:
afforded.
But income doesn’t operate:
in isolation.
The assessment may also take into account things such as:
existing debts,
credit limits,
living expenses,
dependants,
housing costs,
employment,
credit history,
and other financial commitments.
The exact assessment and requirements vary by lender and application.
Your Existing Debts Matter
Suppose our Penrith buyer earns:
a solid income.
But they also have:
a home loan,
a $12,000 credit card limit,
and $9,000 remaining on their current car loan.
Those commitments don’t simply disappear because:
they want another car.
They form part of:
the overall financial picture.
Credit Card Limits Can Matter Even if the Card Isn’t Maxed Out
This catches some borrowers by surprise.
Someone might say:
“I’ve only got $800 owing on the card.”
But the card limit might be:
$15,000.
Depending on the lender’s assessment methodology, the available limit itself may be relevant.
So when discussing your position with a broker, don’t only tell us:
the current balance.
Tell us:
the limit as well.
What About Buy Now, Pay Later?
Disclose those commitments too.
The same applies to:
personal loans,
other vehicle loans,
interest-free facilities,
and other credit commitments.
The purpose isn’t to make the application look:
worse.
It’s to understand it:
properly.
Housing Costs Matter
Someone paying:
$450 a week in rent
has a different housing commitment from someone paying:
$850 a week.
Someone with a mortgage also has:
an existing loan commitment.
That forms part of understanding:
the applicant’s financial position.
Dependants Can Affect the Household Budget
A single person with no dependants and a family supporting:
three children
may have very different household expenditure.
Again, the point isn’t that one person can get finance and the other can’t.
It’s that:
income alone doesn’t tell the whole story.
Living Expenses Are Part of the Picture
A car repayment needs to fit alongside:
housing,
food,
utilities,
insurance,
transport,
education,
childcare where applicable,
and other regular expenses.
That’s why:
“I earn $X, therefore I can borrow $Y”
is too simplistic.
How Much Do You Actually Want to Spend?
This is where the conversation becomes useful.
Our Penrith buyer originally says:
“I’d probably spend up to $50,000.”
But after looking at the market, they realise there are several vehicles that suit them between:
$39,000
and
$44,000.
Now the question changes.
Instead of:
“What’s the absolute maximum I can borrow?”
we can investigate:
“Would the amount required for the car I actually need potentially fit my position?”
Those are different questions.
Maximum Borrowing Isn’t Always the Best Target
Suppose someone could potentially qualify for:
more finance
than they initially expected.
That doesn’t automatically mean they should:
increase their car budget.
There will still be:
repayments.
And the car will still have:
running costs.
The objective isn’t necessarily to discover the most expensive vehicle a lender might finance.
It’s to find a purchase and finance structure that:
makes sense for the borrower.
Think About the Total Cost of Owning the Vehicle
Your finance repayment isn’t:
your entire car budget.
You may also need to pay for:
registration,
insurance,
fuel,
servicing,
tyres,
repairs,
parking,
and other costs.
Depending on the vehicle, those expenses can vary considerably.
A larger or more expensive vehicle may cost more to:
insure,
fuel,
maintain,
and repair.
What if I Have a Deposit?
Tell us.
Suppose the car costs:
$44,000
and you have:
$6,000
you could potentially contribute.
That may change:
the amount of finance required.
But before automatically putting every dollar into the purchase, think about:
what savings you’ll have left afterwards.
You Don’t Necessarily Want to Empty Your Savings Account
Imagine you have:
$10,000
in savings.
You find a:
$42,000
car.
Putting the entire $10,000 into the purchase may reduce:
the finance requirement.
But now your emergency savings are:
gone.
A few weeks later:
the hot-water system fails.
Or:
you have an unexpected household expense.
The right contribution isn’t simply:
“whatever cash I have.”
Your broader financial position matters.
What if I Have a Trade-In?
That’s also relevant.
Suppose your current car is worth:
approximately $16,000.
But there is:
no finance owing.
The trade-in may potentially reduce:
the amount you need to fund.
But make sure you understand:
the actual trade value
rather than assuming it will be worth what similar cars are advertised for online.
What if I Still Owe Money on My Trade-In?
Now we need another number:
the payout.
Suppose your current vehicle is worth:
$18,000.
But the finance payout is:
$11,000.
The approximate equity is:
$7,000,
before considering the actual transaction and any other costs.
That’s very different from having:
an $18,000 contribution.
What if I Owe More Than the Car Is Worth?
That can happen too.
For example:
estimated vehicle value:
$18,000.
Finance payout:
$23,000.
There’s approximately:
$5,000
more owing than the assumed vehicle value.
That doesn’t necessarily mean:
you can never replace the car.
But it changes:
the transaction.
The existing finance needs to be dealt with, and whether any shortfall can form part of a new structure depends on:
the applicant,
vehicle,
lender,
and overall transaction.
We’ll cover this situation properly later in the car finance journey.
The Vehicle Itself Can Affect How Much Can Be Financed
Car finance isn’t only about:
the borrower.
The vehicle can matter too.
Lenders may have requirements concerning things such as:
age,
type,
value,
and condition.
A relatively new:
$45,000 SUV
isn’t necessarily treated in exactly the same way as:
a much older $45,000 specialist vehicle.
Used Doesn’t Automatically Mean a Problem
Many car finance transactions involve:
used vehicles.
But tell us:
what you’re considering.
Useful information includes:
year,
make,
model,
kilometres if known,
purchase price,
and whether you’re buying from:
a dealer
or
private seller.
Private-Sale Purchases Need the Right Information
Suppose our Penrith buyer finds the perfect SUV advertised privately for:
$41,500.
Now we know:
the actual vehicle,
purchase price,
and seller type.
There may then be requirements around:
vehicle identification,
seller details,
ownership,
existing finance,
and settlement.
The amount someone might potentially be able to borrow doesn’t remove:
the need to verify the transaction.
Does My Credit Score Determine How Much I Can Borrow?
Credit history can be relevant.
But don’t reduce the entire application to:
one number from a credit-score app.
A lender may assess:
more than that.
If you’ve had previous credit issues, tell us:
what happened
and
when.
A minor historical issue isn’t necessarily the same as:
current significant financial difficulty.
What if I’ve Never Borrowed Before?
Limited credit history can create a different assessment from:
poor credit history.
They’re not automatically:
the same thing.
If you’re young or haven’t previously used much credit, simply explain:
your circumstances.
What if I’m on Probation at Work?
Employment circumstances can be relevant.
Tell us:
when you started,
what you do,
whether you’re full-time, part-time or casual,
and your employment history.
Don’t automatically decide:
“I’m on probation, so there’s no point asking.”
Let the actual circumstances be considered.
What if I Work Overtime?
Tell us how your income works.
The same applies to:
allowances,
bonuses,
commissions,
casual income,
or other variable earnings.
Depending on the lender and application, different forms of income may be treated differently or require:
supporting evidence.
Don’t simply multiply your best week’s pay by:
52
and assume that’s the income figure a lender will use.
What if I’m Self-Employed?
Self-employed applicants may need to provide:
different information.
Tell us:
how long you’ve been trading,
how your business is structured,
and whether the vehicle is primarily being purchased for:
personal
or
business use.
If you’re purchasing a ute, van or car for business purposes, there may be:
business vehicle finance options
to investigate.
We’ll treat that as a separate journey rather than trying to squeeze business vehicle finance into every consumer car article.
Should I Use an Online Car Loan Calculator?
A calculator can be useful for:
illustrating repayments.
But it isn’t necessarily:
a finance assessment.
You can enter:
$50,000,
choose a term,
enter an interest rate,
and receive a repayment figure.
That doesn’t mean:
a lender has assessed you
or
approved the loan.
Be Careful With Advertised Interest Rates
The rate you see in:
an advertisement
isn’t necessarily the rate that will apply to:
your application.
Rates, fees and eligibility can depend on:
the product,
applicant,
lender,
and transaction.
So don’t build your entire car budget around:
an advertised number
without understanding what actually applies to you.
What About the Loan Term?
The loan term can affect:
repayments
and
the total amount repaid.
A longer term may reduce:
the regular repayment,
but can also mean the debt remains outstanding for:
longer.
A shorter term may mean:
higher regular repayments.
The appropriate structure depends on:
the available product
and
the borrower’s circumstances.
What About a Balloon or Residual?
Some car finance structures may involve:
a balloon or residual amount.
That can change:
the regular repayment structure
because an amount remains payable at:
the end of the term.
A lower regular repayment doesn’t mean:
the final amount disappears.
We’ll cover balloon payments separately because they deserve:
their own explanation.
How Do I Work Out a Sensible Car Price Range?
Start with:
the type of car you need.
Then consider:
your available cash or trade-in,
existing car finance,
household budget,
and approximate finance requirement.
From there, a broker can gather the relevant information and investigate:
potential finance options.
That is considerably more useful than starting with:
“What’s the most expensive car I can possibly buy?”
What if I Haven’t Found the Exact Car?
That’s okay.
You may know:
the type of vehicle
and
approximate price range.
For example:
“I’m looking for a used SUV around $40,000 to $45,000.”
That’s enough to:
start the conversation.
What if I Find a More Expensive Car Later?
Tell us.
Suppose the initial discussion is based on:
$42,000.
Then you find the vehicle you really want for:
$51,000.
Don’t assume:
the additional $9,000 doesn’t matter.
The proposed finance amount has changed.
It may need:
further assessment.
The Same Applies if You Change the Vehicle
Perhaps you initially planned to buy:
a 2022 SUV.
Then you decide on:
a 2017 European performance vehicle.
Even if the purchase prices are similar:
the vehicle has changed.
Tell us before:
committing to the purchase.
What if I’ve Already Been Told How Much I Can Borrow?
Find out exactly what you’ve been told.
Was it:
an online estimate?
A calculator result?
A preliminary discussion?
Conditional approval?
Formal approval?
Those are not necessarily:
the same thing.
Understand what has actually been:
assessed.
Don’t Shop as Though an Estimate Is Cash in the Bank
If you’ve been given an indicative figure, don’t automatically:
sign an unconditional purchase agreement
based solely on that figure.
If you’re entering into a contract or paying a deposit, understand:
your obligations.
Saturday Morning Scenario
Let’s say our Penrith buyer has now narrowed the search to:
approximately $42,000.
On Saturday morning, they find:
a late-model SUV.
Advertised price:
$41,990.
They’ve inspected it.
They like it.
Now the finance conversation becomes:
specific.
Instead of:
“How much can I borrow?”
we have:
“Can we investigate finance for this $41,990 vehicle?”
That’s much easier to work with.
Thrive Is Available on Weekends
If you find the car:
Saturday
or
Sunday,
you can contact Thrive Broking.
We’re available:
seven days a week.
Depending on:
the lender,
application,
vehicle,
seller,
documentation,
and settlement requirements,
it may be possible to progress a transaction over the weekend.
In some circumstances:
weekend settlement may also be possible.
But we won’t promise:
a Saturday or Sunday settlement
before understanding what is required.
If You’ve Found the Car, Send the Details
Useful information includes:
year,
make,
model,
purchase price,
kilometres if known,
dealer or private seller,
and whether you’ve already paid:
a deposit.
If you’re trading another car, also tell us:
the estimated trade value
and
whether finance is still owing.
If You Haven’t Found the Car, Start With a Range
Perhaps you think you’ll spend:
$35,000 to $45,000.
Tell us that.
We can start by understanding:
your position
before you become committed to:
a $45,000 vehicle.
Borrowing Capacity Isn’t a Shopping Target
This is probably the most important point.
If someone can potentially borrow:
$50,000,
that doesn’t mean:
they should spend $50,000.
The purpose of understanding your finance position is to help you make:
a more informed purchase decision.
Not:
a more expensive one.
Back to Our Penrith Buyer
They started looking at SUVs between:
$38,000
and
$48,000.
Instead of immediately committing to the most expensive one, they investigated:
their approximate finance requirement,
existing commitments,
current vehicle position,
and household budget.
Then they found a vehicle for:
$41,990.
Now there is:
a specific transaction
to investigate.
That progression makes far more sense than:
choosing a $50,000 car first
and
trying to force the finance to fit afterwards.
Want to Know How Much You Could Borrow for a Car?
Tell Thrive Broking:
the approximate vehicle price,
whether you’ve already found the car,
your employment situation,
whether you’re PAYG or self-employed,
whether you have a deposit,
whether you’re trading another vehicle,
and whether finance is still owing on your current car.
If you’ve already found the vehicle, send:
the year,
make,
model,
purchase price,
and whether it’s being sold by:
a dealer
or
private seller.
We’re available:
seven days a week.
From there, we can gather the information required and investigate:
what car finance options may be available for your circumstances.
Because the useful question isn’t simply:
“What’s the maximum car loan I can get?”
It’s:
“What finance could potentially work for the car I actually want to buy, while still fitting my financial position?”