Need Finance?
If your situation is not straightforward, we can help you work through your loan options and find finance that fits.
At A Glance
- The car itself can affect which lenders and loan terms are available.
- A purchase price that doesn’t line up with the vehicle’s value can create problems.
- Private sales can require more cooperation and paperwork from the seller.
- Existing finance or security interests on the car need to be dealt with properly.
- Incorrect or missing vehicle and seller details can delay settlement.
- Sometimes choosing another car is easier than trying to force the finance around the wrong one.
Found the Car?
So you’ve found a used car you like, the price looks manageable and you’re ready to work out the finance. Great, let’s get on with it and see what we can do.
First, we need to look at your position as the borrower: how much you need, what repayments might look like and which lenders may be able to work with your circumstances.
Then there’s the car itself and whether it fits the finance we’re looking at.
Before we get too far down the road, I need to understand exactly what you’re buying and how the transaction is going to work. There are quite a few things to consider, and some of them can stop a car purchase in its tracks.
Finding those issues early gives us a much better chance of working out whether this particular car is viable, or whether something about the deal needs to change before we apply.
Table of Contents
The Car Itself Can Limit Our Options
Once we know what sort of finance may work for you, I also need to make sure the car fits within the lenders we’re considering.
Age and kilometres are two of the obvious ones. Some lenders are comfortable with older cars or higher kilometres, while others have much tighter limits. The same can apply to imports, heavily modified cars, specialist vehicles or anything that may be harder to value or sell if the lender ever had to recover the debt.
Condition can come into it as well. A car that’s damaged, has a questionable history or is worth considerably less than the asking price may be a very different proposition from a clean, standard example of the same model.
Different lenders draw their lines in different places, which is why I want the actual vehicle details before deciding where an application should go. A car that one lender won’t touch may still be perfectly workable elsewhere.
This is also why a cheaper car isn’t always the easiest one to finance. Sometimes the vehicle that looks like the budget option can leave us with fewer choices once age, kilometres and lender policy are taken into account.
The Purchase Price Has to Make Sense
What the seller is asking for the car and what the car is actually worth can be two different things.
That becomes important when finance is involved because a lender may have its own view of the vehicle’s value. If you’re paying well above that figure, they may not be willing to finance the full purchase price.
You might have negotiated a car from $27,000 down to $25,000 and feel like you’ve done well. But if the lender is only comfortable with the car at $21,000, the $2,000 discount doesn’t really solve the finance problem.
That doesn’t mean every car needs to be the cheapest example on the market. Condition, kilometres, specification, service history and demand can all affect what a particular car is worth. But the asking price still needs some connection to reality.
If there’s a decent gap between what you’re paying and what the lender will support, we may need a larger contribution from you, a different finance option or, in some cases, a different car.
Who You’re Buying From Can Change the Process
Buying from a dealer and buying privately can both work perfectly well, but the finance process can look a little different.
Dealers are generally used to financed purchases. They know how to provide invoices, confirm vehicle details and work through settlement with a lender or broker.
A private seller may never have dealt with any of that before, which can make things a bit more clunky. Depending on the lender, we may need information or documents from them to confirm the vehicle, seller details, payment instructions and whether any existing finance needs to be cleared as part of settlement.
That means the seller can become part of the process whether they expected to or not. If they’re slow to provide what’s needed, the information doesn’t line up or they simply don’t want to deal with the lender’s requirements, it can hold things up.
Of course, that’s not a reason to avoid private sales. They can definitely be worthwhile. I just like knowing who we’re buying from early so we can work out what will be needed and avoid surprises when it’s time to settle.
Finance Owing on the Car Has to Be Dealt With
If finance is owing, I want to know about it early so we can work out what the lender needs, how the payout will be handled and what has to happen at settlement.
A PPSR search can help identify whether there’s a registered security interest over the vehicle, as well as giving us another opportunity to check details like the VIN against the car being purchased. Doing a PPSR search costs just $2 and it can save you a lot of time and money, so it’s definitely worth doing.
Just be mindful of the currency of the search result. The PPSR itself recommends doing the search on the day you buy the car or the day before, so the result is as current as possible.
Contrary to what a lot of people think, existing finance isn’t necessarily a deal-breaker. Plenty of cars are sold while there’s still money owing on them. The important part is making sure the current lender is paid out correctly and the security interest is released as part of the transaction.
What you don’t want is to hand over the purchase money and later discover someone else still has a registered interest in the car.
The Paperwork Has to Match the Car
Even once the finance itself is looking good, the purchase can still get held up if the paperwork doesn’t line up.
The VIN, registration details, seller information and purchase price all need to match what we’re actually financing.
Depending on the sale, we may also need an invoice, contract of sale or other documents before the lender can settle.
Problems can be surprisingly simple. A VIN might be entered incorrectly, the seller details might not line up with the vehicle records or sale documents, the agreed purchase price may have changed or something the lender needs could simply be missing.
Most of these things can be fixed, but they can create unnecessary delays. I’d much rather pick them up early than discover them when everyone is expecting the car to be paid for that afternoon.
Don’t Box Yourself In With the Seller
Once you’ve found a car you really want, you need to slow down. It’s easy to get a little too keen.
If the seller knows you want it and you start talking about how quickly you can pay, suddenly there’s pressure to get everything done on their timetable. Usually, the price will still be up for further debate too.
Personally, I love a good bargain, especially when it comes to buying used cars. It’s like a sport. I’m always ready to negotiate, and I’m very careful about showing my hand too early.
Apart from weakening your negotiating position, you don’t want to promise a settlement date or make commitments based on finance that hasn’t been confirmed yet. Let alone pay a single dollar more than you need to.
Sometimes you’ll hear things like, “I’ve got someone else interested,” or “I need a deposit today if you want me to hold it.” That may be completely genuine, but it doesn’t mean we should turn a normal finance process into a rush job. It also doesn’t mean you should cough up more money than you planned to unless you’re absolutely sure it’s a good deal.
If you’re being asked to pay a deposit or agree to particular conditions, make sure you understand what you’re committing to before handing over money. Get the agreed terms in writing and keep a receipt for any money you pay.
There will always be another car. I’d rather risk missing one than have you pay more or get backed into a corner unnecessarily.
Another Car Might Be Easier
Sometimes we can work through every possible option and still come back to the same conclusion: this particular car is making the finance harder than it needs to be.
Maybe it’s too old, priced too high, outside the policy of the lenders available to us, or the seller and paperwork are creating more problems than the car is worth.
At that point, I’d rather be practical about it.
Spending another week looking for the right car can be much easier than spending days trying to force the finance around the wrong one.
Unless the car is rare or unusual, there’s probably another one out there. And if there isn’t, there may still be a different make or model that does the job just as well.
That doesn’t mean you need to spend more either. As we’ve already covered, a cheaper car can sometimes be harder to finance, but the goal is simply to find something that makes sense for you and gives us a reasonable path to getting the deal done.
My job isn’t to find someone who’ll finance anything you point at. Sometimes the best advice I can give you is to walk away from that car and keep looking.
What To Take Away
When you’re buying a used car with finance, there’s more to get right than the loan itself. The car, purchase price, seller and paperwork all need to come together before the deal can settle.
It’s always best to be proactive. Most problems are much easier to deal with when we find them early. And sometimes the right answer is as simple as changing the car rather than trying to force a difficult purchase through.
If you’ve found a used car you’re interested in, get in touch before you commit. We can look at the car, your circumstances and the purchase as a whole, then work out the best way forward.
Tom is the founder of BrightCredit and a finance broker focused on borrowing situations that are not straightforward. His writing helps Australians understand credit, loans, and the details that can affect their borrowing options in a clearer, more practical way.