Can I Get a Car Loan at 17?

Buying your first car as a young driver is one of the most exciting things you’ll ever do. However, there are a number of potential obstacles standing in your way. Financial limitations are, understandably, a very common problem. Car loans, otherwise known as finance agreements, are naturally a very attractive prospect for drivers of all backgrounds.

But can you actually get a car loan at 17 in Australia? Here’s all you need to know.

Driving At 17 In Australia

Before looking at potential car loan opportunities, it’s important to acknowledge the driving age regulations across the country. Driving laws do vary between the different states and territories. The following stipulations are currently in place;

  • Australian Capital Territory (ACT): 17 years to drive unsupervised, or 15 years and 9 months as a supervised learner.
  • Northern Territory: 16 years and 6 months to drive unsupervised, or 16 years as a supervised learner.
  • Victoria: 18 years to drive unsupervised, or 16 years as a supervised learner.
  • All Other Territories: 17 years to drive unsupervised, 16 years as a supervised learner.

All new drivers will face a probationary period but, ultimately, it is possible to gain your license by the age of 17 in every state except Victoria. Therefore, car loans may become a relevant topic before you turn 18, especially if you start learning at 16.

While you can technically buy a car without a licence, it’s probably a bad idea. Aside from the added pressure to pass, the vehicle will depreciate in value. Besides, if you plan to drive it as a supervised learner, minor scrapes and bumps could harm your new pride and joy.

Our advice would be to wait. Always.

Getting A Car Loan At 17?

Most drivers will start to think about buying a car as soon as they start learning, and will be eager to purchase their first vehicle soon after obtaining their license. Unfortunately, any 17-year-old hoping to utilise the car loan system will hit a brick wall.

It is illegal for banks and other financial institutions to offer credit agreements to anybody under the age of 18. This includes dealerships, who are prohibited from striking finance agreements with drivers until they turn 18. So, the simple answer is No.

In fact, in some territories, dealers aren’t even allowed to sell you a car until you turn 18. As a 17-year-old, then, car loans are out of the question regardless of whether you were planning to buy a new or used vehicle. Likewise, the bank on lending covers secured and unsecured loans.

Meanwhile, even if you’re due to turn 18 in the coming weeks, it should be noted that many lenders will not accept applications from individuals that gain their main source of income from Austudy, Youth Allowance or Newstart. 

In short: getting a car loan at 17 is not an option, irrespective of which territory you live in. However, as long as you don’t live in Victoria, that needn’t put an end to your plans to buy a vehicle before turning 18.

Alternative Options

When car loans are not a possibility, it’s important to consider the other options at your disposal. There are three chief pathways that you’ll want to consider. They are as follows;

Buy In Cash

Buying a vehicle in cash is arguably the easiest way to overcome car loan restrictions. At 17, your income is probably relatively small. Still, the disposable income levels are probably quite high. If you start to save money each month while you learn to drive, you should have a decent amount by the time you gain your licence.

Completing a cash purchase means you’ll probably choose a used car, which is probably a good idea for your first vehicle. It also offers leverage in terms of haggling. However, you need to take care when test driving a car as you won’t want to fall into the trap of buying one that requires costly repairs.

Besides, proving to yourself that you can save money in this way shows that you can cope with the running costs of driving.

Personal Family Loan

Banks, dealers, and official lenders may not be willing to give you the money. However, it may be possible to borrow the money from a loved one. While parents are the most common source of cash by far, grandparents and older siblings are on the list of potential personal lenders too.

The positive aspects of this option are that your loved ones will probably set a lower (or even 0%) interest rate while there’s also potential flexibility on the duration. However, failing to make repayments can put a strain on your relationship. So, you must only consider this option if you can show high levels of responsibility.

Alternatively, your loved one could take out the financial agreement while you reimburse them with their monthly premium. Again, it can get messy if you’re not responsible, though.

Drive A Loved One’s Car

If buying a car through cash purchases or help from a loved one isn’t possible, it might be better to borrow their vehicle instead. If you still live at home with your parents and do not suffer from major schedule clashes, there’s every chance that this will work out.

When taking this option, you should always let your parent(s) have priority. You need to be added to the car insurance premiums too. This approach allows parents to monitor your driving while you gain the opportunity to drive a better vehicle than you could probably afford while also allowing you more time to save for the vehicle that you truly want.

Only a small percentage of drivers obtain their licence immediately after turning 17. So, in truth, it’ll only be a few months until you turn 18 and can consider the car loan prospects once more.

Driving Your Car At 17 (Or 16)

If you do manage to buy a car at the age of 17, it’s imperative that you abide by the rules in relation to supervision and the three-year probationary period. Be sure to research the regulations in your territory.

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.
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