Before you start shopping, it helps to know roughly what you can borrow — it keeps you looking at the right cars and stops you stretching your budget. The honest answer is that your borrowing limit depends on your income, your regular commitments and the loan term, but you can get a solid estimate in a few minutes once you know what lenders actually count.
This guide explains how lenders work out your car loan borrowing capacity, what pushes it up or down, and a worked example you can follow.
What borrowing capacity really means
Your borrowing capacity is the maximum a lender believes you can comfortably repay without financial stress. They do not just look at your salary — they model your surplus: the income left over after living costs and existing debts. That surplus, spread across the loan term, sets your limit.
Two people on the same wage can have very different limits depending on their expenses, dependants and existing repayments.
What lenders count as income
Most lenders will consider:
- PAYG wages and regular overtime
- Self-employment income (often via a business car finance or low-doc pathway)
- Rental income
- Some government benefits and regular allowances
Casual, seasonal or newly-started income can still count, though lenders may apply a discount or want a longer history.
What reduces how much you can borrow
| Factor | Effect on your limit |
|---|---|
| Living expenses (a lender applies a minimum benchmark) | Lower |
| Existing loans, credit cards and buy-now-pay-later | Lower — even unused card limits count |
| Dependants | Lower |
| Short loan term | Lower monthly capacity, but less interest overall |
| A deposit or trade-in | Higher — you borrow less for the same car |
| A strong credit history | Higher — access to better rates and lenders |
Rough guide: income to indicative borrowing
The table below is a very general illustration for a stable PAYG borrower with modest expenses and no major debts, over a five-year term. It is an estimate only — your real figure depends on your full situation.
| Net monthly surplus | Indicative amount you could borrow* |
|---|---|
| $400 | ~$20,000 |
| $600 | ~$30,000 |
| $800 | ~$40,000 |
| $1,000 | ~$50,000 |
*Illustration only, not a quote or an offer of credit. Assumes an example rate and a five-year term; actual borrowing power varies by lender and circumstances.
Worked example
Priya takes home $5,500 a month. After rent, living costs and a $250 phone-and-car-insurance commitment, her assessed surplus is about $900. She has no other loans and a clean credit file. On a five-year term, that surplus supports borrowing in the mid-$40,000s — enough for a quality used SUV with room to spare. If Priya added a $5,000 deposit, she would only need to borrow the balance, leaving more buffer.
Want to borrow more?
If your estimate falls short of the car you want, there are legitimate ways to lift it — reducing card limits, clearing small debts, adding a deposit or choosing the right term. We cover these in detail in 5 proven strategies to increase your car loan borrowing power. It is also worth understanding what lenders look for when approving car finance before you apply.
Get a real number
An online estimate is a starting point — a broker can give you a firm figure across a panel of lenders in one go, without multiple credit enquiries. Explore your options on our car finance page or apply now for a tailored assessment.
Frequently asked questions
How much can I borrow for a car on a $70,000 salary?
As a rough guide, a stable earner on $70,000 with modest expenses and no major debts could often borrow somewhere in the $35,000 to $50,000 range, but the real figure depends on your living costs, existing commitments, deposit and credit history.
Does a deposit increase how much I can borrow?
A deposit does not raise your assessed capacity, but it reduces how much you need to borrow for a given car — so it effectively puts more within reach and can improve your rate.
Do credit card limits affect my car loan?
Yes. Lenders count the limit on your cards, not just the balance, because you could draw on it at any time. Lowering or closing unused cards can lift your borrowing power.
Will checking my borrowing capacity hurt my credit score?
Getting an estimate or speaking to a broker does not affect your score. A formal credit application does leave an enquiry, which is why a broker assessing you once across multiple lenders is better than applying to several yourself.
What loan term should I choose?
A longer term lowers your monthly repayment and can increase how much you can borrow, but you pay more interest overall. A shorter term costs less in total but needs a higher monthly surplus.
Written and reviewed by the Finance Director at Alpha390 Finance.
This article is general information only and does not constitute credit or financial advice. Alpha390 Finance operates under Australian Credit Licence 506065 (Five Tees Pty Ltd). Any rates or figures are examples only and subject to change; a comparison rate warning applies. Lending is subject to approval, lending criteria, terms, conditions and fees.
