Find the right finance to get on the road for less.
If you're looking to buy your first car or even upgrade, a car loan can help you finance your new purchase. A variety of different car loans are available from banks, credit unions and dealerships, and by comparing your options and knowing what features to look for you can get the best deal for what you need. Find out all about new car loans in our guide below.
- Low fixed interest rate
- No ongoing fees
- Borrow from $15,000
100% confidential application
RACV Car Loan Offer
If you are in the market for a new car the RACV Car Loan might be for you.
- Interest rate from: 7.99% p.a.
- Comparison rate: 8.53% p.a.
- Interest rate type: Fixed
- Application fee: $378
- Minimum loan amount: $15,000
Comparison of new car loans
More Car loan comparisons
Need more information? Check out the details in the table below.
|Get into your new car with an interest rate from 9.5% p.a.|
|A fixed rate loan that offers a competitive rate from 13.95% p.a.|
|A loan for your new car from the Royal Automotive Club of Queensland|
|Get into your new car sooner if you're approved from BankSA|
How does a new car loan work?
The majority of new car loans are secured, 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. New car loans don't mean the car has to be bought from a dealership – the majority of lenders will accept a vehicle up to two years old from a dealer or private sale.
When you apply you and your car will need to pass eligibility criteria to be approved. Depending on how strict the lender is, the entire loan amount may need to be used on the car, although some lenders may allow extra to cover the costs that come with buying the car. You then repay the loan over the specified loan term.
What types of new car loans are available?
- Secured car loan.
A secured car loan is a loan when the bank is able to use the new car as security if the borrower defaults on payments. The interest rate is less than that offered for an unsecured loan because there is less risk for the lender.
- Unsecured car loan.
An unsecured 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 the borrower happens to default on the loan repayments, the bank has little power to do anything about it, except send reminders, or when the default becomes serious, send a debt collector to try and obtain the money. The borrower's assets are safe but there is still the potential of the lender taking the borrower to court.
- Variable rate car loan.
The variable rate means the interest rate will fluctuate according to the Reserve Bank of Australia's cash rate while a fixed rate remains for the length of the loan's term. The variable rate might be cheaper now, but it can and will fluctuate with the market interest rates. This means the repayments can increase if the rates go up. The payments may also come down if the rates start to fall.
- Fixed rate car loan.
By comparison, a fixed rate loan might be initially a bit higher than the variable rate, but the borrower has the certainty that the repayments won't change throughout the loan term. If the rates are likely to increase over the next few years, it is possible that the fixed rate may end up being lower than the resulting variable rate.
- Bad Credit Car Loan
If your credit file isn't quite as stellar and you are still in need of a new car, you can consider a bad credit, secured car loan. These loans come with a higher rate of interest due to the increased risk factor. Read on to find out more.
How you can compare the new car loans on this page
Listed below are the key factors you should consider when comparing new car loans.
- Interest rate and comparison rate.
Compare rates to check how competitive a loan is. The comparison rate includes additional costs, such as the application cost of the valuation of the car, fees, legal fees and any other yearly or monthly charges that could be included.
- Other fees and charges.
There are some charges that are excluded from the comparison rate, such as early termination of the loan fees. All other possible charges should be indicated by the loan company before the agreement between the loan company and the borrower is finalised.
- Redraw facility and extra repayments.
These type of extra features that may come with your car loan can help repay your loan earlier than expected. However, be mindful that costs related to redraw fees or early repayment fees and any cost savings including fee waivers are not part of the comparison rate and could have an influence on the loan's overall cost.
- Eligibility and suitability.
Will you be eligible for the loan and does your car meet the criteria set by the lender? You should also check the minimum and maximum loan amounts on offer as well as the loan terms to ensure the loan is right for your needs.
The benefits and drawbacks of a car loan
- It helps you make your new car purchase
- New cars are generally easier to finance, so you could find a lender easily
- The price of the car is often higher than the resale value of the car. This is because all loans attract interest and new cars can lose market value quickly.
Things to look out for about new car loans
- Once a decision has been made to take out a new car loan, it is essential that all the costs associated with the car loan are established with the loan provider. The obvious costs are the interest rates but there are other costs too. These may vary depending on the lender.
- Fixed interest rates are common amongst car loan companies and they will not change throughout the loan period. It is more uncertain choosing a variable interest rate as the loan provider could alter the interest rate at any time depending on the Reserve Bank rates.
- Early repayment fees and redraw fees should be negotiated with the loan provider just in case the borrower's situation changes throughout the loan period.
Frequently asked questions about new car loans
How can I work out my new car loan repayments?
You can use the car loan repayment calculator located on this page.
Do any brands offer pre-approval?
You can find out about pre-approved car loans here.
I’m on a pension, can I still get a loan?
You may still be eligible for a loan from a bank or short-term loan provider. Please take a look at our guide on personal loan for pensioners.