Lady filling up car

Diesel vs Petrol: A car-buying guide

Wondering whether you'll save in the long run with a diesel purchase? Here's what you need to know to make a decision.

Diesel cars have come a long way in recent years. While petrol may have been obvious ten years ago, the introduction of luxury diesel alternatives and improvements in technology have closed the gap. Want to make the right decision for your next car purchase? The guide below outlines all the variables to factor into your decision.

How much will you save?

The main reason people opt for diesel cars is to save money on fuel. However, because diesel cars are usually a few thousand dollars (10-15%) more expensive than their petrol-alternatives, you need to factor that into your purchase decision. Some car companies claim that diesel vehicles use around 30% less fuel than petrol vehicles. This figure will vary depending on the size of the vehicle and how you drive it and in some cases may be closer to the 15-20% mark.

According to a study by the NRMA Motoring & Services, which compared four vehicles with petrol and diesel variants, the vehicles with diesel used 20% less fuel on average. The highest reduction in fuel consumption was from the Holden Epica by 33%. The lowest was the Hyundai Sonata, which saw a fuel consumption reduction of 13%.

Data Source: ABS

What about performance?

Petrol cars are generally more powerful than diesel. However, power isn't everything. Diesel vehicles can deliver a large amount of torque at low revs, so if you're travelling at 1,500 - 2,500rpm you'll power ahead. This makes diesel better for cruising, whereas petrol cars are better for speed.

Higher servicing costs of diesel cars

Diesel vehicles come with notoriously higher costs for servicing and upkeep. These vehicles need diesel-specific oils, filters and coolants that can come with a higher price-tag. According to an RACQ factsheet, a Hyundai i30 Active petrol costs 5.95c per kilometre in services and repairs, while the diesel costs 6.37c per kilometre. If you look at your fuel savings on that same vehicle, the petrol version will cost you 9.49c per km and you'll pay 6.78c per km for diesel. That's a fuel saving of 28.55%.

If you don't maintain a diesel vehicle you can run into a lot of problems, especially with the engine. Diesel cars are much better for drivers of long distances. A diesel engine, if it conforms to the Euro 5 emission standard, will have a filter built-in, and it's only when the car is driven a certain distance will the filter perform effectively. If it doesn't, you'll be feeling the regret with a sizeable mechanic's bill.

Compare a range of car loan options

Rates last updated January 19th, 2019
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
Latitude New and Used Car Loan
From 6.99% (fixed)
1 to 7 years
Finance a range of vehicles including cars, motorbikes, boats and caravans.
Apply online to finance a new or used motor vehicle and receive a response in 90 seconds. You will receive a competitive tailored rate of between 6.99% p.a. to 14.99% p.a.
Beyond Bank Low Rate Car Loan
From 5.69% (fixed)
1 to 7 years
Offset your interest with a Car Budget Account.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
RACV New Car Loans
From 5.99% (fixed)
1 to 7 years
Benefit from 5-hour pre-approval.
A competitive rate car loan from RACV with no monthly fees.
Stratton Finance New Car Loan
From 5.14% (fixed)
1 to 7 years
$457 (for private seller vehicles this fee is $608)
Fixed or variable rates starting from 5.14% p.a.
Apply for up to $100,000 and have up to 7 year(s) to repay. You can use cash or trade in a vehicle to use as a deposit.
IMB New Car Loan
5.89% (fixed)
1 to 7 years
Borrow as little as $2,000 at a competitive fixed rate
Finance a new car up to two years old. Competitive 5.99% p.a. rate available to all approved applicants. - New Car Loan
5.44% (fixed)
3 to 5 years
Optional balloon payment available to reduce your repayments.
A competitive rate car loan suitable for a new cor used car.
Westpac Car Loan
From 8.49% (fixed)
1 to 7 years
Use a new or used car as security.
A flexible loan thats lets you benefit from a car search tool as well as the option to borrow extra for on-road costs.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
1 to 5 years
You'll receive a fixed rate from 8.49% p.a. based on the value of your car
Get a competitive rate and apply for a larger loan up to $80,000 when you attach a new or used car as security to the loan.
People's Choice CU Car Loan
From 5.64% (fixed)
1 to 10 years
You'll receive a fixed rate of 5.64% p.a.
A lower interest rate when you're borrowing over $20,000. Benefit from pre-approval and no monthly fees.
IMB Secured Personal Loan
6.89% (fixed)
1 to 5 years
Secure this loan with a car and use the funds for any purpose.
Competitive 6.89% p.a. rate available to all approved applicants. Loan amounts up to $60,000 available.

Compare up to 4 providers

Questions to ask before you buy

Would you buy the vehicle for that price regardless of the future costs saving?

If you're willing to pay the cost for the car you're getting based on its features and performance, then you're likely to be happy with it as a diesel vehicle.

Are you buying a new or used vehicle?

Diesel vehicles need to be properly maintained over their lifetime to avoid any major mechanical and engine issues. If you're buying secondhand you'll need to make sure it has no problems before you make your purchase.

How far do you drive?

As mentioned in the guide above, how far you drive has an effect on a diesel car's upkeep. If you're driving less than the national average of 15,000 km per year, or eight to ten km per day, then you may not see the fuel savings you're expecting and you may actually be worse off.

Have you secured your finance?

Remember the initial upfront costs may be higher so compare your options before you go car-hunting. Many lenders offer pre-approval so you know how much you have to spend before you buy your car. You can also consider a car loan broker that can find the loan for you.

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Car Loan Offers

Important Information*
Latitude New and Used Car Loan

You'll receive a fixed rate between 6.99% p.a. and 14.99% p.a. based on your risk profile
Apply for a loan from $5,000 to finance a new or used car. Flexible repayments and options to finance a classic car.

Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 5.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

RACV New Car Loans

You'll receive a fixed rate of 5.99% p.a.
A larger loan of $15,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees. Note: Product only available to residents of Victoria.

Stratton Finance New Car Loan

You'll receive a fixed or variable rate depending on the lender you are approved with
Apply for up to $100,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.

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