It’s been relatively quiet in the car loans interest rates space as we move into 2022. Over the final months of 2021, only a handful of lenders made adjustments to their car loan offerings with some increases and decreases across both new and used options. However, with the RBA potentially increasing its cash rate this year, we could see more car loan rate increases throughout 2022.
Because of the lack of recent changes made to car loan interest rates, the top rates in the Mozo database have remained unchanged in January. For new car loans, Northern Inland Credit Union offers the lowest variable rate option with its New Car Loan at 3.99% p.a. (4.58% p.a. comparison rate*) and loans.com.au offers the lowest fixed rate at 3.99% p.a. (4.53% p.a. comparison rate*) on its New Car Loan. Meanwhile, Queensland Country Bank offers the lowest used car variable rate on its New Car Loan (New or Demo) at 3.99% p.a. (4.52% p.a. comparison rate*).
Online lender loans.com.au has both the lowest used car fixed rate with its Used Car Loan (Fixed) at 3.99% p.a. (4.53% p.a. comparison rate*) and the most competitive green car loan rater for its Clean Green Car Loan at 3.29% p.a. (3.84% p.a. comparison rate*) fixed.
Peter has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.
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Latest car loan interest rates on Mozo - last updated 26 January 2022
Search promoted car loans below or do a full Mozo database search.Advertiser disclosure.
New Car Loan
Home Owner Discount, Including Demo, Fixed, Secured
Interest rate
comparison rate
Monthly repayment
3.99% p.a.
4.53% p.a.based on $30,000 over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 3.99% would cost $33,541.62 including fees.
Eligible for homeowners only. 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^.
Home Owner Discount, Dealer Only, Up to 5 years old, Fixed, Secured
Interest rate
comparison rate
Monthly repayment
3.99% p.a.
4.53% p.a.based on $30,000 over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 3.99% would cost $33,541.62 including fees.
Eligible for homeowners only. 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^.
5.01% p.a.to 16.95% p.a.based on $30,000 over 5 years
Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 4.74% would cost $34,359.23 including fees.
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!
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.99% would cost $34,359.97 including fees.
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^.
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.35% would cost $34,507.61 including fees.
Available for all New and Used cars up to 7 years. 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.
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.99% would cost $35,785.67 including fees.
Check your car loan rate in under 3 mins with no impact to your credit score. Borrow from $5,000 with flexible repayment options. Apply for your loan in 10 minutes and get a response in 60 seconds. Money will be available in 48 hours once settled. Extra repayments allowed.
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,377.58 including fees.
Purchase or refinance a new or used vehicle, up to five years old. Choose a loan term from one to seven years. To be eligible you must be over 18, receiving a regular income and an Australian resident.
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.29% would cost $33,785.83 including fees.
No monthly or ongoing fees. Get a 0.70% discount on your car loan interest rate if you buy a qualifying green car. Winner of Mozo's Experts Choice Green Car Loan 2021 award^.
6.45% p.a.to 11.71% p.a.based on $10,000 over 3 years
Terms from 2 to 5 years. Representative example: a 3 year $10,000 loan at 6.45% would cost $11,620.45 including fees.
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.
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 9.99% would cost $39,230.82 including fees.
Check your car loan rate in under 3 mins with no impact to your credit score. Borrow from $5,000 with flexible repayment options. Apply for your loan in 10 minutes and get a response in 60 seconds. Money will be available in 48 hours once settled. Extra repayments allowed.
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.
Car loan lenders we compare at Mozo
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Car loan interest rates are set by the lender, but they are based on the official cash rate set by the Reserve Bank of Australia (RBA).
Each month the RBA meets and announces whether they have increased, decreased or kept the official cash rate steady. Changes to the rate may be a result of things like inflation, employment stats, economic growth and spending. Simply put, higher rates slow borrowing, economic activity and inflation, while lower rates encourage them.
Australia's lenders generally make changes to their loan products after an RBA announcement.
What types of car loan interest rates are there?
Like other loan products, car loans come with either a fixed or variable interest rate. Ultimately, the type of interest rate you choose can impact what you pay each repayment period. There are pros and cons to each option, so here's a breakdown of how they work.
Fixed rates
A fixed rate car loan is where you receive the same interest rate over the entire life of the loan term. Essentially, if you stick to your regular repayments, you will pay exactly the same amount to your lender each payment cycle. Plus, if interest rates spike during your loan period, your loan won't be affected as you've locked in your lower rate.
The downfall of fixed interest rates is that you won't benefit from any market changes if rates are reduced. Some lenders also charge early repayment penalties on fixed rate car loans - meaning if you pay off your entire loan in full before your loan term is up, you could face a hefty fee.
Variable rates
The other option is a variable rate car loan. Unlike a fixed car loan, a variable interest rate can go up or down during your loan term, typically in line with benchmark interest rates set by the Reserve Bank Of Australia. On the one hand this could work in your favour, but on the flip side, it could end up costing you more if the rate goes up.
There is one solid benefit of a variable rate car loan though, you rarely will pay an early repayment penalty if you square things away ahead of time. So if you plan to throw a little extra cash towards your car loan, and don't mind the risk of a rate spike, a variable loan may be the option for you.
Comparison rate
The truth is the interest rate on your car loan is unlikely to be the only cost you face. There may be a range of other additional fees and charges that you need to factor in. This is where the comparison rate comes in.
According to the National Credit Code, Australian lenders must display comparison rates when advertising loan products. The comparison rate incorporates things like the interest rate, fees and charges, so that you, the customer, has a more rounded view of what the loan is going to cost. Make sure you check the comparison rate on a car loan before applying, it may be a lot higher than the headline rate.
If you'd like to compare the difference between a fixed or variable interest rate car loan, check out our car loan comparison calculator.
How are my car loan interest repayments calculated?
Your car loan repayments and how much you pay in interest depends on a few things, like the rate you receive, how often you make repayments and the length of your loan term. In short, your repayments are split between paying down your principal (what you borrowed) and paying back interest (what the bank charges).
When you first take out the loan, a larger portion of your repayment will go towards paying interest. As the principal on your loan lessens so does the amount of interest you pay on it. This means towards the end of your loan term, the majority of your repayment will go towards your principal rather than interest.
If you want to figure out how much your car loan might cost you each week, fortnight or month, crunch the numbers with our car loan repayments calculator.
How can I get the best interest rate on a car loan?
When it comes to the best car loan interest rate, there are plenty of options for you to choose from as most banks and lenders in Australia will have a car loan option. So, it's a good idea to do some research, shop around and find the right rate for your budget.
Here are Mozo we have a range of great tools that can help you find a car loan to suit you:
Car loan comparison page - weigh up a range of car loan options from the big four to smaller banks, credit unions and online lenders.
Car loan calculators - find out how much your repayments might be, how much you can afford to borrow and compare car loan products.
Car loan guides - get the whole car loan picture with the ins and outs of loan features, how to apply and what to watch out for.
Don't forget there's also a bunch of general interest rate guides, with all you need to know about how they work across all loan products.
Peter Marshall has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.
A car loan comparison rate is designed to give consumers a more accurate idea of how much the loan will cost. Not only does it consider the headline rate, but it also takes into consideration any upfront and ongoing charges you may face over the life of the loan. So remember, when comparing car loan interest rates, always refer to the comparison rate when weighing up your loan options.
There is no right or wrong when it comes to choosing either a fixed or variable interest rate car loan, it all depends on your financial situation. See above for breakdown of fixed versus variable rates.
Along with a competitive interest rate, you'll want to find a loan that also comes with flexible repayment features and options. Some of these include free extra repayments, redraws, repayment schedule options (weekly, fortnightly or monthly) and a range of loan terms.
Also remember to keep the fees to a minimum. Avoid forking out too much on charges like application fees, monthly service fees, exit fees or early repayment penalties.
Risk-based pricing refers to a tiered interest rate system, whereby a car loan lender offers a customer a particular rate based on their credit score. Ultimately, interest rates are calculated depending on how much risk a potential borrower poses to the lender (whether they are likely to default on their loan or not).
Rather than offering a "one size fits all" standard rate, risk-based car loan lenders advertise a minimum and maximum interest rate. Based on the customer's data, the lender can offer a rate that sits anywhere between those two numbers. For those with a good credit history (that are "low-risk") will be offered a lower rate, while those with a poor credit rating ("high-risk") receive higher rates.
In some cases, risk-based pricing can be determined by the loan term a customer selects. For example, those choosing a 2-year term may get a lower rate than those that choose a 5-year term. However, this mode of pricing is much less common than that based on credit history.
While car loan lenders may not promote the fact, it is possible to negotiate your car loan rate. Remember, the deal you are offered upfront from a lender may not be the best they can do. So, why not ask?
At the end of the day some lenders would rather take a small decrease in interest payments over losing you as a customer all together.
When taking out a car loan, you ultimately want to pay as little in interest as you can. So, here are some ways to avoid forking out too much in interest:
Choose a shorter term: Car loans come with a range of different terms, from one year to up to 10 years. Think of it this way, the shorter the term on a loan the less time a lender has to charge you interest. So, if it is within your budget to do so, opt for a shorter loan term.
Make extra repayments: The more you can chip away at your loan the better, because ultimately the less there is to charge interest on. Make extra repayments when you can and pay off that loan sooner!
Work on your credit score: If you aren't after a loan right away but may need one in the future, an easy way to reduce the interest rate you receive is to repair any damage to your credit score. With a healthy credit history you can take advantage of loans with risk based pricing and you give yourself a greater chance at receiving a low interest car loan.
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