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Car Finance Explained

2025-08-01

We know car finance isn’t as exciting as buying a car, but it’s important to understand how it works so you can make the best decision.

What types of documents do I need to take out car finance?

Make sure you bring the following when applying:

Proof of Identity

PRIMARY

Please bring BOTH of the following:

Driver’s license – at least one person on the finance application

Passport or Proof of age card

SECONDARY

Bring ONE of the following:

Valid Medicare card

Credit/Debit card

Veteran card

Proof of Income

EMPLOYED

Please bring ALL of the following:

Pay slip including year to date summary (unless Jul/Aug)

3 x consecutive payslips (if no YTD or Jul/Aug)

Employment contract and 3 months bank statement (if recently started)

SELF-EMPLOYED

Bring BOTH of the following :

Tax Return

Business Financials

Proof of Residence

Please bring one of the following:

Home Owner/Buyer

Rates notice

Renting

Tenancy Agreement

Boarding or Living with Parents

Proof of address

Understanding of monthly expenses

You will be asked about your current monthly expenses. It is best to be prepared with a list of your monthly expenses.

When’s the best time to organise car finance?

Knowing your budget is important when buying a car, however you don’t need to have your finance agreed until you have agreed the car model, accessories and cost.

What’s a credit score?

Your credit score is a number on file that all lenders will look at when deciding how risky you are as a borrower. The better your score (or higher the number), the more lenders will trust you’ll repay the loan, so you can negotiate a lower interest rate.

What’s the difference between a secured and unsecured loan?

A secured loan uses your asset (the car) as collateral. The car is security that you will make the repayments.

More Frequently asked Questions

What do I need to consider when organising finance?

Working out what’s right for you will depend on a number of factors. For example, how long you plan to keep the car, how much you want to spend up front, how much you can afford per week/month and whether you would like a balloon payment (final end of term payment). Ensure you work out your monthly budget. For example, how much you currently spend per month on general living expenses (e.g. groceries, clothes, utilities, insurance, vehicle/transport etc.) and other liabilities (e.g. credit cards, housing, and any other loans). You will need to know all your monthly expenses when applying for finance.

Are there different rules for finance in dealerships compared to banks or credit unions?

What’s the difference between getting car finance at a dealership; a personal loan; or adding a car to my home loan?

Car finance is a type of personal loan used for buying a car. Over the life of that loan – which is generally about 1-5 years – you’re paying interest on the amount that you borrow. As car finance at a dealership is usually a secured loan, the interest rates are highly competitive. Alternatively, personal loans are usually not secure and have higher interest rates. Home loans have lower interest rates but withdrawing on a home loan will mean you are paying interest on the life of that loan. In some instances this could mean paying the loan off over 20-30 years, resulting in a lot more interest being paid.

We are here to help

With a choice of vehicle finance solutions from New Town Toyota, you can enjoy driving away with the right car loan for you. If you're looking for a new or pre-owned vehicle we offer a variety of great loan options to get you into your new car sooner than you think. We offer options for both personal and business finance.