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My wife's car recently broke down, and is in need of replacing. My own car is also on its last legs so we intended to purchase something new-ish (2015-2017 model) to get something a little more reliable.

Unfortunate timing has resulted in this happening while my wife is out of work, she therefore counted against me, where I would have had capacity were we not married.

I have a reasonable income (~$65K) and based on our budget could easier afford our living expenses and repayments on a potential $15k loan out of my salary. However when I approached lenders I was informed that I did not have the borrowing capacity for a loan of any amount. I also tried to arrange novated leasing through my employer with similar results.

Several lenders told me this was due to tighter regulations following the Royal Commission into banking. The regulations significantly increased the estimate calculations for cost of living. Some are as much as 3 times my actual expenditure. I have no outstanding loans and have a perfect history of making payments on time.

Clearly I could put the money I would spend on repayments aside for several months until I had enough ready cash to buy a car outright. However, this means surviving for several months with only a single vehicle. I need a vehicle for my commute most days leaving my wife without transport so this is undesirable.

What are my options for obtaining finance for a vehicle in the short term? Failing that, how can I most effectively save to afford a vehicle in the shortest time possible?


Please note, interest rates in Australia are extremely low at the moment and spending more on a newer vehicle will cost less over the next few years then even a single repair on a used vehicle will. Fuel costs are also extremely high so a newer, more fuel efficient vehicle will more than cover the difference in insurance cost.

I have done a full cost breakdown and purchasing something near this price with dealer used car warranty gives us piece of mind and the most practical long term solution without significantly increasing the total cost. Obtaining the up-front payment in the short term is the only issue. Answers solely telling me to not purchase a vehicle are not useful.

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    Do you have more details on why exactly you are rejected a loan? If your budget should be able to carry the repayment as you claim, then that shouldn't be the case. "Royal Commission regulations" are not a sufficient explanation, because those regulations certainly don't say "Nobody gets a car loan under any circumstances". Do you have any outstanding loans? Did you default on any loans in the past? Any conflicts over unpaidbills which might have lead to a bad mark on your credit report? – Philipp Jul 17 at 9:29
  • Does you wife have places to be at exact times, e.g. regularly scheduled work. If not could she (at least temporarily) drop you at work and then keep the car for the day and pick you up? – DJClayworth Jul 17 at 18:18
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    To add on to DJ's comment, ridesharing services are another alternative. The timing belt slipped on my Civic and myself and my girlfriend went 6 months with one car using ridesharing services and dropping each other off. Wasn't the most convenient, but it got the job done. – Steve-o169 Jul 17 at 18:45
  • @Philipp The regulations significantly raised the estimate calculation for cost of living. They estimate my expenditure at ~3 time what it actually it and therefore think I have no capacity. I have no outstanding loans and have never missed a payment for anything in my life. – linksassin Jul 18 at 3:04
  • @DJClayworth The travel distance for my commute (45 minutes each way) makes that impractical. Having a single vehicle is a significant burden on my wife's lifestyle, it also makes attending interviews difficult. – linksassin Jul 18 at 3:06
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Simple. Do not buy that newish vehicle, and do not even try to obtain finance. Instead, buy an older vehicle (of a reliable manufacturer like Honda or Toyota) for whatever cash you have - or even less. Drive it until either your financial situation improves, or it breaks.

While I don't know the Australian used-car market, in the US you can easily find many reliable vehicles for under say $3K (US). Two of them are in my driveway at the moment :-)

  • "I don't know the Australian used-car market" correct, you don't. Vehicles that cheap in australia are more likely to a money pit than a 3-year old vehicle. Driving two vehicles until they broke is exactly what we have done up until this point and it left us in this situation. ~$15k is actually a very reasonable price for a decent second hand vehicle here. – linksassin Jul 18 at 3:03
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    He's right though, if you can't get the money for a newish car, you can't buy a newish car. Buy a bomb and sell it after you can afford the newish car – Fred Stark Jul 18 at 4:39
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    Even in Australia you can find a 10 year-old Yaris with +/- 100000km for about $5000. I have one of those, it's reliable and gas-efficient (not as efficient as a Prius of course, but ~7L/100km in mixed cycles). That qualifies as a decent second-hand, and will last a long time. – njzk2 Jul 18 at 6:06
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    @njzk: Unless there is something wildly different about the cars the Japanese ship to Australia, 100K miles for a Toyota is just nicely broken in. My '88 pickup has close to 300K miles, while the Honda & Mazda are both over 200K. – jamesqf Jul 18 at 17:37
  • @njzk2 A yaris is no where near big enough for our needs. Also most cars have an expensive major service somewhere between 90-120k km. I'd much prefer a single known expense then the ongoing money pit of an older car. – linksassin Jul 19 at 0:35
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Unfortunately, in your situation you will need to take a short term hit before you can access the benefits of a newer more reliable, fuel efficient car.

Specifically you have a few short term options:

  • Your wife uses taxi / ride-sharing to get around while you're at work
  • You buy a cheap car and drive it until you can afford the newer car
  • Hire a car long term. Some providers give decent rates for longer term hires
  • Use a car-sharing service like Car Next Door or Go Get to access a second car when needed (I suspect this is the cheapest, but it depends on your needs)

All of these mean you lose out financially over getting a loan now. But if you can't get a loan, well then you don't have much choice.

If you haven't already, make sure to check smaller banks and credit unions as well. I found for home loans they have different formulas for calculating borrowing capacity, which meant that where the big 4 wouldn't loan to me, smaller banks would.

  • Thankyou for the car share suggestions. That could be a viable alternative. In my experience buying a bomb doesn't save money and just pushes back the date when you can afford a decent car. – linksassin Jul 18 at 5:48
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I would look into getting a loan through services like LendingClub. Qualifying is a lot easier than banks as the loans are funded by their crowd-investor community(myself being one of them) meaning a bunch of non to semi savy investors get to give you money, which are more lenient

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    Keep in mind, though, that such peer to peer loan agreements can often have quite outrageous interest rates. – Philipp Jul 17 at 9:32
  • OP says he has a great income, no outstanding loans, no defaults or late payments, probably superb DTI, so according the Peer to Peer terms i see every day that's a recipe for A rated interest rates which range from 6.5% for A1 to 8.9% for A5. Cursory research on Australia's CANSTAR indicates that 'excellent credit' buyers through NRMA,CUA,Latitude,Westpac, or SocietyOne have rates between 6% and 18%. Your comment(and downvote) is an automatic regurgitation of opinion(not fact) based on the stigma associated with peer to peer lending and your false sense of ivory tower contributor. – dwkd Jul 24 at 5:37

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