The end of the year brings the end of school for many students and with that, the goal to get their own car. Having their own car can provide young people with access to greater work opportunities, safer and more reliable transport to tertiary education institutions, especially if attending night lectures, and build independence and personal responsibility. But a major drawback to achieving this goal can be securing young driver car loans.
Especially in the current economic conditions, it may be unrealistic to think that a young person or their parents, guardians or other family members would have access to cash to buy a motor vehicle. Leaving the alternative of securing finance to purchase the vehicle.
In our guide to young driver car loans, we cover off on how we may assist with financing options including:- parents or others purchasing the vehicle and taking on the finance; school leaver taking on the car loan with a guarantor; and the prospects for a school leaver taking on finance themselves.
Requirements for Young Driver Car Loans
An important issue to be mindful of is that personal car finance falls under the lending category of Consumer Credit. This sector is regulated by ASIC which stipulates the requirements for applicants and Responsible Lender Guidelines for lenders offering personal loans.
The basic requirements for approval for personal credit include: being over 18 years of age; having employment and income; various forms of identification; and fixed residential address, amongst others. Lenders will also typically require the applicant to have a credit profile which can be checked.
The applicant must provide the lender with their financials for assessment. These documents can include tax returns, bank statements, proof of income and similar. Where a young person can meet these requirements, they may proceed to apply for car loan in their own name. Where they don’t meet these requirements, they may consider other options.
Guarantor Option
A convenient way for individuals of all ages that do not meet application requirements to get source credit is the arrange a guarantor. A guarantor is a person who guarantees the loan. This means, should the borrower default on the loan by failing to meet their repayment obligations, the guarantee is responsible to pay the money owed to the lender.
A parent, guardian, family member or friend that meets the requirements may go guarantor for young driver car loans. Before agreeing to take go guarantor, it can be wise to consider all the responsibilities and risks as outlined at Moneysmart.
Young Driver Car Loans Considerations
Whether applying for a loan as a first-time car loan applicant, with a guarantor, or even if parents or others are taking on finance to provide a vehicle for a school leaver, there are a number of considerations in deciding which is the most suitable way to go.
A first car for a school leaver is typically a second-hand model. Buyers should be aware that there can be differences in finance for new and used vehicles. New vehicles are generally accepted as collateral for a Secured Car Loan. Used cars need to be assessed by lenders as suitable collateral. Where not accepted, an Unsecured Personal Loan can be considered.
Interest rates for new and used car loans can vary. Using a finance calculator may assist in making that buying decision. The loan to value ratio on a used car may not be approved by a lender. This may require the amount be lowered by making a larger deposit.
Vehicles under finance must be insured and the cost of motor vehicle insurance for a young driver also considered.
School leavers may not have the necessary documents to apply for finance and may not have established a credit history for lenders to check.
On the positive side, taking on finance may contribute to good approach to financial responsibility, and provide an opportunity to start building a good creditprofile through meeting repayment commitments.
Services to Secure Young Driver Car Loans
Before discounting one or any of the school leaver car finance options available, speak with our experts and request quotes for consideration. As specialists in motor vehicle financing, Jade Car Loans assists school leavers with options to secure affordable young driver car loans for their first car.
With our extensive lender base, we have access to lenders that approve loans for individuals that do not have a credit history. We select the lender that is best suited to the individual requirements to ensure the best interest rates and workable repayments. In preparation to apply for a car loan, buyers can use our online calculator for rough estimates and to compare new and used car loans. Being mindful that any rate offer is based on an individual assessment of the application.
To discuss your options for young driver car loans and for assistance in securing a workable outcome, contact Jade Car Loans 1300 000 003.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
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