Calculate your car loan borrowing power
Find out about your car loan borrowing power
If you’re thinking of getting a car loan, one of the most important things to understand is exactly how much money you’ll be able to borrow.
With decades of experience and access to a wide range of lenders, we can direct you to some of the best lenders available – but it’s always useful to figure out your car loan borrowing power in advance so you’ll know exactly where you stand. Find out how we can help you get the right car loan.
How much can I borrow for a car loan?
Borrowing power relates to how much money you’ll be able to borrow for your car loan. It’s calculated to not put too much extra strain on your daily finances, and to an amount that a lender will be unlikely to reject.
You need to understand what your car loan borrowing power is so you know how much money you’ll have to spend when it comes to getting a car loan, and you can choose your preferred vehicle accordingly.
It’s quick and easy to get an estimate of your car loan borrowing power by using our simple car loan calculator. Always put in the most accurate information you have and you’ll get the clearest idea of what your car loan borrowing power could be.
Why is car loan borrowing power important?
Understanding your car loan borrowing power can help you to know exactly where you stand before you start to apply for car loans. This can save you a huge amount of time and effort as you won’t be applying for loans that simply aren’t suitable for your financial situation.
It’s also really important to only make applications that could be relevant to you. By having a clear idea of your car loan borrowing power, you’ll be better able to limit the number of applications you make.
This will be helpful for your financial record which lenders will always look at before approving a loan – multiple applications for car loans can raise red flags to them and possibly result in them refusing your car loan application.
How do you calculate your car loan borrowing power?
It’s easy, quick and simple to calculate your car loan borrowing power. You won’t have to spend a single dollar finding out what your car loan borrowing power is, but it could save you hundreds of dollars and a lot of time and effort.
Have a look at our car loans calculator – simply put in the required information and you’ll be able to figure out how much you can afford to spend.
Remember, this is not a guaranteed amount so you should see it as an estimate to help you in your search rather than an exact promise. You can always ask us for expert advice if there is anything you're unsure about.
How do lenders decide what your borrowing power is?
There are a number of factors that lenders will look at when determining what your car loan borrowing power is. These can include:
- Your monthly living costs
- Your monthly income
- Previous financial history
- Cost of the vehicle and potential running costs
Generally, lenders will use a set formula (known as Household Expenditure Method) to work out your borrowing power – this varies between lenders, but helps them to figure out roughly what your capacity for paying back a loan will be.
How do you know what your monthly expenditure is?
This is important to figure out when calculating your car loan borrowing power, and it’s relatively simple to do.
Think about what you spend each month – from essentials such as rent, food, utilities and transport, to luxuries such as restaurants and leisure.
When you think about monthly expenditure in relation to your car loan, you should remember that you also have costs such as fuel and insurance to consider – as well as unexpected repairs or maintenance. Incorporating these into your calculations will help to avoid getting into a sticky financial situation.
How much can I borrow?
This will depend on your individual situation. Generally, you’ll need to consider factors including:
- Your monthly income
- Number of dependents you have
- Any other loans you have
- Monthly expenditures
The best thing to do is to speak to us to start the process. We’ll help you through each step and aim to make everything as easy and efficient as possible.
Can you improve your car loan borrowing power?
This isn’t something you can improve overnight, although having all the right documents and a good financial record to start with definitely helps things.
You’ll want to know as much as possible about where you stand so always make sure you’re aware of your credit score – this is free and easy, we can help you with a free credit check.
You should also prioritise responsible spending and make sure that your credit score is as high as possible when you’re applying for a car loan. Try to time your application for a period when you have a stable income, a stable address and a good credit history.
What are the steps to applying for a car loan?
Once you understand what your car loan borrowing power is, you’ll be able to choose a vehicle that you want to get that is within your financial budget.
You can get a quick quote easily online, and the next step will be getting pre-approval for a loan. You should aim to sort out necessary documents such as insurance for your vehicle during this time so that everything is in place for your car loan.
We’ll aim to contact you as soon as possible once you’ve got in touch and we often have customers seeing their car loans approved within a week. Just seven days for everything to be sorted out for you.
Once your car loan has been approved, your funds will be transferred to your bank account and you’ll be free to make your purchase.
Get in touch today
If you’re wondering how much you can borrow for a car loan, we can help you get a better understanding of your borrowing power. We have decades of experience as well as access to a wide range of lenders, so we’ll lead you through the process efficiently and effectively, getting you on the road sooner.
Discover how we can help you get the right car loan for you.