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To help more Australians find the best car loan our money experts analyse 64 car loans every month using a data-driven methodology. This takes into account both car loan fees and interest rates: the lower the better.
To ensure our picks are useful for more borrowers we've created 4 categories:
All our car loan picks come from lenders which have a commercial partnership with Finder. While these are some of the market's most competitive rates there may be more suitable loans on the market for you.
Best car loan for new cars
OurMoneyMarket New Car Loan
6.57% to 18.99%
interest rate
7.19% to 21.78%
comparison rate
6.57% to 18.99%
interest rate
7.19% to 21.78%
comparison rate
What we like about OurMoneyMarket's New Car Loan
This loan has a very low interest rate.
There are no ongoing fees with this loan.
This fixed rate loan won't change during the life of the loan.
What else to consider
This loan has an application fee based on a percentage of the loan size.
Your new vehicle is used as security for the loan.
Your actual interest rate depends on your credit score and other factors.
Want to get the best car loan rate? Improve your credit score
The car loan rate you'll actually get depends on your individual credit score and financial circumstances.
This means the best car loans go to borrowers with high credit scores and minimal debts. Before applying for a car loan it's a good idea to check your credit score.
You can get a better car loan rate by improving your credit score before you apply.
How do I find the best car loan for me?
If the car loans we've picked aren't what you're looking for, you can find a better car loan yourself with 6 simple steps.
1. Compare loans and find a low interest rate
Car loan interest rates vary quite a lot. You could get a loan with an 8.00% interest rate or one with a 12.00% rate. It depends on both the loan and your own circumstances.
Example: Breaking down car loan costs
Loan
A
B
Loan amount
$25,000
$25,000
Interest rate
7.0%
12.0%
Loan term
4 years
4 years
Monthly repayments
$599
$659
Total loan cost (including interest)
$28,736
$31,601
Savings
$2,865 cheaper
N/A
Over 4 years, Loan A would save you well over $2,000 in interest charges.
2. Find the best car loan for your vehicle type
The lowest rate won't help you if you can't use the loan to buy the car you want. Secured car loans use your car as the loan's security. These are ideal for new cars. Lenders won't take an older car as security because it won't hold its value.
If you are buying an older car the best car loan for you is probably an unsecured car loan.
If you're buying an electric vehicle you can probably get a better deal with a green car loan.
3. Look for a loan that allows flexible repayments
The longer it takes to pay off a car loan the more interest you pay. A flexible loan that lets you make extra repayments means you can get out of debt faster. If you can afford it, you could even pay off the loan in one go.
But not every car loan lets you do this. And some charge fees for making extra repayments.
4. Avoid getting hit with lots of ongoing fees
The fees that come with your loan can make a big difference to how much you end up paying. Car loans can have several fees, including monthly service fees and one-off application fees.
Fees don't have to be a deal-breaker, but be sure to factor them in when comparing costs.
5. Choose the right loan term
Car loan terms are often flexible and can last for 1 to 7 years. A shorter loan term means larger monthly repayments. But you pay less interest because you get out of debt faster.
A longer loan term means lower monthly repayments but more interest in the long term. So finding the best car loan term is about striking a balance between affordable monthly repayments and a reasonable repayment term that doesn't cost you too much in interest.
Amount borrowed
Loan Term
Interest paid
Difference
$30,000
3 years
$2,369
$30,000
5 years
$3,968
+$1,599
$30,000
7 years
$5,617
+$3,248
6. Watch out for hidden surprises
If your car loan has a fixed rate then there will be a break fee if you try to pay it off early. Some car loans look good upfront but have a balloon payment at the end that can be very expensive.
What does a good car loan rate look like right now?
While interest rates have risen for home loans, credit cards and savings accounts in the last 2 years, car loans remain remarkably competitive. A borrower with an Excellent credit score who does their research can get a rate around 7%. But if you don't shop around and your credit score is below average, you could end up with a car loan rate above 20%.
The best car loan can look different for every borrower. And lenders change their rates and fees all the time. That's why we review our best car loan picks every month.
Different types of lenders have different benefits and drawbacks too.
Banks
It's easy to apply for a loan if you're already a bank customer.
Manage your accounts in one place.
Flexible loan options and reasonably competitive rates.
Many banks don't offer specialised car loan products.
Not the lowest rates on the market.
Harder to negotiate your rate.
Online lenders
Often have lower rates than banks
Fast online application process
Lack of face-to-face, personalised service
Car finance brokers
Access competitive rates from multiple lenders.
Expert guidance with the whole buying and application process
Specialist lenders for classic cars, imports or bad credit history
Broker charges may apply, and brokers charge fees in different ways.
Some brokers are better than others and have access to more lenders.
Dealership finance
Convenient as the dealer arranges finance when you purchase the car.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification.
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