Did you know that there are specific vehicle restrictions in place that need to be cleared before being approved for a car loan? If you’re looking to finance a new vehicle, it’s important to be aware of these so that you can find the best deal possible.

What are the restrictions on car loans and how do they work?

Car loan restrictions are designed to protect both the borrower and the lender. This is done by making sure that people can only borrow money they can afford to repay and also by ensuring that the loans are repaid on time.

There are two main types of car loan restrictions: 

  1. LVR (loan-to-value ratio) restrictions: These restrict the amount of money you can borrow relative to the value of the car. For example, you may only be able to borrow 80% of the total value of the car.
  1. Serviceability restrictions: These restrictions limit the amount of money you can borrow based on how much money you make each month. For example, your monthly loan repayments may need to be less than 20% of your total income.

Why do car loan restrictions exist?

Car loan restrictions exist for a few reasons. 

Firstly, they’re there to protect borrowers from taking on too much debt and becoming overextended. 

Secondly, they’re there to protect lenders from unsecured loans, lending money to people who may not be able to afford the repayments.

Car loan restrictions help to make sure that people who borrow money for cars can afford to pay back the loans. This makes it easier for lenders because they know that the people who borrow from them can afford to repay their debts.

It also makes it easier for people who want to buy cars, because they know that they will be able to get a car loan if they meet the requirements.

What does this mean for you?

If you’re looking to take out a car loan, it’s important to be aware of the restrictions that are in place. Make sure you understand both the LVR and serviceability restrictions before you apply for a car loan from a car loan provider. 

This will help you to make sure you’re borrowing an amount of money that you can afford to repay.

How do you know if you’re eligible for a car loan with the restrictions in place?

The best way to find out if you’re eligible for a loan is to speak to a financial institution or car loan provider. They’ll be able to assess your financial situation and let you know whether or not you meet the eligibility criteria for a loan.

When it comes to car loans, it’s important to make sure you’re well-informed before making any decisions. 

Be sure to do your research and speak to a car loan provider so that you can be sure you’re making the best decision for your individual circumstances.

Here are 3 things you need to consider.

Checking your credit score

Your credit score is one of the first things a lender will look at when you apply for a loan. If you have a good credit score, you’re more likely to be approved for a loan and you may get lower interest rates.

If you have a bad credit score, your credit provider may still be able to give you a new car loan but you’re more likely to pay higher interest rates.

Meeting the minimum requirements

First and foremost, you should be over 18 years old, have Australian citizenship (or permanent residency), and have a good credit history. This means no bankruptcies, defaults, or late payments in your recent past. 

You’ll also need to have a steady income and a job that pays at least $1,500 per month.

Additionally, most lenders will require a down payment of at least 10% of the car’s purchase price. Finally, you’ll need to prove that you have the financial resources to make the monthly loan term payments.

If you can meet all of these requirements, you should have no problem getting approved for car loans anywhere in Australia.

Looking at your financial situation

Before you apply for a loan, it’s important to take a look at your financial situation. Make sure you can afford the monthly car loan repayments and have enough money left over each month to cover your other expenses.

You should also make sure you have a good understanding of your credit history and credit score. 

This will help you determine what car loan interest rate you’re likely to get, and whether or not you’re likely to be approved for the best car loan deal.

What are some of the pros and cons of having car loan restrictions?

When it comes to car loans, there are a few pros and cons to having restrictions in place. Let’s take a look at some of the key points.

The Pros

– Ensures borrowers that they can achieve long-term financial goals.

– Helps people who need a car and cannot afford to buy one on their own but have the ability to make car repayments until the end of the loan.

– Helps to protect borrowers from taking on too much debt

– Helps to protect lenders from lending money to people who may not be able to afford the repayments.

The Cons

– For young car buyers with little or no borrowing history, car loan restrictions may make it difficult to get a loan and buy a new car from most car dealers.

– Limits the choice of car that a borrower can buy if they have a limited budget.

– May cause some people to pay higher interest rates.

At the end of the day, it’s important to weigh up the pros and cons of car loan restrictions before making a decision. Be sure to speak to a financial specialist to get expert advice on car loans.

“I’m seeking a car loan and eligible to get one. Does it imply that I can borrow money to purchase any car?”

Good question.

Although you’re eligible for a car loan, it doesn’t mean that you can purchase any car you like, especially a used car or second-hand car. 

There are still lending criteria that car lenders follow on which vehicle can be financed and which cannot. However, they vary from lender to lender.

In other words, the car must be:

No older than 12 years old

If you want to buy a used car from a car dealership, go to your car loan provider and start the application process. The car can’t be older than 12 years old, but there are exceptions based on the applicant’s profile and the type of vehicle.

For example, some lenders may be willing to finance an older car or an exotic or prestige vehicle for a longer loan term if the applicant has a very good credit score and history.

These decisions are made on a case-by-case basis, so it is important to speak to a financial specialist so you can be guided with your decision.

Registered and roadworthy in Australia

This means that as much as possible, you’ll finance a car that’s not imported.


If you want to buy a car from overseas, the lender might have a hard time financing it. This is because the car’s history isn’t registered in this country. The lender might be able to make an exception, but this will depend on what you are capable of.

You may ask a financial specialist to learn more about this.

Free from any encumbrances such as loans or finance agreements 

This car should not be under any previous loans or finance agreements. If it is, you’ll need to factor in, paying out the remainder of the car’s loan on top of your new car loan amount.

Also, you can’t ask your lender to finance a car that has been in a serious accident. This is because the car might have too much damage and be too risky to use as part of your car loan application.


The restrictions on car loans can be confusing for some people. However, by understanding how they work and who is eligible, you can make an informed decision about whether or not a loan is the best option for you.

If you have any questions, don’t hesitate to contact our financial specialists today. We would be happy to help you get the information you need so that you can make the best possible decision for your car loan.