Loans For Cars :: Articles

Loans for Cars: Establishing How Much You Can Afford to Borrow

Loans for Cars: Establishing How Much You Can Afford to Borrow

Loans for Cars: Establishing How Much You Can Afford to Borrow
When it comes to car loans, one of the first things you need to determine is your budget – how much can you afford to borrow and still comfortably make your monthly car loan repayments?

Borrowing power

Borrowing power is the ability to obtain credit from lenders. This can be in the form of a loan, credit card, or line of credit. Individuals with a high borrowing power will typically have a high credit score, which indicates to lenders that they are low-risk borrowers.

There are a few things that can impact your borrowing power. Your income and employment history are two of the biggest factors. Lenders want to see that you have a steady income and a history of making on-time payments. Another factor is your credit history. If you have a good credit history, lenders will be more likely to lend you money.

Best Car Loans
Image for Best Car LoansFinance for all new or used cars including personal or business use vehicles, private sale or dealer purchase. Loans for $10,000 and over Rates from as low as 3.85%

This knowledge will help you narrow down your choices and find the right car for you and the features you can afford. It will also help you decide whether you should buy a new or used car and help you avoid getting into financial trouble.

If you’re not sure how much you can afford to spend on a car, one of the best ways to figure out your car loan borrowing power is to use an online car finance repayment calculator. There are many different car loan calculators available online. Some are more complex than others. But, in general, they all ask for the same information: the price of the car, the interest rate, the term of the loan, and the down payment. With this information, the calculator will generate a monthly payment estimate.

Your Income and Savings

Before you begin to apply for a car loan you need to understand how much you are currently earning from working or investments and the existing amount you have set aside for future expenses.

To get a loan, you will need to present a downpayment. Your money is needed to fund the deposit or downpayment, which comprises the up-front portion of your loan. Once this payment is made, you may obtain a loan for an amount calculated minus the deposit.

To repay a loan, you will need to make periodic payments - these are set payments over a dose size period until the mortgage has been paid in full. These payments may change during periods of resetting interest rates. You have to be conscious that your monthly income after expenses can cover your loan repayments. This will ensure that you can repay the loan comfortably.

Accounting for any past or existing Debt

Credit history is a record of a borrower's past credit experiences, including information about late payments, bankruptcies, and other negative information. This information is used by lenders to determine whether or not to extend credit to a borrower.

A borrower's credit history is important because it can impact the interest rate that they are offered on a loan. For example, a borrower with a good credit history may be offered a lower interest rate than a borrower with a bad credit history.

Poor credit history will reduce your borrowing power and therefore, it is important to clear debts and improve your credit rating to secure financing.

Calculating Repayments

A car loan calculator is a tool that can help you determine your monthly car loan payments. This can be a useful tool when you are considering a new car purchase, as it can help you budget for your new vehicle. There are a few different ways to calculate your car loan payments, but the most common method is to use the interest rate and the loan term to determine the payment amount. Just enter the loan amount, interest rate, and term of the loan, and the calculator will do the rest. 

The interest rate is the cost of borrowing money, and it is expressed as a percentage of the loan amount. For example, if you take out a 5-year loan for $25,000 at an interest rate of 5%, you will be required to pay $3306.80 in interest over the life of the loan. Your monthly payment will be lower if you choose a loan with a lower interest rate.

Try to get a few quotes from different financial institutions so that you can compare and contrast. Make certain you comprehend and don’t miss any clauses in a quote and of course, always pay your monthly payment on time. You may be surprised at how easy and fast it is to attain your auto financing with some smart shopping for the best rates.

Our specialist Car Finance Brokers are qualified and experienced to do this for you with guaranteed results. Simply complete our short Car Loan Eligibility Assessment form on this website to get started, no charge, obligation-free.

Published: Thursday, 27th Oct 2022
Author: Paige Estritori


Car Loans Articles

Loans for Cars: Understanding the Impact of Your Credit History Loans for Cars: Understanding the Impact of Your Credit History
If you're in the market for a new car, you may be wondering if you can get a loan with poor credit. The answer is yes, but it's important to understand the impact that your credit history can have on the loan process. - read more
Why Australian Car Buyers Should Consider Pre-Approved Car Loans Why Australian Car Buyers Should Consider Pre-Approved Car Loans
Pre-approved car loans are financing arrangements where a lender evaluates your financial situation and determines an approved loan amount before you start shopping for a vehicle. This process provides buyers a clear understanding of their budget, which helps in making more informed decisions. - read more
Insurance Renewal Approaching? Tips to Ensure You're Still Getting the Best Rate! Insurance Renewal Approaching? Tips to Ensure You're Still Getting the Best Rate!
Is it that time of the year again when your car insurance is up for renewal? Often, it comes as a reminder in the mail or a notification from your insurer. But instead of instinctively renewing your existing policy, let's pause and explore the underrated benefits of a periodic insurance review. Taking the time to scrutinize your policy could unveil potential savings and align coverage with your current needs. - read more
The Ultimate Guide to Fast Track Your Car Loan in Australia The Ultimate Guide to Fast Track Your Car Loan in Australia
Welcome to The Ultimate Guide to Fast Track Your Car Loan in Australia, designed to help you navigate the exciting journey of buying a car for the first time. Buying a car is a significant milestone, and securing the right finance can make all the difference. - read more
Avoid Rejection: Common Pitfalls to Sidestep in Meeting Car Loan Criteria Avoid Rejection: Common Pitfalls to Sidestep in Meeting Car Loan Criteria
Entering the realm of self-employment brings with it not only the freedom to be your own boss but also unique challenges, especially when it comes to securing financing for significant purchases like a car. For the self-employed, the path to obtaining a car loan can be fraught with additional hurdles, stemming from the variable nature of their income and the scrutiny lenders apply to their financial profiles. - read more
The Pros and Cons of Refinancing Your Car Loan The Pros and Cons of Refinancing Your Car Loan
Car loan refinancing involves taking out a new loan to pay off an existing car loan. This can be done with the same lender or a different one. The primary goal is often to secure better interest rates, alter the loan term, or reduce monthly payments. - read more
Five Common Mistakes First-Time Car Buyers Make and How to Avoid Them Five Common Mistakes First-Time Car Buyers Make and How to Avoid Them
Buying your first car is an exciting milestone that can offer a sense of independence and freedom. Whether you're envisioning weekend getaways or a smoother daily commute, the joy of car ownership holds a special thrill. However, alongside this excitement, it is crucial to approach this journey with awareness and preparation to ensure you make a smart financial decision. - read more
The Ultimate Guide to Fast Track Your Car Loan in Australia The Ultimate Guide to Fast Track Your Car Loan in Australia
Welcome to The Ultimate Guide to Fast Track Your Car Loan in Australia, designed to help you navigate the exciting journey of buying a car for the first time. Buying a car is a significant milestone, and securing the right finance can make all the difference. - read more
Avoid Rejection: Common Pitfalls to Sidestep in Meeting Car Loan Criteria Avoid Rejection: Common Pitfalls to Sidestep in Meeting Car Loan Criteria
Entering the realm of self-employment brings with it not only the freedom to be your own boss but also unique challenges, especially when it comes to securing financing for significant purchases like a car. For the self-employed, the path to obtaining a car loan can be fraught with additional hurdles, stemming from the variable nature of their income and the scrutiny lenders apply to their financial profiles. - read more
Why Australian Car Buyers Should Consider Pre-Approved Car Loans Why Australian Car Buyers Should Consider Pre-Approved Car Loans
Pre-approved car loans are financing arrangements where a lender evaluates your financial situation and determines an approved loan amount before you start shopping for a vehicle. This process provides buyers a clear understanding of their budget, which helps in making more informed decisions. - read more
Temporary Resident? Learn How You Can Qualify for an Australian Car Loan Temporary Resident? Learn How You Can Qualify for an Australian Car Loan
Welcome to your comprehensive guide on navigating the Australian car loan landscape as a temporary resident. Whether you're here for work, study, or leisure, having your own vehicle can vastly improve your time in Australia. However, securing a loan for a car might seem like a formidable task given your temporary status. That's where this article steps in—to enlighten and empower you in this financial journey. - read more
Navigating Credit Scores: How They Impact Your Car Loan Options in Australia Navigating Credit Scores: How They Impact Your Car Loan Options in Australia
Welcome to the guide designed to help you navigate the intricate world of credit scores and their impact on your car loan possibilities in Australia. Whether you're a long-term resident or here for a temporary stay, understanding the nuts and bolts of credit scores is crucial in securing your ideal vehicle through a loan. This post aims to shed light on this pivotal financial metric and aid you in your car financing journey. - read more
Common Car Loan Pitfalls and How to Steer Clear of Them Common Car Loan Pitfalls and How to Steer Clear of Them
Buying a car is a significant financial decision, and for many Australians, this means taking out a car loan. - read more
10 Common Mistakes Australians Make When Financing Their Car 10 Common Mistakes Australians Make When Financing Their Car
Car financing has become increasingly popular among Australians for a variety of reasons. For many, it offers the opportunity to own a vehicle without having to pay the entire purchase price upfront. - read more

Finance News

Uncovering the Impact of Unsolicited Solar Sales on Consumers Uncovering the Impact of Unsolicited Solar Sales on Consumers
04 Jul 2025: Paige Estritori

In a concerning revelation, Australian retiree Christine Hirchfield shares her ordeal with an unsolicited solar installation that turned into a financial nightmare. Despite her initial enthusiasm for cheaper energy bills and a greener home, the project remains incomplete more than a year later. Consumer groups are now advocating for a nationwide prohibition on deceptive sales practices that target vulnerable consumers like Ms Hirchfield. - read more
Australian Online Retail Sees Continued Growth in May Amidst Nationwide Spending Surge Australian Online Retail Sees Continued Growth in May Amidst Nationwide Spending Surge
03 Jul 2025: Paige Estritori

Australian online retail sales experienced a modest rise in May, as consumers continued to invest in fashion, games, and toys. According to the latest figures from the National Australia Bank, there was a 0.7% increase in online sales for the month, compared to a 1.1% growth in April. Over the past year, Australians have spent approximately $63 billion on online retail purchases. - read more
Pay Boosts and Policy Changes: A Closer Look at Financial Updates for Australian Workers Pay Boosts and Policy Changes: A Closer Look at Financial Updates for Australian Workers
03 Jul 2025: Paige Estritori

The starting days of the new financial year bring significant changes for Australian workers, particularly those on minimum wage. As of Tuesday, the minimum wage will rise by 3.5 per cent, increasing hourly earnings to $24.95, or $948 weekly. This adjustment also affects award wages and comes as a response to rising living costs, outpacing current inflation rates. - read more
US Dollar Faces Historic Decline Amid Trump’s Tariff Policies US Dollar Faces Historic Decline Amid Trump’s Tariff Policies
03 Jul 2025: Paige Estritori

The US dollar has experienced an unprecedented decline, marking its worst first-half performance since 1973. Concerns surrounding President Donald Trump's tariff policies have intensified, leading to a substantial drop in the value of the world's primary reserve currency. Specifically, the dollar weakened by 10.7% against a basket of major trading partners' currencies in the first six months of the year, reminiscent of Nixon's era when the dollar was untethered from gold. - read more
Auditor Deregistered After Brite Advisers Collapse Auditor Deregistered After Brite Advisers Collapse
30 Jun 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has deregistered auditor David Makowa, previously of DM Advisory Services, due to his role in the downfall of financial advice firm Brite Advisers. This decision follows Makowa's acceptance of a court-enforceable undertaking in which he agreed to surrender his auditor registration permanently, pledging never to re-apply. - read more
US Involvement in Israel-Iran Conflict Sparks Financial Market Concerns US Involvement in Israel-Iran Conflict Sparks Financial Market Concerns
23 Jun 2025: Paige Estritori

The escalating likelihood of the United States engaging militarily in the Israel-Iran conflict has raised alarm among investors, potentially leading to significant market volatility. This concern was highlighted by the global financial advisory firm, deVere Group, as tensions heighten in the Middle East. - read more
Global Markets Brace for Oil Price Surge Following US Strike on Iran Global Markets Brace for Oil Price Surge Following US Strike on Iran
23 Jun 2025: Paige Estritori

The recent US military attack on Iranian nuclear facilities has raised expectations of a significant oil price spike as global markets prepare to resume trading. Announced by former President Donald Trump, the attack marks an increased US involvement in the Middle East, which analysts believe could lead to heightened volatility across financial markets. - read more

Start Here !
life insurance
Apply now for your free Insurance assessment and price comparisons!

Life Cover Amount:
Your Postcode:
All quotes are provided free and without obligation. We respect your privacy.
Need A Car Loan Right Now?
Compare Car Loan rates & options to secure the best finance offers from our broad network of leading Australian car finance brokers & specialist lenders. Fast, free … and without accessing or affecting your credit file!

 START HERE.

Loan Amount:
Postcode:
Your quotes are provided free & without obligation. We respect your privacy.
Compare Car Loan rates & options to secure the best finance offers from a broad selection of Australia`s leading car finance brokers & specialist lenders. Fast, free … and without accessing or affecting your credit file!

Knowledgebase
Amortization Schedule:
A table that provides details of each periodic payment on a loan, including the amount going towards principal and interest.