Can a Student Get a Car Loan?

Whether living on campus or enjoying a house share, the student life offers millions of students their first glimpse of true independence. Purchasing a car takes those vibes to a whole new level, adding the convenience and practicality needed to juggle student life with a part-time job and other goals. However, finding the money for a vehicle isn’t easy. Car loans are the obvious alternative.

So, can students get a car loan in Australia, or are they forced to seek alternative solutions? Let’s find out.

Car Loan Regulations In Australia

While the age restrictions for driving in Australia vary from state to state, the fundamental eligibility requirements for taking out a car loan are universal. As a student, you will need to satisfy the following criteria;

  • Be at least 18 years old,
  • Be an Australian citizen or live permanently in the country,
  • Have a job or verified regular source of income.

Therefore, it’s unlikely that international or exchange students will be eligible to apply for a car loan. In truth, though, even Australian students may face additional obstacles. For example, many lenders won’t lend to students that use Austudy, Youth Allowance, or Newstart as their primary source of income.

Some lenders will also view an absence of credit history as a source of concern. While it might not preclude you from an application, it does often reduce your chances of acceptance. Similarly, if you have other credit agreements in place, these may harm your hopes of being offered a car loan.

In essence, then, car loans for students are available. Nonetheless, the marketplace isn’t quite as open as it would be to other applicants. This is where its best to use the services of a car loan broker like Awesome Car Loans.

Car Loan Types For Students

Students would be forgiven for assuming that there is a set blueprint in place for all student car loans. There isn’t. The terms of any agreement will vary from one lender to the next while a wide range of contributing factors will influence what (if any) terms can be offered.

Understanding the different car loan types is an essential starting point. The ones you need to know are;

Secured Car Loans: This is when the car that you are buying is used as collateral against the loan. So, if you default on the repayment plan, the vehicle will be repossessed. It is possible for other assets to be used as collateral, but most secured car loans use the vehicle for these purposes. Secured car loans are the most commonly used type of student car loan by far.

Unsecured Car Loans: Unsecured car loans do not require you to put the car down as collateral. However, the unwillingness to do this makes you a far greater risk in the eyes of a lender. This results in a far higher interest rate while students with bad credit or no history may be rejected for this type of financial agreement when buying a vehicle.

Car Leasing: Students can also consider car leasing. This means renting the car from the lender, which can be a good option due to depreciation and the fact that lenders view applicants as far less risky. The main types of car leasing agreements for students are novated leases, finance leases, and operating leases. Students should analyse the pros and cons of their circumstances.

New Car Loans Versus Used Car Loans

Students also need to decide whether to seek new car loans or used car loans. There is no single right or wrong answer, which is why research is required. To form an educated decision, it’s necessary to consider the vehicle as well as the financial attributes of the respective agreements.

New Car Loans

A new car loan is a far less risky option from the lender’s perspective, especially on a secured agreement. This is because the vehicle can be sold at a far higher cost if it needs to be repossessed. As an upshot, the interest rates will be lower, although you will naturally spend more money on a new car than its used counterpart.

New vehicles do boast better reliability, though, while the ongoing maintenance costs are likely to be lower too. Of course, this is counterbalanced by the high depreciation rates.

Used Car Loans

Used car loans often carry a higher interest rate due to the lower resale value, but they do cost less. The fact that the agreement is for a smaller fee can also increase the chances of acceptance, while many student drivers would prefer a used vehicle anyway. However, older cars (over six years) may not be eligible for secured loans.

It should be noted that only cars that are over 2-3 years old are classified as “used”. Anything younger can be sold under a new car loan finance agreement, even if the costs are lower than a brand new car.

How Much Can Students Borrow?

Understanding which types of car loans are available is one thing, but students also need to know how much they can borrow. There’s little point in spending hours online looking at vehicles that are out of your price bracket.

There is no set figure on how much you can borrow as a range of factors will influence the outcomes. The list includes, but is not limited to;

  • Your age,
  • Your credit score and history,
  • The hours and pay of your job,
  • Whether you have student finance,
  • Which state you’re studying in,
  • The value of the car,
  • Whether the vehicle is new or used,
  • The type of car loan applied for,
  • Which lender is analysing the application,
  • Luck.

Therefore, it is advised to seek pre-approved agreements. This allows you to discover how much can be borrowed before entering the marketplace.


In short, then, it is possible for you to gain a car loan as a student applicant. However, the road to success isn’t as smooth as it is for people in full-time employment. Consequently, then, you must scrutinise every aspect of the process before completing an application.

It does require a little hard work. Once you drive off the dealership forecourt, it will all seem worthwhile.

Disclaimer -This page/article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

Credit Representative Number 496186 is authorised under Australian Credit Licence Number 389328.
ABN – 63 007 814 458. Member of MFAA.

Ph. 1300 696 902
Email –