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I have been writing for newspapers, magazines and online publications for over 10 years. My passion is providing, in a way that is easily accessible and digestible to all, the knowledge needed for readers to not only manage their finances, but financ...
I have been writing for newspapers, magazines and online publications for over 10 years. My passion is providing, in a way that is easily accessible and digestible to all, the knowledge needed for readers to not only manage their finances, but financ...
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Candiece Cyrus
I have been writing for newspapers, magazines and online publications for over 10 years. My passion is providing, in a way that is easily accessible and digestible to all, the knowledge needed for readers to not only manage their finances, but financ...
I have been writing for newspapers, magazines and online publications for over 10 years. My passion is providing, in a way that is easily accessible and digestible to all, the knowledge needed for readers to not only manage their finances, but financ...
Former Editor
Editorial note: Forbes Advisor Australia may earn revenue from this story in the manner disclosed here. Read our advice disclaimer here.
Whether you need a reliable set of wheels for the commute, a trusty runaround for the weekly shop, a family-friendly car to pick up the kids from school, or even all three, cars are essential for many Australian households. According to the latest data from Statista, almost 60% of the population owned a passenger vehicle of some kind in 2023, with more than 21 million registered cars on the road.
Cars are also one of our largest expenses. The Australian Automobile Association (AAA) found that in the 2024 March quarter alone, the typical Australian household’s transport costs rose by 4.5%. The increase was predominantly driven by higher up-front costs for new vehicle purchases. In its most recent transport affordability survey for December 2024, the AAA found that costs fell by 0.3% per cent, largely as a result of the easing of fuel costs. Nevertheless, costs remain elevated. By the end of 2019, the Australians spent an average of 13.9% of household income on transport costs. By the end of 2024, it was 16.1%.
Buying a car up-front is also expensive. According to a Drive.com.au‘s 2023 survey the average price for new motor vehicles has risen from $39,790 to $50,161 over the past five years.
Car loans can help cover up-front costs, whether new or used, green (electric/hybrid), or an internal combustion engine (ICE) vehicle. When comparing car loans, it’s important to note the interest rate you’ll be expected to pay, but also whether it’s a fixed or variable rate loan, secured or unsecured.
You’ll also need to check if the lender offers the amount you want to borrow, for the loan term you need. We’ve compared these details, and more, for car loans to find our pick of the best lenders. All allow you to choose between weekly, fortnightly and monthly repayments. You can find our list below, and methodology, with more information on how we determined our top picks.
Note: the below list represents a selection of our top category picks, as chosen by Forbes Advisor Australia’s editors and journalists. The information provided is purely factual and is not intended to imply any recommendation, opinion, or advice about a financial product. Not every product or provider in the marketplace has been reviewed, and the list below is not intended to be exhaustive nor replace your own research or independent financial advice. For more information on how Forbes Advisor ranks and reviews products, including how we identified our top category picks, read the methodology selection below.
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- Featured Partners
- Our Pick Of The Best Car Loans For Australians
- Great Southern Bank Car Loans
- Harmoney Car Loans
- Latitude Financial
- OurMoneyMarket
- Now Finance Car Loans
- CommBank Car Loans
- Move Bank Car Loan
- Loans.com.au
- Queensland Country Bank Car Loan
- Methodology
- What Are The Different Types of Car Loans?
- Should I Apply For a Car Loan?
- How Much Can I Borrow On A Car Loan?
- What Should I Consider When Applying For a Car Loan?
- How Do I Apply For a Car Loan?
- Frequently Asked Questions (FAQs)
Our Pick Of The Best Car Loans For Australians
- Great Southern Bank Car Loans
- Harmoney Car Loans
- Latitude Financial
- OurMoneyMarket
- Now Finance Car Loans
- Macquarie Credit Union
- CommBank Car Loans
- Move Bank Car Loan
- Loans.com.au
- Queensland Country Bank Car Loan
Note that a previous version of this story listed Macquarie Credit Union as one of our top picks. Macquarie has since merged with Regional Australia Bank, and Macquarie’s products have been discontinued. Also note: Rates are current as of April 2, 2025.
Methodology
To find our pick of the best car loans for Australians, Forbes Advisor analysed 21 of the most popular lenders in the country.
Our analysis included comparing the types of loans offered, whether green loans were available as well as standard, and if there’s a choice of secured and unsecured loans; interest rate options (fixed or variable); loan amounts offered; and an in-depth review of each provider’s product disclosure statement (PDS) to evaluate any exclusions and extras.
The loans were compared across the following 14 key data points:
- Loan type: Does the lender offer a choice of car loan, such as standard, green, secured and unsecured? The more choice, the better.
- Interest rate range: What is the starting interest rate for a secured and unsecured car loan?
- Interest rates on new and used cars: Does the lender offer the same interest rates for new and used cars?
- Fixed or variable rate interest: Is the interest rate variable, fixed for the life of the loan or can borrowers choose?
- Comparison rate: What is the true cost to the borrower of servicing the loan? A comparison rate that is less than, or the same as, the interest rate is ideal.
- Loan amounts: How much can people borrow? The wider the range, the better.
- Loan term: What loan terms are available? The wider the range, the better, although we found no lender offered longer than seven years.
- Old or new cars: Can the borrower use the loan to purchase a new or second-hand car? A choice of either is best.
- Fees: Are there any establishment fees or monthly fees, or any other similar costs? If so, how much?
- Extra repayments: Are extra repayments allowed for free, so borrowers can pay off their loans faster?
- Repayment cycle: Can borrowers choose to make repayments, weekly, fortnightly or monthly?
- Green loans: Does the company offer loans designed to cover the purchase of an electric or hybrid vehicle?
- Redraw facility: Can borrowers access funds via redraw, if they make extra repayments?
These variables were compared to determine an overall ranking of each lender. Note that we have not awarded each provider a FA star rating. Interest rates are a vital consideration when shopping around for a car loan, but the rate you will receive from one lender will differ from the next depending on their assessment criteria. Furthermore, your financial situation and credit score may mean that you are slugged an entirely different interest rate from someone borrowing the same amount of money, with the same lender. This made it difficult to objectively differentiate between high-performing providers and so no stars were awarded.
What Are The Different Types of Car Loans?
There are a number of types of car loans and not all providers offer the full range. Deciding which one you need, and finding a lender that can cater to your requirements, is essential.
The main types of car loan are:
Secured: A lender will use the car as security against the money borrowed. This means it can repossess the car if you fail to pay off your loan. A secured loan is often available for newer car purchases and offers lower interest rates than an unsecured loan.
Unsecured: This type of loan does not require the car as security, which poses an increased lending risk to the provider. For this reason, interest rates on unsecured car loans are typically higher. Some unsecured loans are only available for older cars.
Green: Green loans are designed to help finance the purchase of a green vehicle such as an electric or hybrid car. These loans often offer lower interest rates than other types of loan, as a reward for choosing a more environmentally friendly car.
Some lenders may also provide personal loans that can cover the cost of a car. These are loans that can also be used for other purposes, such as to finance a wedding or home improvements.
Should I Apply For a Car Loan?
There is no doubt that cars are expensive, with an estimated 13% of Australians using a car loan to finance the purchase. Whether you should apply for a car loan, or save up for the car, will depend on your personal situation and finances. While the loan can provide immediate access to finance, and a car, in the short term, you’ll need to weigh up the long-term implications of borrowing money as well as the true cost of repaying the loan.
When applying for a loan, the lender will calculate how much you will need to repay including interest, so make sure you’re confident you can meet these repayments. If not, you could find yourself not only owing on the principal of the loan, but interest and fees. You can find information on the various types of fees charged, and the loan’s terms and conditions on the lender’s website.
How Much Can I Borrow On A Car Loan?
Typically, lenders offer a wide range within their minimum and maximum loan amounts, usually between $1,000 and $150,000. Some may offer a minimum $5,000, $10,000 or $15,000 while upper limits tend to be either $75,000, $100,000 or $150,000. Some providers offer higher amounts on their secured loans than on their unsecured loans, but not all.
The amount you will be able to borrow will be based on your credit history and financial situation, which is reflected in your credit report and credit score. You can check how they fare, through a credit agency bureau, before deciding whether to apply for a loan.
Lenders determine whether you will be able to keep up with making repayments in full, and on time, by running a credit check. The check will leave a mark on your credit report, and can be potentially damaging to your credit score, particularly if you apply for credit regularly and are refused. This can make it difficult to apply for credit in the future.
What Should I Consider When Applying For a Car Loan?
In Australia, car loan terms tend to range from one to seven years. When applying for a loan, you will need to decide on a term, depending on how much time you think you’ll need to pay off your loan. Of course, the shorter the loan-term, the less you will pay in interest (and the sooner you will pay it off.)
Establishment Fee
Also known as an application fee, this is a one-off amount that is charged by some lenders to process your loan application. While some lenders waive this fee, others may require anything between $100 to around $500. There may also be a monthly loan service fee of roughly $5 to $15, and a charge to make repayments by BPAY.
Interest Rate vs Comparison Rate
The interest rate for the loan is a vital number to factor into your budget when making repayments. However, even more important is the a loan’s comparison rate. This figure provides a more accurate idea of the true cost of servicing the loan as it includes not only the interest charged, but any administration or ongoing fees.
Fixed vs Variable Rate
A fixed-rate loan allows you to lock in a set interest rate for the duration of your loan term, which can make it easier to budget for your repayments. Conversely, the amount of interest attached to a variable rate loan can fluctuate with the market. While you can end up paying less than expected if it falls, you may find yourself paying more than you can potentially manage if it rises. Lenders may offer both types of rate or either, across their car loans.
How Do I Apply For a Car Loan?
Banks, building societies and dedicated online lenders all offer car loans, with many allowing you to apply online via their respective websites.
To apply for a car loan:
- Compare the type of car loan you need, from as many providers as possible by using their online loan calculators, and reading the information provided in each loan’s PDS.
- Look through the lender’s eligibility criteria—this can differ between lenders—and check your credit score using a credit agency if need be.
- Apply online, over the phone or in-branch with your chosen lender. Applying online is usually the fastest. You may find out if you’ve been approved immediately, though it can take as long as several working days. To avoid delays make sure you submit the required documentation and that it’s up-to-date and accurate. This can include a copy of your passport, proof of income and proof of address.
Data Research: Mia Dunn
Frequently Asked Questions (FAQs)
What is car financing?
If you don’t have the means to pay for a car outright, you may want to consider car financing in one form or another. This includes taking out a car loan, leasing a car or using a 0% purchase credit card. Many Australians also obtain finance through the car dealership from which they purchased the car.
What car loan can I pay off early?
Some lenders charge a fee to make extra repayments or even pay your loan off early. When comparing car loan providers we awarded points to those that allow you to pay down the loan faster without imposing a penalty. These include Great Southern Bank, Harmoney, and Latitude, among others.
Which car loans can I get approved for?
You may want to find out which lenders will most likely approve you for a loan, before going through the application process. The process typically involves the lender running a credit check which can potentially damage your credit score if you are refused the loan.
These days, many lenders have online eligibility checkers on their websites, known as a soft credit check, that give an indication of whether they may approve your application, although approval still isn’t guaranteed.
How to get the best rate on a car loan?
Without a doubt the best way to secure a low rate on a car loan is to start with your credit score. Contact one of Australia’s credit agencies to determine your score so you’re aware of your borrowing power and likelihood of obtaining a competitive interest rate. If your score is low you may wish to delay taking out finance and improve your credit score first. The next step is to shop around for a loan provider that offers the kind of finance you are looking for and has positive reviews on TrustPilot and ProductReview. Wherever possible, fill out the online rate checker on the loan provider’s site—this is a soft credit check and will not affect your credit score—so you can get an idea of the likely interest rate. Also pay attention to the comparison interest rate, which reflects the true cost of the loan once fees are taken into account.
Is dealer finance cheaper than a car loan?
This depends on the dealer and the terms and conditions of your finance. Dealerships act as brokers for buyers so often the loan can work out more expensive than if you had dealt with the loan provider directly. Sometimes a dealer offers lower interest rates than banks or other loan providers, but this is often because borrowers will need to pay a large lump sum—sometimes as high as 30% of the car cost—in one instalment at the end of the repayment period. This one-off final instalment is known as a “balloon payment”. For example: if you buy a $40,000 car with finance from a car dealership, you may need to pay off 70% of the amount in instalments with interest ($28,000), while the remaining $12,000 will be due at the end of the loan term. This suits some customers as they can effectively split the cost between upfront payment and repayments over time (with interest), while for others with less of a deposit, a 100% loan is ideal.
Is a bank or broker better for car loans?
This entirely depends on your situation. If you’re time poor, and don’t mind paying a bit extra for the service, you may prefer to go to a car dealer that can offer a range of loan products. Car dealerships act as a type of broker, so their fee will usually be built into the loan cost. If, however, you have a good relationship already with a bank, and wish to use the same institution for your car loan, it may make more sense to forego dealership finance for your trusted bank.
The information provided by Forbes Advisor is general in nature and for educational purposes only. Any information provided does not consider the personal financial circumstances of readers, such as individual objectives, financial situation or needs. Forbes Advisor does not provide financial product advice and the information we provide is not intended to replace or be relied upon as independent financial advice. Your financial situation is unique and the products and services we review may not be right for your circumstances. Forbes Advisor encourages readers to seek independent expert advice from an authorised financial adviser in relation to their own financial circumstances and investments before making any financial decisions.
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