How old is too old to get a loan?

Asset finance is a popular means of acquiring assets such as cars, machinery, or equipment in Australia. It offers individuals and businesses the opportunity to obtain essential assets without the burden of upfront payments.

However, it's important to note that there are age restrictions in place when it comes to asset finance. These restrictions can vary depending on the type of asset and the lender.

In this blog post, we will explore the age restrictions for asset finance, why they exist, and what options are available for individuals who may not meet these age requirements.

Age Restrictions for Asset Finance

1. Personal Loans for Assets: When it comes to obtaining asset finance through personal loans, many lenders in Australia have age restrictions. Generally, borrowers must be at least 18 years old to apply for a personal loan. However, some lenders may set their own minimum age requirement, often around 21 or 23 years old.
2. Car Finance: Car finance is one of the most common forms of asset finance. To finance a car in Australia, you usually need to be at least 17 years old, as this is the legal driving age. Some lenders may also have maximum age restrictions, typically around 65 to 70 years old, which can affect the term of the loan.
3. Business Asset Finance: Businesses looking to acquire assets through financing may also encounter age restrictions. Lenders typically require business owners or directors to be of legal age, which is 18 years old. Additionally, some lenders may set maximum age limits, often around 65 to 75 years old.

Reasons for Age Restrictions

Age restrictions in asset finance exist for several reasons:

1. Legal Capacity: Borrowers must have the legal capacity to enter a financial contract. In Australia, this capacity is generally recognised at 18 years old.
2. Repayment Capacity: Lenders assess borrowers' ability to repay loans. Age can be a factor because younger individuals may not have a stable income or credit history.
3. Asset Lifecycle: The age of the borrower can impact the useful life of the asset. Lenders want to ensure that the borrower will be able to use the asset for the duration of the loan.

Options for Individuals who Don't Meet Age Requirements

If you don't meet the age requirements for asset finance, there are still options available:

1. Co-signer or Guarantor: If you're younger than the required age, you may consider having a co-signer or guarantor who meets the age criteria and has a stable financial history. This can increase your chances of approval.
2. Build Credit History: Younger borrowers can work on building their credit history by using credit responsibly and making timely payments on existing financial obligations. A good credit history can help in obtaining asset finance in the future.
3. Explore Alternative Financing: In some cases, you may find alternative financing options that don't have strict age restrictions. These may include lease agreements or asset rentals.
4. Seek Advice: Consult with financial advisors or lenders who specialize in working with younger borrowers. They may be able to provide guidance and tailored solutions.

Age restrictions for asset finance in Australia are in place to ensure that borrowers have the legal capacity and financial stability to manage their loans effectively. While these restrictions can pose challenges for younger individuals, there are alternative options and strategies available to help them access asset finance.

It's important to carefully research lenders, seek advice, and consider your financial situation before pursuing asset finance to make informed decisions that align with your goals and circumstances.