Used Car Loans Explained

A used car loan allows you to finance a pre-owned vehicle purchased through a dealership or private seller. You borrow a set loan amount and make regular repayments—typically weekly, fortnightly, or monthly—over a term ranging from one to seven years, with either fixed or variable interest rates.

Most lenders offer secured or unsecured options for used vehicles. A secured loan uses the car as collateral, generally securing a lower interest rate. However, most financiers enforce strict vehicle age limits, often requiring the car to be under 10 years old at the end of the loan. Unsecured loans are typically used for older vehicles.

To approve the loan, lenders assess your overall serviceability by looking at your income, existing commitments, and credit file. They also check the vehicle's history and purchase price to confirm the loan-to-value ratio (LVR) fits within their specific underwriting guidelines.

Because lending criteria, fee structures, and comparison rates differ widely between banks and non-bank lenders, finding the right fit requires careful comparison. A Lonix broker can evaluate options across multiple lenders and structure the loan to suit your cash flow.