Car Loan for 17-Year-Olds? Discover Your Options (2026)

As a 17-year-old eager to hit the road with your first car, you might be wondering if it's possible to secure a car loan at your age. This goal is common among young Australians looking to gain independence and convenience. However, navigating the finance world at 17 can be challenging, especially when it comes to being eligible for a loan. In this guide, we'll explore whether a 17-year-old can get a car loan, what the requirements are, and how you can improve your chances of driving away with your dream car.

Understanding Car Loans for 17-Year-Olds

Car loans are financial products that allow you to borrow money to purchase a vehicle. Typically, these loans are repaid over a set period with interest. However, for individuals under 18, securing a traditional car loan can be complex due to legal and financial regulations.

In Australia, the age of majority is 18, which means individuals under this age are considered minors and have limited legal capacity to enter into contracts. This can be a significant barrier to obtaining a car loan directly. However, there are alternative routes and solutions available for young Australians determined to finance their first car.

Options and Requirements for Car Loans

When it comes to car loans for 17-year-olds, here are some options and the associated requirements you might encounter:

Interest rates for car loans typically range from 6.49% to 12%, depending on the lender and your financial profile. In the case of parental involvement, the parents' credit history and financial situation will significantly influence the terms of the loan.

Steps to Secure a Car Loan at 17

If you're determined to secure a car loan at 17, here are some practical steps you can take to improve your chances:

1. Build a Strong Savings Record: Start a savings plan to demonstrate financial discipline. Consistent deposits into a savings account can prove your commitment and ability to manage money.
2. Seek a Parental Guarantor: Talk to your parents or guardians about co-signing the loan. This involves them taking on the legal responsibility for the loan, so ensure they are comfortable with this arrangement.
3. Research Lenders: Explore options from different lenders. At Esteb and Co, we have access to 83+ lenders, providing a wide range of options that may suit your unique situation.
4. Prepare Necessary Documentation: Gather all required documents, such as identification, proof of income (if applicable), and any savings records.
5. Consider a Secured Loan: If possible, offer collateral to secure a loan. This might require parental assistance but can lead to better terms.
6. Consult a Financial Advisor: Before making any decisions, consider consulting with a financial advisor or a mortgage broker from Esteb and Co to explore the best options tailored to your needs.

Expert Tips and Considerations

Here are some expert tips to keep in mind when pursuing a car loan as a 17-year-old:

• Understand the Risks: Be aware of the financial responsibilities and risks involved, especially if your parents are co-signing. Their credit score will be affected by the loan's performance.
• Start Small: Consider starting with a less expensive vehicle to minimise the loan amount required. This can make repayment more manageable and reduce financial pressure.
• Build Your Credit: Use this opportunity to start building your credit history. Making timely repayments can positively impact your future borrowing potential.
• Stay Informed: Keep up-to-date with the current market conditions. Interest rates and lending criteria can change, impacting your loan options.
• Use a Broker: Utilising a mortgage broker like Esteb and Co can provide valuable insights and access to a broad range of lenders, ensuring you find the best deal possible.

Frequently Asked Questions

1. Can a 17-year-old legally sign a car loan agreement in Australia?
No, individuals under 18 cannot legally sign a loan agreement without a guarantor or co-signer who is over 18.

2. What role does a guarantor play in obtaining a car loan for a minor?
A guarantor, often a parent or guardian, co-signs the loan agreement, sharing the responsibility and risk with the borrower.

3. Are there any lenders that specialise in loans for young drivers?
While there are no lenders specifically targeting 17-year-olds, some lenders might offer flexible terms with a guarantor. Consulting a broker can help identify suitable options.

4. How can I improve my chances of getting a car loan at 17?
Building a strong savings history, having a guarantor, and demonstrating financial responsibility can improve your chances.

5. What is the typical interest rate for a car loan in 2026?
Interest rates generally range from 6.49% to 12%, depending on the lender and the borrower's financial circumstances.

6. Can I use a part-time job as proof of income for a car loan?
Yes, a part-time job can serve as proof of income, especially if consistent and reliable. However, the lender may require additional financial backing, such as a guarantor.

7. Is it better to buy a used car or a new car at 17?
Purchasing a used car may be more financially feasible, requiring a lower loan amount and thus reducing financial strain.