What is a good interest rate for a car loan in Australia?

By Paige Sutton · · 3 min read
Fact Checked
Happy woman in new car with pet dog

Need a car loan to help you fund your first or next set of wheels? But don’t know what a good interest rate looks like? 

We’re here to help. 

Right now on the Mozo database, the average new car loan rate is 7.44% and the average used car loan rate is 8.16%. So, if you are receiving a rate that is below average then you are getting a solid deal.

What is the best car loan rate available right now? 

By best, we are going to assume you mean lowest. Currently on the Mozo database the lowest car loan interest rates on offer are as follows:

New car loan (excluding green car loans) : 

  • Fixed rates: South West Slopes Credit Union Car Loan – rates from 4.99% p.a. (4.99% p.a. comparison rate*)
  • Variable rates: Community First Bank Car Loan – rates from 5.89% p.a. (7.12% p.a. comparison rate*) - car up to 5 years old. 

Used car loan (excluding green car loans):

  • Fixed rates:  South West Slopes Credit Union Car Loan – rates from 4.99% p.a. (4.99% p.a. comparison rate*)
  • Variable rates: Community First Bank Car Loan – rates from 5.99% p.a. (7.12% p.a. comparison rate*) - car up to 5 years old. 

Green car loans:

  • Fixed rates: Westpac’s Hybrid or Electric Car Loan – rates from 5.49% p.a. (6.70% p.a. comparison rate*)
  • Variable rates: Community First Bank’s Green Car Loan – rates from 5.54% p.a. (6.67% p.a. comparison rate*)

3 tips to getting a low car loan rate 

Getting a low car loan rate can save you money by slashing the amount you pay in interest over the life of the loan. So here’s three ways you can better your chances of securing a competitive rate … 

1. Shop around: By comparing car loans and weighing up different options, you are bettering your chance at finding a competitive rate on a loan that suits you. When shopping around for a car loan, get all the details from interest rates, to fees and repayment features. Be careful though, it’s important that you don’t apply for multiple loans at once as this can put a negative mark on your credit rating. Look at it as window shopping, and only commit to applying to the loan you like best (and are likely to be approved for). 

2. Consider an online lender or smaller bank: While it might seem like the easy option to stick with a big bank when applying for a car loan, by doing that you may not receive a low rate. Right now many credit union, small bank and online loans come with lower rates than those offered by bigger banks. Plus, CommBank and Westpac are the only two of the big four to offer car-specific loans to customers, so there’s more choice if you go with smaller lenders. 

3. Get your credit history in check: Some car loan lenders offer products that come with a risk-based pricing model. Essentially, this means rates are calculated according to an applicant’s credit rating, so the better the credit score the lower the rate. So by ensuring that your credit rating is healthy, you'd better your chance at receiving a lower rate. You can do this by being responsible with your current debt and always making repayments on time. 

Want to compare more car loan options? Head to our car loan comparison table for some other top lenders!