Car loans aren’t always easy. And getting car finance as an international student in Australia can be even harder. But we’ve got good news – it is certainly possible.
To make it easier, we’re compiling an in-depth guide to used car finance for international students in Australia. It will cover everything you need to know: loan types, visa conditions, and how to apply so that you get approved. We’ll also show you what to do if you can’t get a loan.
Car finance for international students in Australia is possible
First things first: the good news. You can get car finance as an international student in Australia. Not all lenders will offer you a loan, but there are reputable lenders who will offer you finance, so long as your loan term doesn’t exceed the length of your current student visa.
Now let’s dive into that a little deeper and look at:
- what types of loan are available to international students in Australia
- possible loan conditions and visa requirements
- how to apply for car finance in Australia
- how to increase your chances of getting approved
- financing a second car vs car sharing
- how to offset the costs of your car
- what to do if you can’t get a loan to buy a car
Finance options for international students
There are a few different types of car loan available in Australia. Here are the main ones.
Car loan at a fixed rate. This is money you borrow from a bank, credit union, or independent lender at a fixed rate of repayment, regardless of what happens to interest rates in that time.
- Car loan at a variable rate. Borrowed in the same way as a car loan at a fixed rate, but your rate of repayment may vary with interest rates.
- Secured car loan. A secured car loan includes collateral that will act as your ‘security’ (such as your car) should you fail to make repayments.
- Unsecured car loan. An unsecured car loan has no collateral as security, instead relying on your credit score to approve the loan. Of course, most international students won’t have a credit history in Australia.
- Peer-to-peer personal loan. Peer-to-peer lending is an online platform that cuts out the middleman (your traditional lenders). It allows people to borrow funds directly from investors who can be individuals or corporations.Dealer finance. If you’re purchasing a car from a dealership, they may be able to arrange a loan for you through their own bank or lender.
If you’re unsure about your loan options, you can learn more in our quick guide to car finance options.
Loan conditions and student visa requirements
Keep in mind that not all lenders provide car finance for international students in Australia. And those that do offer car finance to international students have strict conditions around visa type and length.
It’s also important to keep the age of your intended car in mind. The terms for most secured car loans will specify the car should be either new, or used up to a certain age. For example, a Commonwealth bank secured personal loan allows you to buy a used car up to 5 years old, and you can use a Westpac secured personal loan to buy a car up to seven years old.
Here’s a quick summary of eligibility for secured car loans with four of the largest Australian banks.
Choosing the right lender
To find a reputable lender that does provide car finance for international students in Australia, speak to a trusted financial advisor. Some lenders may well loan to you as an international student, but it may be at unfairly high interest rates or the loan may have other unscrupulous conditions.
A trusted financial advisor will take you through your best options for used car finance as an international student. You can search the Australian Government’s financial advisers register, or learn more about choosing the right financial advisor for you.
Applying with a student visa
With the right lender, you can finance a car on a student visa in Australia. But it should be obvious that no lender will offer you a loan that requires repayments after the expiry of your student visa.
So if your visa starts in 2022 and ends in 2025, you may be offered a loan term of three years or less. Keep in mind that lenders won’t take into account pending visas, only the visa you have approved now.
So that covers what sort of loans you may get, depending on visa type and length. Now let’s go through how to apply for car finance for international students, and what might happen when you do.
Four steps to car finance in Australia
1. Get conditional approval
You can apply online with most lenders to get conditional approval. Most of these preliminary applications (or pre-approvals) are pretty quick to apply for. You can fill in some online forms in as little as 15 minutes.
2. Find the right car
Once you have conditional approval you’ll have a set number of days to find the right car (often about 30 days, but this will vary depending on your loan). As a secured loan, the car will need to be eligible too, so make sure you understand what that means for your loan.
3. Final loan approval
You’ve found the right car. Great. Now you need to add the details into your application. The lender will check to make sure it’s valued correctly. At this point, if you’re considered particularly high risk, you may be asked for more information to confirm your ability to pay back the loan.
4. Getting the money
Once you’re approved and have signed the contract, the funds will be remitted to you. This usually involves a bank cheque or sending the funds electronically directly to the seller.
How to get approved for used car finance as an international student
Nothing can guarantee you loan approval. But there are a few things you can do to increase your chances of being offered used car finance as an international student in Australia.
As an international student, you’re automatically considered higher risk than some other applicants. So you simply need to prove to your lender that you’re not a risky person to loan money to.
You need to demonstrate financial stability, and your capacity to make repayments. Here are three things that will help you do that.
- Regular income: a consistent salary is ideal. Part-time or casual employment is okay, so long as it’s regular (and the longer you’ve worked regular hours, the better your application looks).
- Loan guarantor: a guarantor is someone who agrees to be responsible for your debt if you default on your loan. This is usually someone who is a close relative.
- Cash deposit: the larger your deposit, the more likely you are to be approved. Think about it – the more you pay to begin with, the less they have to risk by lending to you.
As you can see, it’s all about reducing the level of risk that the lender takes on by loaning money to you. And remember it’s not personal (although it certainly can feel that way).
Need car finance to buy a second car?
If you’re researching whether car finance for international students is an option for you to buy a second car, have you thought about car sharing when needed instead? Uncover the pros and cons of buying a second car vs car sharing occasionally.
How to offset the cost of your car
If you buy a used car on finance, are you worried you’ll struggle to make your repayments? Let’s be honest – students aren’t known for being rich (yet). Many students struggle just to pay their bills. Well, we have some good news. Car sharing can offset the cost of your car repayments and take some of that stress—and risk—away. Learn how to offset the cost of your car, or read about how one international student quit his day job by earning money from his car.
What to do if you can’t get car finance as an international student
Despite doing everything possible to increase your chances, your loan may not be approved. Car finance for international students can be difficult. Don’t worry. We have a great solution – car sharing.
Borrowing a car from your neighbour is easier than you think. Unlike traditional car rental companies, you can skip the counter and the paperwork. Use Car Next Door to find reliable cars at a competitive price.
And the best bit about car sharing as an international student? At Car Next Door it doesn’t matter where you hail from, or whether you’re leaving soon. If you’ve got a valid driver’s licence, then you’re ready to hit the road – whenever and wherever you need to.
The information published on this blog is of a general nature only and does not consider your personal objectives, financial situation or particular needs. The information published on this site/page should not be relied upon as a substitute for personal financial or professional advice.