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As many as one in five Australians use a loan to finance their new car purchase and there is a staggering number of different car loans on the market, from banks, credit unions and dealerships. Let us help you by comparing your options and showing you what features to look for, so you can find the best deal for your situation. Discover all about new car loans in our guide below.
Loans.com.au - New and Dealer Used Car Loan
Loans.com.au - New and Dealer Used Car Loan
From
4.67 %p.a.
fixed rate
From
5.22 %p.a.
comparison rate
Early payout available
No monthly ongoing fee
Borrow up to $100,000
100% confidential application
Loans.com.au - New and Dealer Used Car Loan
A competitive fixed rate to purchase a car up to four years old. Option to add on-road costs into loan amount.
The majority of new car loans 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 dealer or from a private sale.
When you apply, you and your car will need to pass 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.
Types of new car loans
Secured car loans With a secured car loan, the bank is able to use the new car as security. That means they have 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 loans 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, or when the default becomes serious, 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 file 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 is the difference between fixed and variable new car loans?
Variable rate car loans
A variable rate means the interest rate will fluctuate (according to the Reserve Bank of Australia's cash rate), while a fixed rate remains the same 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 your repayments can increase if the rates go up. Your payments may also come down if the rates start to fall.
Fixed rate car loans
By comparison, a fixed rate loan might initially be a bit higher than the variable rate, but you know that your repayments won't change throughout the loan term. If the rates increase over the next few years, it is possible that the fixed rate may end up being lower than the resulting variable rate.
How to compare new car loans
Listed below are the key factors you should consider when comparing new car loans.
Interest rate and comparison rate You need to compare rates to check how competitive a loan is. The comparison rate includes additional costs, such as application fees, cost of the car valuation, 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 fees. The loan company should inform you of all possible charges before you finalise your loan agreement.
Redraw facility and extra repayments These extra features can help you 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 new car loan and does your car meet the criteria set by the lender? You should check the minimum and maximum loan amounts on offer as well as the loan terms to ensure the loan is right for your needs.
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.
The benefits and drawbacks 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 loans attract interest and new cars can lose market value quickly, through depreciation.
Most popular new cars in Australia
Still doing your research and not sure which car you are going to purchase? Check out some of the vehicles below. We also have car reviews on Finder which go through the good and the bad of vehicles, to help you make a more informed decision. Below are some best-selling new cars and how much they cost.
Once you have decided to take out a new car loan, 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.
Matt Corke is the head of publishing in Australia for Finder. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time he has survived the dot-com crash and countless Google algorithm updates.
You'll receive a fixed rate of 5.29% p.a. Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
You'll receive a fixed rate from 5.69% p.a. A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
You'll receive a fixed or variable rate depending on the lender you are approved with Apply for up to $250,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
Toyota doesn’t offer home loans so you may be thinking of another lender. Toyota’s has a finance branch that lets you fund vehicle purchases, but interest rates are as advertised.
Hi there,
i been going crazy trying to find out the best finance for my car. Not sure if i should lease or redraw into my home loan. Is there any guidance i can get?
Unfortunately I’m unable to offer you personal advice, as the best finance for your situation will depend on a number of different factors. You can have a read of this page that details the different options that are available and explains how you can compare them.
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i have a home loan with Toyota.So can i get a car loan from them in lo rate as a home loan.
Hi Bayi,
Toyota doesn’t offer home loans so you may be thinking of another lender. Toyota’s has a finance branch that lets you fund vehicle purchases, but interest rates are as advertised.
Hope this helps,
Elizabeth
hi would like to know if i can apply for a loan with centrelink payments
Hi Helen,
Please check out this guide on loans for recipients of centrelink payments
I hope the guide will help.
Cheers
Matt
Hi there,
i been going crazy trying to find out the best finance for my car. Not sure if i should lease or redraw into my home loan. Is there any guidance i can get?
Hi Sam,
Thanks for your question.
Unfortunately I’m unable to offer you personal advice, as the best finance for your situation will depend on a number of different factors. You can have a read of this page that details the different options that are available and explains how you can compare them.
I hope this has helped.
Thanks,
Elizabeth