What Are The Restrictions On Cars That Can Be Financed?

What are the restrictions on car loans?

Each lender tends to look at car loan applications on an individual basis. However, there are some restrictions on cars that can be financed.

You may be concerned that you’ll be subjected to higher interest rates if you're buying a high-performance sports car, for example. This could be the case, but it’ll also depend on other factors such as your credit history and driving record.

If you're unsure of the restrictions on car loans, we can help you get the right car loan for your situation.

Restrictions on cars that can be financed

There are certain restrictions on cars that can be financed, purely to reduce the risk to the lender who will be concerned about the loan amount being paid back. Restrictions on car loans can include:

Older cars

Generally, lenders will be wary about financing a used car that will be older than 12 years at the end of the loan term. Think carefully about whether you’re opting for a short or long-term car loan. If you want a five-year loan, you’ll need to ensure that the used car you’re purchasing is less than seven years old when you buy it.

It’s better to see this restriction as more of a guideline than a strict rule. If you want to purchase a vintage or classic car model and have a good credit history, you can find a lender who is happy to arrange a car loan for you.

Imported cars

If you’re looking to buy an imported car, it won’t be registered in Australia. This raises alarm bells with some lenders, and you could find it hard to get a car loan. It’s generally easier to get a car loan on an imported car if it’s sold through a dealership rather than a private seller.

Again, lenders will look at this type of case on an individual basis. They will decide based on risk to them if the vehicle needed to be repossessed sold.

Written off cars

If a car has been declared a repairable write-off, you may find it difficult to get a car loan. Lenders won’t see the car as suitable security for the loan and will be reluctant to offer you finance.

Why are there restrictions on cars that can be financed?

A lender will always need to decide the level of risk involved in a car loan application. If you miss payments or default on your loan, the lender will need to repossess the vehicle and potentially resell it. So they may be reluctant to finance a car that they don’t believe they’ll be able to resell.

The restrictions on cars that can be financed are in place to protect the lender, but many lenders appreciate that there will often be exceptional circumstances or those where extra consideration can be given.

Ask for Expert Help

It’s important to realise that most lenders understand that no individual case is the same. Although there are general restrictions in place, they can often be seen as guidelines rather than strict rules.

If you want to get a car loan on a specific vehicle but are concerned that it may not match the lender’s criteria, don’t give up—we can help. Ask for expert help and we’ll be able to help you find the right lender and the right loan for your circumstances.