When you’re calculating a car loan or comparing car loan interest rates across different lenders, one of the most important factors at play is your credit score. In Australia, your credit score can make a big difference when applying for a loan with a car as security or even for unsecured vehicle finance. Let’s take a look at how your score affects your loan options, what lenders look for, and what you can do to improve your chances of approval.
Why Your Credit Score Matters for Car Loans
Your credit score is a number that reflects your history with credit, including how reliably you’ve paid off debts. It gives lenders insight into how risky it might be to offer you finance.
If you’re applying for a car loan—whether it’s through a dealership, a bank, or a broker—your credit score can:
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Influence the car finance interest rates you’re offered
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Determine whether you’re approved at all
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Affect the total cost when calculating car finance
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Decide your eligibility for different vehicle loan interest rates
Typically, a higher credit score means access to lower interest rates and better terms, while a low score might limit your options or attract higher fees.
Credit Score Ranges in Australia
In Australia, credit scores range between 0 and 1,200 (depending on the credit bureau). Here’s a rough breakdown:
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Excellent: 800–1,200
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Very Good: 700–799
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Good: 625–699
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Average: 550–624
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Below Average: 0–549
If you fall into the ‘Good’ or higher range, you’re more likely to get a better rate when calculating a car loan.
What Lenders Look for When Approving a Car Loan
Lenders don’t just look at your credit score—they assess the whole picture, including:
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Your income and employment status
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Existing debts or financial obligations
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Savings and deposit amount
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The car’s value and age
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Loan type (secured or unsecured)
When calculating car finance, many banks and lenders will favour applicants with a stable income, lower debt-to-income ratio, and a healthy repayment history.
Popular Lenders for Car Loans in Australia
Here’s a look at how some of the big players in the market handle car loan interest rates and approvals:
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Commonwealth Bank Car Loan
Offers flexible repayment options and fast approvals, but strong credit history helps secure better interest rates. -
ANZ Car Loan
Competitive vehicle loan interest rates for borrowers with solid credit and financial stability. -
Westpac Bank Car Loan
Often includes pre-approval, fixed and variable rate options depending on your profile and score. -
St.George Car Finance
Tailored options for both new and used cars; approval depends heavily on your credit history.
How to Improve Your Credit Score Before Applying
Improving your credit score before applying can significantly increase your chances of approval—and reduce how much you pay over the loan term.
Here are a few steps:
- Check your credit report: Visit Equifax or Experian to review your report for any errors.
- Pay off existing debts: Reduce your credit card balances and pay off outstanding loans if possible.
- Make all payments on time: Even utility bills and BNPL repayments count.
- Limit credit applications: Too many loan or credit card applications in a short period can lower your score.
- Keep old accounts open: A longer credit history can help build your score.
Final Thoughts: Credit and Car Loan Approval
Whether you’re applying for your first loan with a car, upgrading to something new, or looking at a new Ford Raptor for work, your credit score can make a world of difference. It doesn’t just influence car loan interest rates—it affects the type of lenders willing to work with you and the long-term cost of your finance.
Before you go ahead and apply, take the time to review your score, compare lenders, and use online calculators to help with calculating car finance tailored to your situation.
