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How Much Can I Borrow For A Car?




Whether you’re thinking of finally treating yourself to an upgrade or need to purchase your first car for work, a car loan can help you access the car of your dreams. If it’s your first time considering auto financing, you may have several questions bouncing around, like “How do car loans work?” or “How much can I borrow for a car?”

At Salt & Lime, we aim to empower our customers through education. We understand that navigating personal finance products can be tricky for those new on the scene. That’s why we’ve compiled this blog. In this guide, we’ll explain the ins and outs of car loans and what goes into determining how much you can afford to borrow. 


What are car loans, and how do they work at Salt & Lime?


A car loan is a type of personal loan that can only be used to fund the purchase of a vehicle. Like a personal loan, a car loan comes with an interest rate, a fixed loan term and other features, such as extra repayments or a redraw facility. At Salt & Lime, we offer a range of car, motorbike and vehicle loan options to help borrowers access the vehicle of their dreams. 

Our car loans feature zero fees and the ability to make additional repayments, helping you pay off the loan all the more quickly — in fact, 81% of our customers are already ahead on their repayments! We also offer interest rate discounts of up to 3.50% upon completing our 12 quarterly financial education modules. 


The types of car loans available 


Car loans come in all shapes and sizes, and while this can sound like a dream for borrowers, it can complicate finding the solution that best suits your financial circumstances. If you’ve already started shopping around for car loans, you would likely have come across the following terms and loan types: 


  • Secured car loans — These are car loans that require security to be approved. In the case of a car loan, the car you intend to purchase can be used as collateral. As the borrower will be asked to secure an asset by the lender, secured car loans tend to have lower interest rates, making them an ideal choice for borrowers looking to keep costs low. 

  • Unsecured car loans — As the name suggests, unsecured car loans don’t require collateral in order to be approved. These types of car loans tend to feature higher interest rates as lenders try to minimise the risk of non-payment. 


Aside from the type, car loans also come with one of the following types of interest rates: 


  • Fixed rate — A fixed interest rate is “fixed” for the duration of the loan and will not change regardless of market conditions. This kind of interest rate is popular among borrowers who like to keep to a strict budget and don’t want any surprises with their repayments.

  • Variable rate — A variable interest rate rises and falls with the market. This means that should the market work in your favour, your monthly repayments could fall. Of course, there’s also the chance your repayments could increase. Variable rates are more suitable for borrowers who appreciate flexibility in their repayments.


How much can I borrow for a car loan? 


This depends on a couple of factors, like the lender’s borrowing limit and your own borrowing capacity. Salt & Lime customers can access secured loans of between $4,000 and $75,000, providing ample flexibility for borrowers with varying needs. 

Your borrowing capacity will also be considered when you approach a lender for a car loan. A person’s borrowing capacity refers to the amount a lender is willing to lend you based on several factors. 


Four factors that determine your borrowing capacity 


Before a lender can approve you for a car loan, they will first need to uncover your borrowing capacity by evaluating the following factors: 


  • Income — Your income is crucial when deciding your borrowing capacity, as it tells a lender whether you are in a financially stable position to make your repayments. Many lenders may also want proof of income and ask you to provide three months' worth of payslips. 

  • Expenses — This refers to where your money goes each month, from groceries to electricity bills. Like your income, lenders want to see how your income is spread out to ensure you will have the capacity to make your repayments each month. 

  • Existing debt — Whether you have credit card debt or a personal loan, your lender will aim to assess any liabilities during your application. In some cases, it’s best to pay off existing debt before approaching a lender for a car loan, as existing debt could impact your chances of approval. 

  • Credit score — Your credit score tells a lender everything they need to know about how you manage money. It’s a reflection on your current and past relationship with money. While a higher credit score doesn’t necessarily guarantee approval, a lacklustre score isn’t ideal either, so be sure you check yours before submitting your application!

  • Your borrowing needs — The amount you’re looking to borrow and for how long will also be assessed during your application. Lenders will compare your request against the listed factors above to ensure you are not biting off more than you can chew. 


Choose Salt & Lime for competitive and low-cost car loans


With flexible lending, opportunities for rate discounts and minimal fees on your side, Salt & Lime is the number one choice for competitive and low-cost car loans. No matter your history with credit, we welcome applicants from all walks of life and can provide a tailored solution. In fact, we specialise in working with borrowers who may have been previously rejected by banks and other traditional lenders.


Responsible lending is what we do. We assess all applicants case-by-case to ensure you receive the right product for your circumstances. So what are you waiting for? Find out for yourself how easy it is to access financial freedom with Salt & Lime by contacting us to submit your car loan application or check out our other loan offerings.

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