Car Loans with Debt? Get Approved Fast (2026)

Are you dreaming of driving away in a new car but worried that your existing credit card debt might slam the brakes on your plans? You're not alone. Many Australians face this dilemma, wondering if it's possible to secure a car loan while managing credit card debt. The good news is that it is possible, but there are some important factors to consider. Let's explore how you can navigate this situation and get on the road to your new car.

Understanding Car Loans and Credit Card Debt

Before diving into the specifics, it's essential to understand the nature of car loans and how credit card debt can impact your ability to secure one. A car loan is a type of secured loan specifically designed to help you purchase a vehicle. The loan is typically repaid over a period of 3 to 7 years with fixed monthly payments.

Credit card debt, on the other hand, is unsecured and often comes with higher interest rates. While having credit card debt doesn't automatically disqualify you from getting a car loan, lenders will consider your overall financial situation, including your debt-to-income ratio and credit score, when assessing your application.

Current Car Loan Rates and Requirements in 2026

In 2026, car loan interest rates in Australia range from approximately 6.49% to 12%, depending on various factors such as your credit score, income, and the lender's criteria. Here are some key requirements and options you should be aware of:

Most lenders prefer borrowers with a stable income and a debt-to-income ratio below 40%. If your credit score is above 600, you may have access to more competitive rates.

How to Get a Car Loan with Credit Card Debt

Securing a car loan while managing credit card debt requires careful planning and a strategic approach. Here are steps to help you achieve this:

1. Assess Your Financial Situation: Calculate your total monthly income and expenses. Determine your debt-to-income ratio and understand your credit score. This will give you a clear picture of your financial health.
2. Improve Your Credit Score: If possible, pay down existing credit card debt to improve your credit score. On-time payments and reducing credit utilisation can significantly boost your score.
3. Explore Lender Options: With access to 83+ lenders, Esteb and Co can help you find a lender that fits your financial profile. Different lenders have varying criteria, so it's beneficial to shop around.
4. Consider a Co-Signer: If your credit score is low, having a co-signer with a good credit history can improve your chances of loan approval.
5. Prepare Necessary Documentation: Gather documents like proof of income, tax returns, and bank statements. These will support your application and demonstrate financial stability.
6. Apply for the Loan: Once you've found a suitable lender, submit your application with all the required documents. Be honest about your financial situation to avoid complications later.

Tips and Considerations

Here are some expert tips to enhance your chances of securing a car loan:

• Compare Lenders: Don't settle for the first offer. Use Esteb and Co's extensive panel of 83+ lenders to find the best rates and terms.
• Budget Wisely: Choose a car loan amount that fits comfortably within your budget to avoid financial strain.
• Negotiate Terms: Don't be afraid to negotiate with lenders for better terms or lower interest rates, especially if you have a strong credit profile.
• Stay Informed: Keep abreast of market trends and any changes in interest rates that could affect your loan.
• Focus on Reducing Debt: While managing a car loan, continue to make efforts to pay down credit card debt to improve your financial situation.

Frequently Asked Questions

1. Can I get a car loan with a credit score below 600? While it's more challenging, some lenders may still offer loans, possibly with higher interest rates or additional requirements.
2. How does my credit card utilization affect my loan application? High credit card utilisation can negatively impact your credit score, making you appear riskier to lenders.
3. Is it better to pay off my credit card before applying for a car loan? Paying off or reducing credit card debt can improve your credit score, increasing your chances of loan approval and better rates.
4. What is the impact of a co-signer on my loan application? A co-signer with a strong credit history can enhance your application by providing additional security to the lender.
5. How does Esteb and Co assist with finding car loans? With access to over 83 lenders, Esteb and Co can guide you through the process, helping you compare options and find the most suitable loan.
6. What documents are typically required for a car loan application? You'll need proof of income, identification, credit history, and sometimes proof of residence or employment.
7. Can I refinance my car loan if my financial situation improves? Yes, refinancing is an option if your credit score improves or if market interest rates decrease, potentially lowering your repayments.