Car loans

When you need a new set of wheels but don’t have 100% of the cash needed to pay for it upfront, a car loan can put you on the road without you having to wait. Check out some of the great deals on offer on this page.

By   |   Updated 13th May 2020

Comparing car loans for $30,000.00 over 5 years

CUA Secured Fixed Car Loan

On CUA's website

CUA Secured Fixed Car Loan

Interest rate

6.79%

Comparison rate

7.16%

Repayment period

5 years

Application fee

$265.00

Monthly repayment

$596.29

Total repayment

$35,777.40

Highlights

  • Loans from $5,000 to $100,000
  • $0 monthly fees
  • $0 early payout fees
  • Unlimited fee-free extra repayments
RateSetter Car Loan - New & Demo Cars

On RateSetter's website

RateSetter Car Loan - New & Demo Cars

Interest rate

From 4.89% (personalised)

Comparison rate

5.44%

Repayment period

5 years

Application fee

From $249.00

Monthly repayment

$569.31

Total repayment

$34,158.60

Highlights

  • Enjoy a low rate that is 100% made for you
  • Apply online in under 10 minutes with your driver’s license and bank details. Enjoy no monthly or early repayment fees
RateSetter Car Loan - Used Cars

On RateSetter's website

RateSetter Car Loan - Used Cars

Interest rate

From 5.29% (personalised)

Comparison rate

5.84%

Repayment period

5 years

Application fee

From $249.00

Monthly repayment

$574.86

Total repayment

$34,491.60

Highlights

  • Enjoy a low rate that is 100% made for you
  • Apply online in under 10 minutes with your driver’s license and bank details. Enjoy no monthly or early repayment fees
RateSetter Car Loan - Refinance

On RateSetter's website

RateSetter Car Loan - Refinance

Interest rate

From 5.29% (personalised)

Comparison rate

5.84%

Repayment period

5 years

Application fee

From $249.00

Monthly repayment

$574.86

Total repayment

$34,491.60

Highlights

  • Enjoy a low rate that is 100% made for you
  • Apply online in under 10 minutes with your driver’s license and bank details. Enjoy no monthly or early repayment fees
IMB New Car Loan

IMB New Car Loan

Interest rate

5.45%

Comparison rate

5.80%

Repayment period

5 years

Application fee

$250.00

Monthly repayment

$577.11

Total repayment

$34,626.60

Highlights

  • Borrow up to $75,000
  • Fixed repayments for easy budgeting
  • Flexible terms from 1 - 7 years

Learn about car loans

Our team share their tops tips for financing a new or used car using a car loan.

  • FAQs

Can I get a car loan to buy a motorbike?

Yes, although you may have fewer loans to choose from than you would if you were buying a car.

Can I get a car loan to buy a used car?

Yes, most lenders offer loans for the purchase of used cars, but you may find it more difficult to get a loan for a car already more than five years old, or a car that will be more than seven years old at the end of the loan term.

Can I get my car loan approved first, before I’ve decided on which car to buy?

Yes, in many cases you will be able to get pre-approval so that you know in advance how much you have to spend.

Do car loans have a fixed or variable interest rate?

You can usually choose to have a car loan with either a fixed interest rate or a variable interest rate.

If you have a fixed interest rate, the interest rate never changes during the life of the loan, and your periodic repayments will always be for the same amount. This can make budgeting easier, but if interest rates generally are declining you will risk locking in a rate that sees you paying more in interest than you would have paid with a variable rate.

If you choose a variable interest rate, the rate can go up or down, usually in response to a change in the Reserve Bank’s cash rate. This can be risky if interest rates generally are rising, and it makes it more difficult to control your finances because your periodic loan repayment amount will change whenever the interest rate changes.

How does a car loan work?

It works in much the same way as any other loan finance. When you want to buy a car but don’t have enough cash to purchase it outright, you can apply to a lender for an advance of enough funds to buy the car. You then repay the loan, plus interest, in periodic instalments (e.g. monthly).

How much can I borrow with a car loan?

The amount you can borrow will typically fall in the range $2,000-$70,000, and will be calculated depending on on a number factors:

  • The purchase price of the car
  • Whether a deposit is required
  • Whether the car is new or used
  • Your income
  • You credit rating
  • Whether the loan is secured or unsecured
  • Any existing borrowings you have

How often will I need to make repayments?

You may be able to choose between weekly, fortnightly or monthly repayments.

Is it a good idea to get a car loan?

A car loan is considered to be a reasonable type of debt, provided you don’t take on more debt than you can afford, because you are acquiring an asset rather than borrowing for something ephemeral, like a holiday. You could also have a very good reason for needing a car, such as assisting in your employment or travelling to your employment.

Is it better to get a car loan direct from the lender or through a car dealership?

You will often get a better interest rate by applying to a lender directly, rather than through a middleman (the car dealer), since the middleman may expect to receive a commission from the lender for introducing the borrower (you) to the finance company (the lender). Alternatively, the dealer may mark up the price of the car you are buying because you are being given help with finance.

What is a car loan residual or balloon payment?

A residual or balloon payment is a one-off lump sum that the borrower agrees to pay at the end of the loan term, in order to reduce the monthly repayments. For example, if the total loan amount was $20,000, the borrower could agree to make a balloon or residual payment of $5,000 at the end of a five-year loan term, which means that only $15,000 of loan principal (plus interest charges on $20,000) would need to be repaid during the first 4 years and 11 months. You would need to compare the sum of your total repayments both with and without the residual payment option, to work out which method was more expensive, and whether it would be worth having lower monthly repayments.

What is included in the regular home loan repayment?

Most home loan repayments include a portion of the home loan principal as well as interest charges. In the early years of a home loan term, interest charges will account for the bulk of the repayment. But the ratio of principal to interest changes as the home loan amount is gradually reduced, so that in the final years the home loan principal accounts for a larger share of the repayments.

Interest-only home loans are an exception. In this case, the repayments only cover the interest charges and the home loan principal does not reduce, either during the entire home loan term or for an agreed number of interest-only years at the beginning of the term.

What is the difference between a car loan’s advertised interest rate and comparison interest rate?

The advertised interest rate is the rate that will actually be applied to the loan principal in order to calculate the amount of interest you must pay.

The comparison rate shows the effective interest rate you would be paying if all the fees associated with the loan (e.g. application fee, account-keeping fee) were instead built into the interest rate. The comparison rate provides a more accurate way of comparing the true cost of two different loans, because the loan with the lower advertised interest rate may cost more in total if it has higher fees attached to it.

What is the standard loan term for a car loan?

The loan term (the period of time allowed for you to repay your loan in full) can vary from 12 months to 10 years, but a typical term would be 3-5 years. You can usually negotiate the loan term with the lender, to suit your budget. For example, if you choose a shorter loan term, your monthly repayment amount will be higher but your total interest cost will be lower. If you choose a longer term, your monthly repayment amount will be lower but your total interest cost will be higher.

What kind of loan is a car loan?

A car loan can be either secured or unsecured.

For a secured loan, the lender takes a charge on an asset (collateral) owned by the borrower. This asset is most often the car being purchased, but it could be another asset, such as the borrower’s house or another car the borrower owns.

The charge on the asset gives the lender a degree of certainty that the loan will be repaid. If the borrower defaults on the loan, the lender could use court proceedings to take possession of the asset and sell it in oder to recover any remaining loan principal, plus interest and costs.

In the case of an unsecured loan, the lender will advance loan funds without taking security over an asset. Unsecured loans typically have higher interest rates and lower loan principal amounts, because they are seen as more risky from the lender’s viewpoint.

What other costs, besides interests, can I expect to pay with a car loan?

Some of the fees you may have to pay include:

  • Loan establishment or application fee (only payable if the application is approved), typically between $100 and $600
  • Monthly account-keeping or administration fee, ranging between $5 and $15 per month
  • Late payment fee, possibly around $20, charged if you don’t make your periodic repayment on time
  • Early exit fee, payable if you want to pay off your loan early (but some lenders will allow you to do this without charging a fee)

Will having a car loan affect my credit rating?

Taking out a car loan, making repayments on time and eventually paying off the loan will help you to build a positive credit history and improve your rating. Adding a car loan to your credit mix will also improve your score if you currently have only credit card debt.

Making an application for a loan has a slight downward impact on your credit score, but your score should recover quickly when you make prompt repayments. However, if you fail to pay on time or default on the loan, you will damage your credit score.

Will I be able to borrow 100% of the car’s purchase price, or do I need a deposit?

Some loan offers will require you to make a deposit towards the cost of a car, while others will let you borrow 100% of the cost. If you have savings, and can release some cash as a deposit without leaving yourself with no emergency funds, it makes sense to borrow less than 100% because the interest rate you can earn on a bank deposit will always be lower than the interest rate you will pay on a car loan.

Will I get a better interest rate by applying for a loan from the bank I do my everyday banking with?

Not necessarily. You should compare offers from a variety of financial institutions competing for your business.

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