How to Qualify for a Car Loan as a First-Time Buyer (2025 Guide)

Buying your first set of wheels? You’re not alone. Car loans are often the only way first-time buyers can make that dream happen.

In a city like Brisbane, where public transport doesn’t always cut it, having a car means freedom, flexibility, and access to better job opportunities. A car loan spreads the cost over time, making ownership realistic even when savings are tight.

That’s where the experienced Brisbane mortgage brokers at Kelly Brothers Finance come in. We help car buyers understand their options, compare lenders, and manage the paperwork with ease, so you find the right loan with competitive rates, tailored to your financial situation.

Let’s break down everything you need to know about car loans and how to qualify as a first-time buyer.

What Is a Car Loan? 

A car loan, or auto financing,  is a type of finance where a lender gives you money to buy a vehicle, and you agree to repay it in regular monthly repayments, usually with interest, over a set period of time. It’s one of the most common loan types in Australia, especially for first-time buyers who don’t have thousands saved up.

In Queensland, especially around Brisbane, the growing demand for personal vehicles, thanks to spread-out suburbs and limited public transport, has made car loans a practical option for many. Whether you're buying a fuel-efficient hatchback or exploring electric vehicles, a car loan helps make that purchase manageable.

There are two main types of loans to consider:

• Secured car loan: The car itself is used as collateral. If you fail to make repayments, the lender can repossess the vehicle. These loans usually offer a lower interest rate and are common for new or near-new cars.
  
  
• Unsecured car loan: This loan isn’t tied to the car, which makes it riskier for lenders and more expensive for borrowers. It’s more flexible but comes with higher rates.

Either way, your financial situation, credit history, and the loan amount all influence the loan terms you're offered.

How to Qualify for a Car Loan?

First-time buyer? First car loan? To qualify, you don’t need a perfect financial record, just proof that you can handle the repayments. Lenders want to see steady income, low debt, and proof that the loan you intend to take out fits your budget. 

Here’s what you’ll need to prepare: 

1. Proof of Income

Lenders want to see reliable income. You’ll need:

• 2–3 recent payslips
  
• 90-day bank statements
  
• Self-employed? Use your latest tax return or BAS statements

Stable, ongoing income is key, especially if you’re working full-time or permanent part-time.

2. ID and Residency

You must be an Australian citizen, permanent resident, or on an eligible visa. You need to show:

• Driver licence
  
• Medicare card or passport
  
• Proof of address (e.g. utility bill)

3. Expenses and Existing Debts

Lenders will assess your debt-to-income ratio to make sure repayments won’t strain your budget. They’ll ask for:

• Credit card or personal loan balances
  
• Rent or mortgage payments
  
• Monthly living expenses
  
  

4. Credit Score

To qualify, most lenders prefer a credit score above 600. The higher your score, the better the loan interest rates you’ll be offered. If you have no credit history, consider:

• Adding a cosigner
  
• Using a credit-builder loan first

Lenders will also look at your credit report for missed payments, defaults, or late fees.

5. Car and Loan Info

You’ll need to provide:

• The car’s purchase details (make, model, price)
  
• Whether it’s a new, used, or eligible vehicle
  
• Loan term and preferred repayment frequency
  
• Proof of comprehensive car insurance

Need Help Qualifying for a Car Loan?

Our expert Brisbane mortgage brokers at Kelly Brothers Finance will make sure you meet the right requirements and match you with the right lender fast. No guesswork. Just clear advice, the right documents, and a better chance at approval. Call our brokers today at (07) 3847 9450.

How Does a Car Loan Work?

Applying for a car loan for the first time might sound overwhelming, but it’s actually a simple, step-by-step process. Knowing what to expect will help you avoid delays, hidden costs, and the frustration of being declined last minute.

Here’s how the car loan process works in Brisbane and across Queensland:

Step 1: Start the Loan Application

You begin with a loan application, either online or in person with a lender or broker. This kicks off the application process, where the lender collects details about your income, expenses, credit rating, and the car you want to buy.

Step 2: Submit Required Documents

To move forward, you’ll need to provide:

• Proof of income (e.g. payslips or bank statements)
  
• ID (driver licence, Medicare card or passport)
  
• Vehicle details (make, model, purchase price)

This helps the loan provider assess your individual circumstances and whether the type of loan suits your needs.

Step 3: Pre-Approval or Full Approval

Some lenders offer pre-approval, which gives you a clear budget before you shop. Others may go straight to full approval after assessing your documents and credit rating.

Timeline: Pre-approval usually takes 1–2 business days. Full approval can take 2–5 business days, depending on the lender.

Step 4: Know How Much You Can Borrow

Most first-time buyers can borrow between $5,000 and $40,000, but this depends on your income, debts, and deposit. Your approved amount may also depend on the loan features, whether it’s a secured loan (lower risk for the lender) or an unsecured loan (no collateral, higher risk).

Step 5: Calculate Your Deposit or Down Payment

A typical down payment is 10–20% of the car’s purchase price. Putting down more can improve your loan rate, reduce your monthly payment, and cut the true cost of the loan.

Step 6: Compare Loan Terms and Features

Loan terms generally range from 36 to 72 months, and your choice affects the monthly payment and total loan repayments. Use the comparison rate to see the full cost of the loan, including establishment fees, interest, and other additional costs.

Shorter loan terms mean higher monthly repayments but offer cost savings on interest. Longer terms lower your monthly cost but add more to the true cost over time.

Step 7: Choose Between Fixed or Variable Interest Rate

A fixed rate car loan keeps your repayments stable. A variable rate or variable interest rate loan can go up or down depending on market conditions. These loans usually come with more flexible repayment options, like extra repayments and additional repayments without penalty.

Step 8: Sign the Loan Contract

Once you’ve chosen your financing option, you’ll sign the contract. Double-check for:

• Late payment fee and exit fee terms
  
• Any repayment fee for early closure
  
• Inclusion of loan features like redraw, extra cost add-ons, or stamp duty

Always know what you're signing. This is where understanding the loan rate and fees really matters.

Step 9: Settlement and Payout

After signing, the lender sends the funds either to you or directly to the seller or dealership. This is called settlement, and it usually happens within 1–3 business days after approval. From there, your loan repayments begin based on your selected frequency (monthly, fortnightly, or weekly). Don’t forget to budget for additional costs like comprehensive insurance, registration, and maintenance.

Ready to Apply for a Car Loan and Get Approved?

Don’t waste time guessing what lenders want. Our Brisbane mortgage brokers at Kelly Brothers Finance make the loan application simple and stress-free, so you can focus on finding the right car, not fighting paperwork.

We’ll help you get it right from the start and boost your chances of fast approval. Call (07) 3847 9450 and let’s get your application underway today.

Frequently Asked Questions (FAQs)

What is a good interest rate for a car loan in Australia?

A good car loan interest rate typically sits between 5% and 8%, depending on your financial position, lender, and loan product. Those with a strong credit history or excellent credit score usually qualify for the lowest rate, while those with a bad credit score may face higher offers.

What is the best bank for a car loan?

There’s no single best choice. Major banks like Commonwealth Bank, NAB, and Westpac offer reliable options, but credit unions and online lenders can provide a competitive interest rate with fewer fees. Compare the loan agreements, monthly loan service fee, and available features like a redraw facility to see what fits best.

What are the repayments on a $30,000 car loan?

Use a loan calculator or loan repayments calculator to get an exact figure. For example, with a competitive interest rate of 6.5% over 5 years, expect regular repayments of around $580 per month—though this varies based on loan requirements and your credit profile.

What is the best rule for a car loan?

A popular rule is the 20/4/10: 20% down payment, 4-year loan term, and no more than 10% of your income going toward loan repayments. This keeps your loan deal affordable and protects your overall financial position.

What's the difference between new and used car loans?

New car loans often come with a lower loan rate, better loan approval odds, and longer terms. Used car loans may have slightly higher rates and shorter terms, depending on the car’s age and condition. Some lenders only offer specific loan products based on vehicle type.

Why should you work with a broker for your car loan?

A broker matches your financial position and goals with the right lender, saving time and hassle. They compare loan agreements, know the loan requirements inside out, and help you avoid mistakes, especially if you’re dealing with a bad credit score or need a quick loan approval.

Final Thoughts

Still unsure how to qualify for a car loan in 2025? You're not alone, but it’s easier when you’ve got someone in your corner. 

At Kelly Brothers Finance, we help everyday Aussies figure out exactly what’s needed to get approved and make confident decisions from start to finish.

We’re based in North Brisbane and proudly assist first-time buyers across Greater Brisbane, offering personalised support with no pressure and no jargon. As experienced mortgage brokers, we take the time to understand your needs and match you with the right lender and loan structure.

Call us on (07) 3847 9450 or visit kellybrothersfinance.com.au to book your free consultation and take the first step toward owning your car.