Do I Need a Deposit For My Car Loan?

If you're considering a car loan to pay for your next car, you may be wondering how much of a deposit you may need - or if you even need a deposit at all.


Unlike a home loan, you don't automatically need to provide a deposit for a car loan.

As a general rule, you may be asked to provide a deposit if you:

  • Don't have any credit history
  • Have negative equity on your current car (you owe more on a loan for your existing car than it is worth)
  • Have bad credit history

We've explained these scenarios in more detail below.

Still not sure?

Contact a stratton consultant. Every day we help people compare a range of finance options to find one that best suits their unique circumstances. We'll be able to explain your options in just a few minutes.

Call 1300 STRATTON (1300 787 288) to speak with a stratton consultant, click here for an online enquiry or click here for an online quote before you get started.

Here are some detailed examples of when you'd need to pay a deposit on your car loan.

Don't have credit history

If you've never had finance before, chances are you'll need to pay a deposit. Here's why:
All finance providers put a price on risk. As a customer with no finance history, the lender isn't able to look at your history of loan repayments to judge your track record. They don't know that you will pay back your loan without having any defaults, so they'll typically ask for a deposit on the loan to offset the perceived risk of lending to you.

The good news: you have options.

If you're under the age of 30, ask your stratton consultant about our 'First Car Buyer' loan. It's a special no-deposit loan option that lets you get in your new car straight away, while working toward building a positive credit history for the future.

Have negative equity on your current car

If you've taken out a loan to buy a car, and the value of the asset has since fallen below the outstanding balance of the loan, you're considered to be in negative equity. This can happen when the value of your car is dropping faster than the payout amount of the loan, your vehicle is destroyed without sufficient insurance, or you paid more for the car than it was worth.

If you're planning to buy a new car but have negative equity on another asset, its likely you will be asked for a deposit on your car loan. The good news is stratton has options that can work to structure a loan with negative equity and no deposit.

Have bad credit history

As with negative equity and no credit history, lenders will look to compensate for any risk when lending money to you. If your credit history shows that you have failed to repay loans in full or have gone bankrupt, banks and finance companies will be less willing to lend you money without a deposit to offset the risk. In other words, you should expect you'll be asked for a deposit.

Want to know more about what information is on your credit report? Check out our step-by-step guide to Credit Reports.

What about deposits on a Chattel Mortgage, Car Lease or Novated Lease?

This advice generally applies to other types of car finance too, such as Chattel Mortgages. Car Leases and Novated Leases have their own rules, however. To find out more, visit our information pages on Novated Leasing and Car Leasing.

Does the requirement for a deposit vary by lender?

Yes. Our lenders have no deposit options, so even if you have negative equity or no credit history we may still be able to find you a loan with minimal or no deposit, if that's what you are after. As these applications are assessed on a case-by-case basis, the easiest way to get started is a call to speak with a stratton consultant.

To find out whether or not you will need a deposit for your loan, or if you are looking to find a minimal or low deposit option, give us a call on 1300 STRATTON (1300 787 288) or get an online quote before you get started.