Vehicle finance · Brand new cars
Finance for a brand new car.
A new car is the easiest kind of vehicle to lend against — it is known, it is valued in seconds, and nobody has to guess what it has been through. What makes the finance interesting isn't approval. It's the gap between what you owe and what the car is worth in the first couple of years, and whether the dealer's finance offer is really as cheap as the sticker says.
Start here
The thing most new car pages leave out.
A new car falls in value faster in its first years than at any other point in its life. That is not a controversial claim and it is not a reason to buy something else — you are paying for a car nobody has used, a full warranty and the specification you chose. It is simply the shape of the asset, and it deserves a paragraph rather than silence.
It starts to matter once the car is financed. A loan balance comes down on a schedule set by your contract; a car's value comes down on a schedule set by the market. Early on those two lines are rarely in step, and the value line is usually moving faster.
The practical consequence has a name people only hear at the worst possible moment: negative equity. For a period, you can owe more on the loan than the car would fetch if it were sold. Nothing is wrong when that happens — the loan is behaving exactly as written — but it changes what your options are:
- If you want to sell or trade early. The sale doesn't clear the debt. You either pay the difference in cash or roll it into the next loan, and rolling it in means starting the next car already behind.
- If the car is written off or stolen. A comprehensive policy generally pays what the car is worth, not what you owe. Where those differ, the shortfall is still yours, and the car that was covering it is gone.
None of this argues against a new car loan. It argues for structuring one deliberately: a real deposit, a term that isn't stretched further than it needs to be, and clear eyes about a balloon payment if one is on the table, because a balloon holds your balance high for longer and keeps the two lines apart.
There is a category of insurance built for precisely this problem, usually described as gap or shortfall cover. In principle it pays some or all of the difference between a comprehensive insurance payout and what remains owing on the finance. We're not recommending a product and not naming an insurer — cover, exclusions, limits and price differ enormously, and some policies are poor value for what they do. What we will say is that it's a fair question to put to whoever sells you the car and whoever writes your insurance, and worth reading the terms yourself before you decide.
The assessment
What lenders look at.
You, and whether the repayment fits
Income and how steady it is, how long you've been in the role, what you already owe including card limits you never use, and who depends on you. The question is not whether you could make the payment in a good month — it's whether it works across the whole term.
Your credit conduct
Not a score in isolation, but the pattern behind it. Repayments made on time, no cluster of recent applications, and statements that don't show accounts running to empty every fortnight.
The car as security
This is where new works in your favour. A current model with a build date, a VIN and a dealer invoice is unambiguous — there is no history to verify, no odometer to trust and no argument about condition. Straightforward security tends to mean more lenders willing to look.
The showroom offer
Subsidised and "0%" dealer finance, fairly described.
Manufacturers and dealers periodically advertise finance well below what an ordinary lender charges, sometimes at nothing at all. These offers are real. Anyone telling you they are automatically a rip-off is overselling their point.
What is true is that subsidised money costs somebody something, and that cost sits somewhere in the transaction. The two prices in front of you — the price of the car and the price of the finance — are connected. A subsidised deal is often paired with less room to move on the drive-away price, a narrower model or stock selection, or conditions on term and deposit.
So the useful question isn't whether the rate is too good to be true. It's a comparison you can actually run:
| Ask | Why it's the right question |
|---|---|
| What is the drive-away price if I bring my own finance? | This separates the two prices so you can see each one. Ask it plainly, in writing, before the finance conversation starts. |
| What is the drive-away price under the subsidised deal? | If the two prices differ, the difference is part of what the cheap finance is costing you. |
| What is the total I repay under each, over the same term? | Total cost — car plus interest plus fees — is the only fair basis. A weekly figure hides the term, and the term is where the money is. |
| What conditions come attached? | Required deposit, fixed term, a balloon, specific stock, add-ons bundled in. Conditions change the comparison and are easy to miss. |
Run that comparison and the subsidised offer sometimes wins outright — we'll tell you when it has. Sometimes an outside loan plus a sharper negotiated price comes out ahead. Either way, having a genuine alternative in your pocket is the leverage. Walking in with no other option is how people end up accepting whatever is put in front of them.
Showroom conversations tend to migrate towards "what can you afford a week", because almost any car fits almost any budget once the term is long enough or a balloon is parked at the end. Decide what you'll borrow and over how long before you go, and treat the weekly figure as an output of that decision rather than the starting point.
Getting it right
Decisions worth making before you sign.
New car finance is rarely declined for lack of security. It is much more often regretted for how it was structured. Four things carry most of that weight:
- Your deposit. The single most effective response to depreciation. Money in at the start keeps the balance below the car's value sooner and shrinks everything you pay interest on.
- The term. A longer term drops the repayment and raises the total cost, and it keeps you in negative equity longer. Shorter is usually better if the payment is comfortable.
- A balloon or residual. Deferring a chunk of the balance to the end lowers the monthly figure now. It also means a large amount falls due on a date, against a car that will be years older by then. Sometimes sensible, especially where a vehicle earns its keep — never automatic.
- Add-ons rolled into the loan. Paint protection, extended warranties, accessories. Financing them means paying interest on them for years, and none of them adds resale value equal to their price.
What to have ready
Photo ID, recent payslips and bank statements, details of your other commitments, and — once you've chosen — the dealer quote or order form showing the exact vehicle and the drive-away price. If you're trading in, whatever you know about that car and any finance still owing on it.
Common questions
New car finance, answered.
Is a new car easier to finance than a used one?
Generally, yes, and the reason is the security rather than you. A brand new vehicle has a known build date, a verifiable VIN and a value the lender can establish without inspecting anything. There is no service history to chase and no doubt about what it has been through. That simplicity means fewer questions about the car, so the assessment concentrates on your income, your commitments and your credit conduct.
What is negative equity and should I worry about it?
It's the position where the loan balance is higher than the car's market value. On a new car financed with a small deposit it is common early in the term, because value falls quickly at the start while the balance follows the contract. It causes no trouble at all if you keep the car and keep paying. It causes real trouble if you need to sell early or the car is written off, because the debt outlives the asset. A deposit and a sensible term are the two things that shorten the period.
Should I take gap or shortfall insurance?
We can't tell you that, and we won't recommend a product or an insurer. What we can explain is what it's for: bridging the difference between a comprehensive insurance payout and what you still owe if the car is written off or stolen. Whether it's worth the premium depends on your deposit, your term and the policy's actual terms — some are far better value than others. Ask about it, read the exclusions, and don't buy it on the strength of a one-line description at the finance desk.
Is dealer 0% finance a con?
No. Those offers are genuine, and occasionally they're the best deal available. The honest point is that the price of the car and the price of the money are linked, so a subsidised rate often comes with less movement on the drive-away price or with conditions attached. Get the drive-away price you'd be offered using outside finance, get the price under the subsidised deal, and compare the total cost of each over the same term. Sometimes the dealer wins. That's a result you should reach by checking, not by assuming.
How much deposit do I need?
We won't quote a figure, because there isn't a universal one and lenders set their own requirements. What's worth understanding is why a deposit does more on a new car than almost anywhere else: it reduces the amount you pay interest on, and it puts you closer to the car's value from day one, which is exactly where depreciation is working against you. If you're deciding between a bigger car and a bigger deposit, the deposit is usually the better buy.
Should I take a balloon payment to lower my repayments?
Only with your eyes open. A balloon leaves part of the balance sitting at the end of the term, which lowers what you pay each month and raises what you pay overall. It also keeps your balance high against a car that keeps getting older, so the equity gap lasts longer. When the balloon falls due you'll need to pay it, refinance it or sell the car to cover it. There are situations where it's the right call — we'll walk you through yours rather than treating it as a default.
Can I finance the car before I've chosen one?
You can start the conversation and get your own position assessed, which is the part worth doing early. A lender's formal decision ultimately attaches to a specific vehicle, so the last step waits on your order form or quote. Knowing your borrowing position first is still the point — it's what stops the showroom setting your budget for you.
Does talking to you affect my credit score?
No. We check your circumstances against lender criteria before anything is formally lodged, so no enquiry is recorded while we work out where you fit. That's worth knowing, because applying at a dealership and then at two lenders leaves a run of enquiries on your file, and each one makes the next application read slightly worse.
Let's talk
Get your finance sorted before you get to the showroom.
Tell us the car you're considering and what your situation looks like. We'll come back with what it would really cost to borrow, so you have something concrete to hold the dealer's offer against — and if theirs is better, we'll say so.
The Finance Team is the trading name of Online Showroom Pty Ltd, a credit broker rather than a lender, holding Australian Credit Licence 551493. Nothing on this page is an offer of credit. Any repayment or cost figures we discuss with you are estimates prepared for comparison only, and every application is subject to assessment and approval by the lender.
Prefer to get started now?
The online application takes a few minutes and gives a broker what they need to check your position properly. Nothing goes to a lender until you say so.
Apply nowOr use the call back form at the top of this page and we'll come to you.