New Car Loan Interest Rates Australia
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How we picked theseFinder 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
- You can borrow the funds to buy a new car through a bank, dealership or other finance lender.
- New car loan interest rates in Australia in early 2026 generally range from approximately 5.09% to 9.99% p.a., but can be higher based on your risk profile.
- Often the rate you recieve with depend on your credit history, the type of car (electric vehicles often have lower rates) and whether it's a secured or unsecured loan.
How new car loans work
The majority of new car loan products are secured loans, meaning the lender has the right to repossess the vehicle if you default on your loan. While this is a steep price to pay, it also means you get a lower interest rate. Getting a new car loan doesn't mean you have to buy a car from a dealership – the majority of lenders will accept a vehicle up to two years old from a second-hand car dealer or a private sale.
When you apply, you and your car will need to pass the eligibility criteria. Depending on how strict the lender is, you may need to use the entire loan amount on the car, although some lenders may allow you to borrow some extra money to cover the costs that come with buying a new car. You will need to repay the loan over the pre-agreed loan term.
What will influence my new car loan interest rate?
- Your credit score: Borrowers with good to excellent credit are more likely to get the lowest rates (from around 5.09% p.a.) compared to those with poor credit who may face rates above 15% p.a.
- Type of loan: A secured car loan (where the car is used as collateral) almost always comes with a cheaper rate than an unsecured loan.
- Type of vehicle: Some lenders offer discounts on rates for green cars like electric or hybrid models.
- The lender: Banks, credit unions and online lenders all set their own pricing, so rates can range widely - currently between 5.09% and 20.07% p.a.
- Loan term: Shorter terms often attract lower rates, while longer terms can cost more in interest overall.
Types of new car loans
Secured car loan
With a secured car loan, the bank is able to use the new car as security. That means it has a registered interest in the car and can repossess it if you default on your payments. The interest rate is lower than the rate you would get with an unsecured loan because a lender views it as less risky.
Unsecured car loan
An unsecured car loan works a little differently, as the bank or loan company does not hold the new car you are purchasing or any of your assets as security. If you fail to make your personal loan repayments, the bank has little power to do anything about it, except send reminders. When you've consistently lapsed on repayments, it will send a debt collector to try and obtain the money. Your assets are safe, but the lender could take you to court. In response to the increased risk taken on by the lender, the interest rates are raised when compared with a secured loan.
Bad credit car loan
If your credit report isn't quite as stellar as you'd like and you still want a new car, you should consider a bad credit secured car loan. These loans come with a higher interest rate due to the increased risk factor.
What's the difference between fixed and variable new car loans?
Variable rate car loans
A variable rate means the interest rate can fluctuate. Over the length of your loan your rate might go up or down (or both) depending on market interest rates. This means the repayments you're making at the start of your loan could change, and you need to be sure that you could meet your repayments if rates were to increase.
Fixed rate car loans
Fixed rate loans are usually a bit higher than variable rates, but you know that your repayments won't change throughout the loan term. If rates increase over the next few years, the fixed rate may end up being lower than the resulting variable rate. It's more common to find fixed rate car loans.
How to compare new car loans
When it comes to new car loans, the interest rate only tells part of the story. You're also going to want to:
- Check the comparison rate. Compare new car loan comparison rates and find the lowest option. While your interest rate and comparison rate will be personalised in most cases, the comparison rate includes all fee's included in the loan.
- Watch out for fees. Car loan application and monthly service fees can cost you hundreds of dollars.
- Look for a loan with money-saving features. You can get out of debt faster and save money with a loan that lets you make penalty-free extra repayments. A redraw facility lets you pull out those extra repayments to spend in an emergency.
- Choose a suitable loan length. Also known as loan term, this is how many years it will take to pay off your loan. A longer loan term makes your monthly payments cheaper, but you’ll pay more interest all up.
Did you know
Finder not only helps you find and compare new car loans, but we also have vehicle comparisons. If you still aren't sure about which car you are going to purchase, read our car reviews and compare models against each other.
Pros and cons of a new car loan
- It fills your coffers so you can buy a new car.
- It spreads the cost over several years.
- New cars are generally easier to finance, so you could find a lender without fuss.
- You get a new vehicle, benefiting from improved safety equipment, fuel efficiency, technology and passenger comforts.
- The price of the car is often higher than the resale value of the car. This is because all car loans attracts interest and new cars can lose market value quickly, through depreciation.
Things to look out for with new car loans
- Once you have decided to take out a new car finance, it is essential that you work out all the costs associated with the car loan. The obvious things are the interest rates but there are other charges too. These may vary depending on the lender.
- Fixed interest rates are common among car loan companies and they will not change throughout the loan period. If you choose a variable interest rate, the loan provider could alter the interest rate at any time depending on the Reserve Bank rates.
- You should negotiate early repayment fees and redraw fees with the loan provider just in case your situation changes during the loan period.
Bank loans vs dealership finance
| Bank loan | Car dealership |
|---|---|
| Interest rates won't have a dealership markup. | Dealerships will handle all the paperwork for you. |
| You can get pre-approval so you know the budget you're working with. | They are more likely to consider bad credit applications. |
| You'll have to do the paperwork yourself. | They may advertise more attractive interest rates, but there's a catch... |
| Loans are less likely to have balloon payments. | The catch is that they typically come with residual or balloon payments, where you have to fork out a hefty lump sum. |
How much are Australians borrowing in car loans?
The latest ABS figures show that new car loan values reached a record high in the September 2025 quarter, beating the record from the previous quarter. Australians borrowed more than $4.96bn.
How much are Australians borrowing on average?
Finder's Consumer Sentiment Tracker shows that on average Australians are carrying approximately $12,761 through their car loan.
Source:
Finder's Consumer Sentiment Tracker
What are some new vehicles to consider?
Frequently asked questions about new car loans
Sources
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