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If you’re considering a car loan, one main question stands out – how much can I borrow? This is a big question that depends on your individual circumstances and can also depend on the lender.

At People’s Choice, we offer an unsecured personal loan from $2,000 and up to $40,000, plus we offer a secured personal loan from $20,000. If you’re unsure of the difference between secured and unsecured car loans, we recommend you read this article first.

Borrowing power

In a nutshell, your borrowing power is how much money a lender is willing to lend you. Among other things, your borrowing power depends on factors such as your income, expenses, assets and liabilities (like credit card or HECS debt).

When you’re applying for a car loan, your lender will assess how much you can afford to repay and determine if the loan meets your needs before they can approve your application.

Calculating your borrowing power shows how much you can afford to pay back in regular repayments from your remaining income, after expenses and liabilities are taken out. Knowing this will help you understand how manageable it’ll be if your car loan is approved. The loan term determines how long you may have the financial commitment for, and also needs to be taken into consideration. Your lender will also consider the interest rate and any associated fees and charges when they work out your car loan repayments.

Use our calculators

Our personal loan calculator can help you get an easy estimate of what your car loan repayments will look like. The calculator can help you work out your repayments by adjusting your interest rate, loan amount, repayment frequency, and loan term. It can also help you work out the amount of time and interest you could save if you make extra car loan repayments.

Our budget tracker can help give you a clearer picture of where your money is going, how much you can put into savings every week, plus how much you can afford to repay if you got a car loan.

Do I need a deposit for a car loan?

You don’t necessarily need a deposit for a car loan, but it may be helpful. Depending on the lender, having a deposit may give you access to more competitive interest rates. This is because having a deposit will positively impact your Loan to Value Ratio (LVR).

LVR is the amount of money you’re borrowing to buy a car, compared to its total value. If you save a large deposit and borrow as little as possible — you can aim for the lower LVR too. A lower LVR may help in obtaining a lower interest rate.

Every loan is a commitment, so if you’re not sure if getting a car loan is the right decision for you, feel free to get in touch with us for some personalised help. If you’re ready to apply for a car loan, you can check out our personal loans and apply online today. We have pre-approval available which is valid for 90 days.

Thinking of a loan to finance your new car? Take a look at our personal loans and find the right one for you!

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