What's the lowest car loan interest rate on Finder?
- Right now on Finder, the cheapest car loan rate starts from 5.67% p.a. and is offered by Stratton Finance New Car Loan.
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Finder Score for car loans
To make comparing car loans even easier we came up with the Finder Score. Interest rates, fees and features across 200+ car loan products and 100+ lenders are all weighted and scaled to produce a score out of 10. The higher the score, the more competitive the product.
Key takeaways
- Look for car loans with low interest rates and minimal fees to reduce your overall repayment amount.
- Choose between a secured loan, where the car is used as security for a lower rate, or an unsecured loan, which doesn’t need security but might cost more.
- Check the loan details, like how long you have to pay it back, if there are extra costs for paying it off early, and whether the interest rate can change.
What you should know about advertised low rates on car loans
If you see a low interest rate on a car loan, it’s important to know that's not necessarily how much you'll end up paying.
Lenders will decide your final interest rate based on things like your credit score, the type of car you're buying and how much it costs. Some rates may only apply to certain loan amounts or have other specific criteria you will need to meet.
This means if you're buying a car that is 3 years old and you want to borrow $21,000, you may be paying a higher interest rate than the one you saw advertised.
It's also important to find out whether your car loan has a balloon payment option as this may keep your repayments down month to month, but you'll have to make a lump sum payment at the end.
How your credit score affects your car loan costs 
Lenders set their interest rates based partly on your credit score. Having an excellent credit score (800 or above) means you can get a lower rate on your car loan. A lower score can result in a higher interest rate.
You can check your credit score quicky for free before you look at car loans. If your score is on the lower side, there are steps you can take to improve your credit score.
Example: Residual payments
Simone wanted to borrow $25,000 to buy a new car but didn't want her repayments to be higher than $400 per month. She set her loan term to 5 years to keep her payments at $400 per month, but doing this means she would have a $10,000 balloon payment due at the end of the 5-year term.
She can choose to pay this $10,000 by refinancing her car loan's outstanding balance with her current lender or a new lender. This means she'll have a new $10,000 loan to pay off over the next few years.
She also has the option to trade in her car and buy something else. If her car is worth $15,000 when she trades it in, and she buys another car for $25,000, she'll need a new car loan of $20,000 – $10,000 to pay out the existing loan, and another $10,000 to cover the gap on the new car.
* This is a fictional, but realistic, example.
Comparing 5 vs 7-year loan terms
Let's assume you want to borrow $20,000. Over a 5-year term you might be quoted an 8% p.a. interest rate, but you're offered a 7.5% p.a. rate if you accept a 7-year loan term.
| Low interest loan details | Low option 1 | Loan option 2 |
|---|---|---|
| Loan Amount | $20,000 | $20,000 |
| Loan Term | 5 years | 7 years |
| Interest Rate | 8% | 7.5% |
| Monthly Repayment | $405.53 | $306.77 |
| Total Interest Paid | $4,331.80 | $5,768.68 |
In this example, you're paying 8% p.a. on the 5-year loan term, so your repayments are $405.53 per month. You end up paying $4,331.80 in interest charges over 5 years.
By comparison, if you take the cheaper interest rate at 7.5% over a longer 7-year loan term, your repayments are almost $100 cheaper at $306.77 per month. This can be a very appealing option as it's obviously more budget-friendly. Unfortunately, even with the cheaper interest rate, you end up paying more than $1,436 in additional interest charges.
An option you have is making additional repayments and paying off your low interest rate car loan sooner while letting you take advantage of the cheaper interest rate. It's important that you check if you'll be charged an early repayment fee that wipes out any savings you thought you were getting.
How to find the right low interest rate car loan for you
When searching for a low interest rate car loan, you should consider:
- The age of the car you're buying. Some lenders will only lend to you if you are buying a new car, which is generally considered to be a car under 2 years old. Cars beyond 10 years of age may need to be bought with an unsecured personal loan.
- The interest rate and loan term. Take the time to input your numbers into a good car loan repayment calculator to work out how much you would repay for various loan terms. You might pay less per month with a longer loan term, but ultimately you'll end up paying more in interest. A loan with a balloon payment may be more afforable month-to-month, but again you'll pay more overall.
- Extra fees. Check to see if the loan has any upfront or ongoing fees as these will add to the overall cost of your low interest rate car loan.
- Total cost of repayments. Make sure you look at the whole picture, including application fees, ongoing fees, interest and balloon payments.
Low rate car loan calculator
Your loan details
$
%
$
Overview of your loan
Once the interest only period ends, your estimated repayments will be
(including extra )
Total loan repayments:
Total interest payable:
By making extra monthly repayments of
Your loan term could reduce by:
You could pay less interest, saving:
| Years remaining | Principal remaining |
|---|
Calculator Assumptions: The above calculations are worked out assuming you’re paying off a principal and interest loan where the interest rate remains the same over the life of the loan. The repayment amounts do not take into account any additional fees or charges that may be charged to your loan (e.g. application fees).
Disclaimer: Whilst every effort has been made to ensure the accuracy of this calculator, the results should be used as indication only. They are neither a quote nor a pre-qualification for a loan.
Data: Average car loan interest rates over time (updated October 2026)
What factors influence car loan interest rates?
- The age of the car
- Whether the low rate car loan is secured or unsecured
- Whether the interest rate is fixed or variable
- The loan term
- Whether the loan is full-doc or low-doc
- Your credit history
- If the loan comes with additional features
- If brokerage fees are charged
As the lender will need to be able to recoup its losses by selling the vehicle if you default on a loan, a newer car is usually preferred. New car loans tend to attract lower rates than used car loans. "New cars" are vehicles under 2 years of age.
A secured car loan is going to come at a cheaper interest rate than an unsecured loan. This is simply because the bank is able to use your car as security for a secured loan, meaning they can recoup the costs if you can't meet repayments.
Some banks offer both fixed rate car loans and variable rate car loans. The variable rate offered is usually cheaper than the fixed rate because it might fluctuate throughout the loan term.
There are some lenders out there offering lower rates for longer loan terms. For example, if you agree to extend your loan term up to 7 years instead of taking out a 5-year loan, you could find that your interest rate drops a little. Don't automatically assume that a lower rate will mean a cheaper car loan. It's important to work out your total cost over the entire loan to be sure you're getting the best car loan deal.
If your loan application shows that you have a stable employment history and you can show payslips to verify your income, you're likely to qualify for a low interest rate car loan. However, if you're self-employed and you can't verify your income with payslips or tax returns, it's likely you'll pay a slightly higher rate with a low-doc loan.
If you've seen a really low interest rate car loan advertised but you have a bad credit history, it's likely you won't qualify for those really good rates. Your cheap car loan search will usually be limited to lenders that offer bad credit products.
Some lenders will include extras on top of your loan repayment. These might include loan insurance premium payments, where you're paying for a policy that covers you in the event you can't keep up with repayments. This can increase the amount you have to pay each month but doesn't go towards your car loan balance at all.
If you're getting your low interest rate car loans through a broker or through the finance officer at the car dealership, you might also be expected to pay brokerage fees on top of other finance fees. With some brokers, this can be as much as 4% of the amount you're borrowing.
What else will I be charged for a low interest rate car loan?
Low interest car loans come with a few costs, but each individual loan differs depending on the lender you apply with. Here is a breakdown of some fees to watch out for:
- The establishment fee. This is the cost to set up your low rate car loan. Lenders usually add this cost into your loan amount and you pay it off with the rest of your principal.
- Other monthly fees. These are ongoing fees for maintenance of your account.
- Any early exit or early repayment fees. If you repay your loan early, you may be charged this penalty by the lender to cover the loss of interest.
- Any additional repayment fees. If you make additional repayments, you may be charged a fee by your lender.
- Late payment fees. You will be charged a fee for late and missed payments. Ensure you make your payments on time to avoid this.
5 ways to get a low interest car loan
- Be in stable employment. Changing employers regularly or having irregular work shows a level of instability to your bank and it may worry about your level of risk. Being in a stable job for a good length of time is more attractive to a lender.
- Have a good credit history. You're far more likely to get a good deal and a cheaper car loan if you have a good credit history by meeting repayments on previous debts.
- Offer a deposit. While you can probably take out a loan for the entire purchase price of your car plus fees, paying a deposit may help. You will borrow a smaller amount of money and therefore reduce your repayments.
- Shop around. You should never accept the first low interest car loan offer you see. Always take the time to look around and compare what else is available. Be prepared to ask questions about loan term and whether the rate is fixed or variable.
- Negotiate. Regardless of which lender you approach for your low rate car loan, you can negotiate a discount on your interest rate and ask if the fees can be waived. If you've already done some comparison shopping and you know what other lenders are offering, you can use this information as ammunition to strengthen your negotiations.
Always check what fees are being charged on your loan and wherever possible, ask for them to be reduced. If the broker or finance officer won't reduce them, shop around elsewhere for a better deal. When considering low interest car loans, remember to compare car loan options before you apply.
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