Compare 40+ car loan options, estimate repayments, and choose the right lender for you.
Are you in the market for a new car – or one that’s new to you? Most Aussies will need to take out a car loan to buy a car. So, what is a car loan? It may seem self-explanatory, but there are many moving parts to a car loan you need to understand if you want to get the best deal. The team at LoanCalculator.com.au have decades of experience in personal finance and car loan broking and have come up with a comprehensive list of tips, tricks, and vital information you should know when approaching car finance and car buying in general.
Compare, find out more, and calculate your repayments for car loans right here – and you don’t have to sign up! You can also apply for a car loan from one of our top 40 Australian car loan lenders.
Car loans are a financial product where consumers and businesses are fronted money from a lender and then pay it back with interest over time. For everyday Australians who cannot afford to pay the full purchase price of a vehicle upfront and living in a country where car ownership is often a necessity, car loans provide a practical solution. People don’t have to wait to save up for a car; and that sum can be eroded by inflation.
Take a look various car loan products, their features, eligibility criteria, and our tips for choosing the right loan that suits your budget and situation.
There’s more than one flavour of car loan – though they all work in a similar fashion: a lump sum payment deposited to you so you may purchase a car, which you pay over a set period with interest. How that interest is calculated how the loan is structured can differ, which effects your repayments.
Secured car loans use the vehicle as collateral, meaning the lender can repossess the car if the borrower defaults. This security typically results in lower interest rates and higher borrowing limits, making secured loans a popular choice for many Australians. Most car loans offered by lenders and banks are secured. Unsecured Car Loans Unsecured car loans do not require the car as collateral, which reduces the risk for the borrower but increases it for the lender. As a result, these loans often come with higher interest rates and lower borrowing limits. Unsecured loans aren’t as common in the car loan market but may be practical if the car itself is old (more than 10+ years.)
Dealer finance is arranged through the car dealership, offering convenience and rapid, on the spot approvals. However, the interest rates may be higher compared to loans from banks or credit unions, so it’s important to compare options carefully – we’ve seen thousands of Australians get burned accepting “0%” or ultra-low dealer finance deals, which use caveats such as a “take it or leave it” sticker price, e.g., no haggling or price negotiating is allowed. It leads to higher prices and unfavourable terms for buyers like yourself.
A novated lease is a three-way agreement between an employer, employee, and a financier. The employee leases the car, and the employer deducts lease payments from the employee’s pre-tax salary, providing potential tax benefits. However, novated leases can be complex and may involve additional fees, and there are different types of novated leases, too! It also depends on whether an employer offers novated leases as part of their employee benefit package.
A chattel mortgage is a business car loan where the borrower takes immediate ownership of the vehicle, but the lender holds a mortgage over it until the loan is fully repaid. This option is popular among business owners due to tax deductions and the ability to claim ownership at the end of the term. A business vehicle is defined as a car or vehicle that’s used at least 50% of the time for business purposes. Personal Loans Personal loans can also be used to finance a car purchase. While they offer flexibility, the interest rates may be higher than those of dedicated car loans, making them less cost-effective for some borrowers. In this context, an unsecured car loan is identical to a personal loan as a bank or lender isn’t taking any kind of asset as a security.
There’s more than one flavour of car loan – though they all work in a similar fashion: a lump sum payment deposited to you so you may purchase a car, which you pay over a set period with interest. How that interest is calculated how the loan is structured can differ, which effects your repayments.
Secured car loans use the vehicle as collateral, meaning the lender can repossess the car if the borrower defaults. This security typically results in lower interest rates and higher borrowing limits, making secured loans a popular choice for many Australians. Most car loans offered by lenders and banks are secured. Unsecured Car Loans Unsecured car loans do not require the car as collateral, which reduces the risk for the borrower but increases it for the lender. As a result, these loans often come with higher interest rates and lower borrowing limits. Unsecured loans aren’t as common in the car loan market but may be practical if the car itself is old (more than 10+ years.)
Dealer finance is arranged through the car dealership, offering convenience and rapid, on the spot approvals. However, the interest rates may be higher compared to loans from banks or credit unions, so it’s important to compare options carefully – we’ve seen thousands of Australians get burned accepting “0%” or ultra-low dealer finance deals, which use caveats such as a “take it or leave it” sticker price, e.g., no haggling or price negotiating is allowed. It leads to higher prices and unfavourable terms for buyers like yourself.
A novated lease is a three-way agreement between an employer, employee, and a financier. The employee leases the car, and the employer deducts lease payments from the employee’s pre-tax salary, providing potential tax benefits. However, novated leases can be complex and may involve additional fees, and there are different types of novated leases, too! It also depends on whether an employer offers novated leases as part of their employee benefit package.
A chattel mortgage is a business car loan where the borrower takes immediate ownership of the vehicle, but the lender holds a mortgage over it until the loan is fully repaid. This option is popular among business owners due to tax deductions and the ability to claim ownership at the end of the term. A business vehicle is defined as a car or vehicle that’s used at least 50% of the time for business purposes. Personal Loans Personal loans can also be used to finance a car purchase. While they offer flexibility, the interest rates may be higher than those of dedicated car loans, making them less cost-effective for some borrowers. In this context, an unsecured car loan is identical to a personal loan as a bank or lender isn’t taking any kind of asset as a security.
There are multiple elements of the credit for a car loan that you need to understand before you can go through the motions and eventually apply for one.
First up are interest rates. Car loans come with price points that vary, often fixed. Fixed rates bring stability, keeping repayments balanced across the loan term. Variable rates, on the other hand, can fluctuate, potentially offering lower rates if market conditions improve. Others on the market will post interest rates as a comparison rate rather than a bare interest rate (more on that below). You’ll also have to work out how long you want the term for.
Loan terms typically range from 12 months to 7 years, though in our experience five years is the standard. Shorter terms mean you will repay more with greater monthly expenses and a diminished total of interest but lower interest to be paid up front, and shorter means higher monthly repayments but higher interest total payments over time. And be on the lookout for fees and charges – they can’t really be avoided! Car loans — which tend to come with high fees like establishment fees, monthly account-keeping fees, early repayment fees, and balloon payments which are large amounts that are paid off at the end of the loan term.
A borrower would be wise to closely review these fees (and more) to understand the total cost of the loan. All of us would be thrilled to have a Porsche, but we have borrowing limits so we don’t borrow the kind of money we can’t repay.
Limits on borrowing vary based on the lenders and the borrower’s finances — most limit themselves to $5,000 to more than $200,000. The minimum loan amount can vary due to personal circumstances. You might calculate on a loan where the fees and charges are added or look for what’s called a comparison rate.
A comparison rate measures just what a loan costs, even with its fees and charges on the way out, as a percentage. This gap between the listed interest rate and their comparison rate could be a result of fees, which would generally equate to higher fixed repayments than the bare interest rate indicates.
Comparison rates help you paint a more complete loan picture, as our example shows:
| Option 1 | Option 2 | |
|---|---|---|
|
Loan Amount |
$40,000 |
$40,000 |
|
Advertised Rate |
7.65% |
8.12% (comparison rate) |
|
Added Fees |
$50/mo. |
None |
|
Loan Term |
5 Years |
5 Years |
|
Monthly Repayment |
$854 |
$813 |
|
Total Interest Paid |
$11,262 |
$8,801 |
As you can see, a higher comparison rate ends up being cheaper overall – $2,461 less interest than the bare interest rate with added fees on top. Keep in mind that weighing up interest rates and comparison rates isn’t a direct comparison, and you’ll need to research how much you’ll owe in fees when considering a car loan product without a comparison rate.
Creditworthiness refers to a borrower’s ability and likelihood to repay debt based on their financial history and current circumstances. In Australia, lenders such as banks, credit unions, and finance companies assess creditworthiness to determine whether to approve a loan, credit card, or other forms of credit, and to set the terms, including interest rates and borrowing limits.
Key Factors in Assessing Creditworthiness
Creditworthiness affects your ability to secure loans, mortgages, credit cards, and or other credit (such as mobile phone contracts) and plays a significant role in car loan applications. It also influences the interest rates and fees you are offered, as well as your borrowing capacity. For example, borrowers with high creditworthiness often qualify for lower interest rates, saving money over the life of a loan. Conversely, poor creditworthiness can lead to loan rejections or higher interest rates, increasing the cost of borrowing.
To improve your creditworthiness:
Understanding and maintaining good creditworthiness is essential for accessing favourable financial products and achieving your long-term financial goals.
Before you apply for a car loan, you will need to assess whether you are eligible for a loan, how much you can borrow, and what documents or proof you need in order to satisfy lender requirements. All this can make your car loan application process as trouble free as possible. Eligibility Criteria To qualify for a car loan in Australia, applicants must satisfy eligibility criteria.
Here is a step-by-step guide to the application process:
Car loan pre-approval is kind of like how it sounds: a conditional approval from a lender showing how much you can borrow, based on an initial assessment of your creditworthiness. In Australia, pre-approval provides clarity on your budget and strengthens your negotiating position when buying a car, whether from a dealer or a private seller.
Multiple pre-approval applications in a short time can negatively impact your credit score, so it’s wise to compare lenders carefully before applying.
Ensure your credit report is accurate and address any issues
Use comparison tools to evaluate interest rates, fees, and loan terms
Prepare proof of income, identification, and details of your financial commitments
Submit your application to your chosen lender and await their decision
Pre-approval is an incredibly helpful solution for buyers who want to buy a car, buying the car to help the consumer feel comfortable with the price and simplifying it. But it’s crucial to check the details and not overcommit yourself to a loan you can’t afford to repay.
|
Borrow from $5,000 to $200,000 |
Car loans available for new and used vehicles |
Flexible loan terms ranging from 12 months to 7 years |
|
Choose from weekly, fortnightly, or monthly repayments to suit your paycycle |
Customised interest rates based on your financials and credit history |
Choose between fixed or variable loan rates |
|
Some loans may allow additional payments without penalty |
Option for a balloon payment at the end to reduce regular repayments |
No upfront deposit required for select customers |
From instant calculations to trusted lender comparisons, we make it simple to find the right loan for your needs.
A good car loan is a car loan that suits your budget and needs. Our car loan experts have examined thousands of car loans into a simple checklist and made sure that you get the best loan our lender panel can offer.
Leverage online tools to compare interest rates, fees, and loan features on your account versus which lenders can give you the best experience for your money.
Get all terms and conditions right, including hidden fees or charges.
Making sure that repayments of loans are within your monthly budget as much as possible to keep it under control
Pre-approval can help you understand your borrowing ability and strengthen your negotiation position when purchasing a car
As of 2025, the Australian car loan market is shaped by several trends: – Interest Rates: Average rates vary depending on the type of loan and lender competition, with some lenders offering competitive deals to attract borrowers.
Lender Competition:
Increased competition among lenders can lead to better loan terms and lower interest rates for borrowers. – Electric Vehicles: There is a growing focus on incentives and specialised loan options for electric and hybrid vehicles, reflecting the shift toward climate friendly transport.
Car Loan Statistics:
In September 2025, car sales grew by 5.1% compared to last year’s. This all follows a recent trend of higher sales, although year-to-date figures remain lower than the previous year. Electric vehicles (EVs) now account for 11.3% of all new car sales, with Chinese manufacturers making up more than two-thirds of the EV market.
State of Car Loan Interest Rates
Based on bank and lender data (October 2025), the rate range to finance Internal Combustion Engine (ICE or petrol/diesel) cars is about 6.49% p.a. (per annum) to 12.99% p.a. with a median rate of 8.49% p.a. The comparison rate ranges from 7.90% p.a. to 14.34% p.a. with a median rate of 9.67%p.a. Thanks to government incentives, BEV (Battery Electric Vehicles) and Hybrid Electric vehicles can see rates as low as 5.99% p.a.
Car Loan Turnaround Times
Owing to the advent of artificial intelligence and integration within finance, car buyers can rest assured that their loan application, provided there are few or no complications with credit scores or documentation, can see their loan conditionally approved within 24-48 hours – even sooner according to some consumer reports. Our top lender panel offers quick approvals, which you can see below.
Remember to use our Car Loan Calculator to estimate repayments before comparing personal loans or business finance options.
You may qualify for better car loan rates when buying a new car, as they’re seen as lower risk. New vehicles usually hold most of their value during the loan term, making them strong collateral for lenders. Cars under two years old are often classed as new, though this varies by lender. Even certified used cars can qualify since they’re refurbished and come with a warranty.
Most cars lose around 20% of their value the moment they leave the dealership.
Secured loans are available for used cars, but age limits often apply. Interest rates tend to be higher, so comparing lenders is essential. For cars over 10 years old, getting approval can be difficult due to depreciation. In such cases, lenders may offer an unsecured personal loan instead. These loans don’t risk repossession but usually come with higher rates and less protection. Missed repayments can still affect your credit score.
Can you pay off your car loan faster? In many cases, yes! Here are a few simple tricks to pay it off quicker and avoid paying for unnecessary interest.
Have a Deposit
Having a deposit of at least 20% can significantly reduce the amount you need to borrow, and shows lenders you have “skin in the game” – it takes a risk burden off their shoulders, and they may reward you with more favourable rates in return. Even a modest deposit can go a long way in reducing how much you pay overall in interest.
Opting for a Balloon Payment
Another way to repay a car loan early is by choosing a shorter loan term with a balloon or residual value payment. A balloon payment is a part of a car loan amount that’s set aside for immediate payment at the end. For instance, if you get approved for a $25,000 car loan at 5% p.a., you can select a 40% balloon payment over three years and pay $284.80 each month. The same loan would cost $471.78 monthly over five years without a balloon payment. However, you’d need to front up with $10,000 to finish it off. This is a substantial amount, especially when you consider you had to borrow $25,000 initially and could lead to more interest if you have to refinance this balance with another personal or unsecured loan.
Rounding Up and Extra Payments
Using the earlier example, a $25,000 car loan at 5% per annum would cost $471.78 monthly over five years. Let’s say you round up to the nearest $50 increment, which is $500 in this case. This will save you roughly $213 in interest and shorten your loan term by three months. You can do this manually by adding the extra amount to your direct debit or ask your lender if they allow such payments without penalty. In secure loan scenarios, this may be tricky – though we’ve seen some lenders be flexible about roundups.
An alternative is to make occasional, one-time payments to reduce your car loan faster. This could come in the form of work bonus money or income tax returns that you use to decrease your overall car loan term.
Boosting Repayment Frequency – The Most Cost-Effective Method
Switching from monthly to fortnightly repayments can erase at least one month extra off your car loan term each year without any additional penalty. This is because you’re making 26 fortnightly payments in a year, which is equivalent to 13 monthly payments. With this method, you’re paying off your car loan with an “extra” month each year using fortnightly repayments. Weekly payments work the same way. Remember, some lenders might not allow weekly or fortnightly repayments; however, most will offer these options when you apply.
Refinancing a Car Loan
If your car loan has high interest due to poor credit but you’ve been diligent with payments without missing any, you might consider applying for a car loan refinance. Car loan refinancing is typically used to lower your interest rate, which can decrease your overall repayments. However, refinancing means taking out another loan to pay off the original one. This means you get to choose your own repayment frequency and term. If your budget allows, aiming to repay your loan in less time will help you reduce total interest. Speak with one of our qualified loan consultants to find out if a car loan refinance with shorter terms fits your situation.
Not keen on a car loan? Perhaps you have bad credit? Here’s what else you can do to get behind a new set of wheels.
Use Savings: Paying for a car in cash avoids interest and debt, but it requires significant upfront funds. This is out of reach for many – which means a car loan is required.
Car Subscription Services: These services offer flexibility and access to a vehicle without the long-term commitment of a loan.
Renting or Leasing: Suitable for short-term needs, renting or leasing a car provides an alternative to traditional financing. – Ridesharing: You may be able to use ridesharing as a means of private transportation, although this can prove costly long-term.
Find clear answers to the most frequently asked questions about car loans.
Borrowing capacity is how much money a lender thinks you can borrow without struggling to pay it back. If you’ve got a high borrowing capacity, you can borrow more. If it’s low, you might only get approved for smaller loan amounts.
Lenders look at your income, expenses, and credit history to work this out.
Our car loan calculator helps you estimate your repayments. You just need three things:
Once you plug in the numbers, it’ll show you:
Yes! Some lenders on our panel may approve car loans for people on pensions or disability payments, but you might need to meet a minimum income requirement. If mainstream lenders knock you back, you could also look at:
An amortisation table is a breakdown of each loan repayment, showing:
It’s usually shown for monthly, fortnightly, or weekly repayments. This table is most accurate for fixed-rate loans, not variable ones
Yes, but it’s tougher. If you’ve got bad credit (a credit score below 600) ,you can still apply for a bad credit car loan, but expect:
Stick to accredited lenders or brokers to avoid scams or unfair deals. If you’re unsure, get financial advice before signing anything.
