New car loan

couple buying new car

So you’re getting a car loan for a new car. This is exciting! 

With so many options available to you, it may seem daunting choosing the right lending option for you. However, if you have the car loan basics down-pat you're more likely to snag yourself a ripper deal. 

And that's where we come in. This guide will give you the ins and outs of new car loans, from all things features and fees to applying and making repayments. 

Already know your stuff and want to start looking through car loans right now? Check out our top loans below. 

Car Loan Comparison Table - rates updated daily

Search promoted car loans below or do a full Mozo database search. Advertiser disclosure.
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    New Car Loan

    Including Demo, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    4.67% p.a.
    5.22% p.a.based on $30,000
    over 5 years

    Low fixed car loan rate for purchasing new and demo vehicles from dealers. There is no monthly or ongoing fees and early payout options available. Winner of Mozo's Experts Choice Car Loan 2021 award^.

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    Details
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    Secured Car Loan

    Fixed

    Interest rate
    comparison rate
    Monthly repayment
    4.74% p.a.to 16.01% p.a.
    5.01% p.a.to 16.31% p.a.based on $30,000
    over 5 years

    Low personalised rates, ideal for borrowers with excellent credit. No monthly account fees, no early payout fees, so you can pay off your loan sooner. Borrow between $5,000 and $64,000. Easy online application, receive a response in minutes and approved funds within 24-48 hours!

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    Details
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    Car Loan - Excellent Credit

    Fixed, Unsecured

    Interest rate
    comparison rate
    Monthly repayment
    5.95% p.a.to 19.99% p.a.
    5.95% p.a.to 21.0% p.a.based on $10,000
    over 3 years

    Be rewarded for your good credit history with low rates. Plus there are no ongoing fees and you can pay off your loan with no early repayment penalties. Simply apply online and get a quote in minutes.

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    Details
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    Discounted Green Car Loan

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    5.29% p.a.
    5.56% p.a.based on $30,000
    over 5 years

    Bank First Green Loan offers low Car Loan rates to reward you for purchasing a lower emissions vehicle. Free redraw, flexible repayments and no monthly fees.

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    Details
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    Car Loan

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.
    5.65% p.a.based on $30,000
    over 5 years

    Available for all New and Used cars. A quick and easy, 100% online application with loans up to $75,000. No printing. No paper. No fuss. No monthly account keeping fees, no exit fees and no early repayment fees.

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    Details

What features should I expect in a new car loan? 

Interest rate - it probably wouldn’t surprise you if you found interest rates relatively low when shopping direct from a dealer. But it usually means that there’s little room to move when it comes to negotiating the price of your new car. 

So the question is, will your repayments work out better if you secure a car or personal loan with a lender independent of the dealership? And the answer is, mostly yes.

But this is something you need to research. Since a car loan lasts anywhere between 1 to 10 years, the difference between percentages and car prices could mean you either save or spend thousands of dollars. So do your homework! 

Something else you need to consider: either a fixed or variable rate. A fixed rate means you get to budget your repayments every month at the same time for the period you have the loan for. Alternatively a variable rate might change, meaning it could go up or down as the market changes. Want to check out how car loan rates are right now, see for yourself on our Car Loans Interest Rates page. 

Security - did you know that if you actually put the new car you’re buying as security on your car loan, the rate you pay will be less than if it was an unsecured loan? 

Ultimately this is a safety blanket for the bank in case you default on your repayments. And, having your house as security on the car loan is probably not a good idea. Do you really want to be forced to sell your home for the sake of saving your car? Probably not. 

Term - this usually refers to the length of time you decide to take your loan out for. Some lenders offer a minimum of 1 year, others offer a minimum of 3. However, many car loans are taken out over a 5, up to a 10 year period. This is so that you can stretch out your monthly budget dollars further, despite the fact that in the long run, you’ll be paying more in interest. It’s just a little room to breathe while tackling your loan at a good pace. 

Application fees - not every dealership or lender charges for application fees. But some do. These costs can range anywhere from $0 to over $900, and you have to pay it straight off the bat. At the end of the day, if you can avoid this fee it's a plus, but a lower interest rate might come with a high application fee, so it's all about doing the sums and finding what will save you more. 

Repayments - you guessed it! It’s one thing to be approved for a car loan, but the reality of the loan is repaying it.

Ask yourself, can I afford the regular increments? A fixed rate allows you for better monthly budgeting, but it really depends on you, your personal situation and what you prefer. If you want to  check out how much your repayment might be on a potential car loan, try Mozo’s car loan repayments calculator

REMEMBER: Don’t think you can miss a payment here and there either. If you miss a payment, you may be charged a late payment fee, plus you risk a strike against your credit history. Bottom line? Make all your repayments on time. Every single one of them. 

Additional repayments - are you aware that some lenders allow you to make extra repayments on your car loan? And at no extra cost? This means that you can shorten the length of time you need to repay the loan, which may even save you money in the long run. Great, huh?

But triple check this. Not every lender allows you to pay extra or even payoff your loan earlier without a cost. 

On-road costs - with any luck, your dealer will absorb the costs for you. In most cases, the on-road costs are incorporated in the sale and price of the car so that you don’t have to worry about it when you receive your car. This means everything from registration of your vehicle, new number plate, CTP greenslip and more will be all sorted. 

Insurance - if you haven’t already thought about it, you’ll need more than just your car loan repayments. Apart from your compulsory CTP insurance, you’ll need to consider regular car insurance payments for your actual vehicle because you never know when or if you’ll ever be involved in a prang. Don’t take the risk! 

Applying for a new car loan - what you need 

Home, business, car? It really doesn't matter what kind loan you apply for - the application process is almost identical for each. This is what you’ll need: 

Proof of income - you’ll need to pull out the last financial year’s tax return. And depending on the lender, you may need to provide the last two years. If you’re earning more this year though, a few month’s payslips or invoices that you’ve sent out (if you’re a contractor) may help too. 

Australian citizenship - or at the very least, permanent residence. It just means that the lender has more confidence and trust that you’re staying put and not going to run away while incurring a whole lotta debt. You’ll need to provide proof of residency and preferably have an Australian address. 

Awesome credit rating - what defines awesome? How about paying your bills on time! So if you’ve mostly paid all your utilities, credit card and any other loan repayments on time, then you should be ok. 

Other ID 

You may think you’ve provided enough identification already, but there’s more needed. Every lender has different requirements, so you’ll need to be on standby all or a combination of anything from: 

  • bank statements 
  • credit cards 
  • passport 
  • driver’s license or proof of age card 
  • medicare card 
  • birth certificate. 

Car Loan Repayments - just a recap 

Whether you take out a personal loan at your local bank or a car loan with your dealership, you’re going to have to think about the following: 

  • How long do I want to term to be? 1, 3 or 5 years? Or more?
  • Will I use my new car as security for a lower rate or opt for an unsecured loan at a higher rate? 
  • Will I be penalised for additional payments or finalising the loan quicker than the end date? 
  • Do the repayments fit my monthly budget? What if I lose my regular income and struggle to make repayments? I need a backup plan. 

Tip: To avoid unnecessary fees on late payments, set a reminder on your smart device or diary. You’re even better off setting up auto repayments with your bank so that you don’t ever forget or distracted by everyday life. Set and forget, we say!

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