Personal loan vs car loan? 5 things to think about before you borrow
Planning a renovation, buying a car, or looking to consolidate some debt? We look at some of the essentials for picking the best type of loan.
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Choosing the wrong type of loan can cost you more than you'd expect - not just in interest, but in fees, flexibility, and how long you're paying it off. Personal loans and car loans might seem similar, but there are real differences that affect what you pay and how you borrow.
Here's what to weigh up when comparing personal loans and car loans from NOW Finance.
What can these loans be used for?
Personal loans are generally a more flexible option that can be used for a range of different purposes. In fact, you can often use one loan for multiple purposes.
For example, you might be looking to furnish your apartment or invest in some value-adding renovations. Or maybe you're dreaming of both!
Adult education to boost your career prospects might be on the table. Or if you have existing debt, you might be looking to consolidate it.
You can see a range of personal loan uses on the NOW Finance website.
Car loans (also known as "vehicle loans") as their name suggests, are primarily used for buying cars.
However, NOW Finance Vehicle loans can also be used for buying a range of vehicles, like motorbikes, jetskis, hybrid/EV cars, and more. With a NOW Finance Vehicle Loan, the funds go directly to the seller rather than into your account. That means the full loan must be used for the vehicle purchase itself - it's a more focused borrowing option, in comparison to a personal loan.
The item you're purchasing can be for personal use and may be new or second-hand.
You can see a more detailed breakdown of NOW Finance's loans in the table below.
Personal loans vs Car loans
| NOW Finance Personal Loans | NOW Finance Vehicle Loans | |
|---|---|---|
| Fees | No fees ever No establishment, monthly, missed payment, or early repayment fees - more of your money goes toward your loan. | One-off establishment fee up to $595 Included in your loan. No ongoing fees including no monthly, missed, or early repayment fees. |
| Loan amounts | Borrow from $5,000 to $50,000 unsecured or $15,000 to $100,000 secured | Borrow from $3,000 to $150,000 |
| Loan purpose | Up to 4 purposes per loan Combine things like renovations and a holiday into one loan. | One vehicle per loan Each loan is dedicated to a single vehicle purchase. |
| Loan term | 18 month – 7 years | 18 month – 7 years |
| Interest rates | Fixed interest rates from 5.95% up to 26.95% | Fixed interest rates from 7.59% to 15.39% |
| Comparison rates | Comparison rates from 5.95% up to 26.95% | Comparison rates from 8.43% to 16.29% |
| Repayment period | Weekly or fortnightly | Weekly or fortnightly |
What affects your borrowing power?
Before you submit an application for credit, it's important to determine how much you'll need to borrow and explore your loan options.
Personal loans with NOW Finance allow you to borrow up to $50,000 with an unsecured loan and up to $100,000 with a secured loan.
NOW Finance Vehicle loans can be up to $150,000.
Your own specific borrowing limit is determined by a range of factors, including (but not limited to):
- The stability of your income
- Your current credit rating
- Your living expenses
- Your savings
- Your existing debt (including HECS and HELP)
These will also influence your loan's interest rate (more on that in a moment).
You're able to check your eligibility for a loan with NOW Finance online.
And if you're looking at ways to increase your lending power, you can also find information on the NOW Finance website.
Congratulations, NOW Finance!
NOW Finance was a big winner in the 2026 Finder Awards.
- Winner, Best Unsecured Personal Loan: NOW Finance No Fee Unsecured Personal Loan
- Winner, Best Secured Personal Loan: NOW Finance Secured Personal Loan
Visit NOW Finance
How do interest and fees affect the total cost of the loan?
Whenever you take out any sort of loan, you need to consider the included fees and interest rates.
Some common fees from lenders include:
- Establishment fees
- Early repayment fees
- Ongoing/monthly fees
- Missed payment fees
These need to factor into your budget for repayments.
Similarly, you need to factor interest rates into the overall cost. NOW Finance has a repayment calculator that you can use to estimate costs based on how much you'd like to borrow, and your credit score.
A personal loan with NOW Finance doesn't have any fees. This includes no establishment fees, monthly, missed payment, or early repayment fees.
A vehicle loan with NOW Finance has a one-off establishment fee of up to $595, which is then included in your loan repayments. However, there are no ongoing fees e.g. monthly, missed payment, or early repayment fees.
In terms of interest rates, these will vary from person to person, depending on some of the same factors as your ability to borrow. If you've got a better credit score, you can qualify for a better interest rate on a loan.
Likewise if your credit score isn't as strong, it's worth considering securing your loan with an asset like a car to improve your borrowing power, and chance of approval.
You're able to check your personalised interest rate for both a personal loan and vehicle loan without affecting your credit score on the NOW Finance website.
What sort of repayment period applies?
Repayment periods vary from lender to lender and depend on the type of loan you're applying for and the amount you're borrowing.
The longer the repayment period, the more time you'll have to pay it off and the smaller your repayment amounts will be. However, you'll also pay more in interest over the life of the loan.
Conversely, too short a loan period may mean needing to consolidate debt or refinance down the track as your repayment amounts will be larger. But you'll pay less interest over the life of the loan, meaning your loan will cost less.
NOW Finance offers loan periods ranging from 18 months to 7 years.
You can also make repayments on a weekly or fortnightly basis.
Are there any extra loan features?
Until May 31 2026, when you apply for an eligible NOW Finance Loan through Finder, you can receive up to a $500 VISA Card Reward.
- For loans up to $10,000 you'll get a $100 Gift Card
- For loans $10,001 - $25,000 you'll get a $200 Gift Card
- For loans over $25,000 you'll get a $500 Gift Card
You'll need to submit an application by 31 May 2026 and settle your loan by 14 June 2026.
Offers like this can be a great way to get more for your money when you're applying for a financial service that you were already planning to use.
Explore a range of loans from NOW Finance
Compare other products
We currently don't have that product, but here are others to consider:
How we picked theseNow Finance Group Pty Ltd, ACN 158 703 612 Australian Credit Licence 425142
Eligibility criteria: to be eligible to apply for a NOW Finance loan you must be…
- 18 years or older
- An Australian citizen or permanent resident
- Employed and not on probation. If self-employed, you must have two years of business history. If you're casual, you'll need to be in your position for at least 6 months.
- Have no bankruptcy or unpaid defaults
- Able to provide a valid ID (Australian Passport or current Australian Driver's License)
If you're eligible and submit an application, we also assess your credit history, income and existing financial obligations to ensure the loan is suitable for your situation.
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