The car loan lending space has remained relatively quiet over the past few months, with minimal movements to interest rates and we are expecting that October will be similar. In September there were no changes across variable rates for both new and used vehicles, however some fixed car loan rates were modified.
While variable rates for car loans haven’t changed recently, they still remain more competitive than the fixed rate options available. Queensland Country Bank continues to offer the lowest new car loan option, with a variable rate of just 2.99% (3.53% comparison rate*). For those looking to purchase a used car, Australian Military Bank has the most competitive variable rate at 3.60% (4.48% comparison rate*) for customers with excellent credit.
If you are looking for a fixed rate car loan, Auswide offers the lowest fixed rate for new car loans, having dropped its rate by 141 basis points to 4.49% (5.10% comparison rate*). Even after increasing its rate by 0.50% last month, online lender loans.com.au has retained the cheapest used car fixed rate at 5.17% (5.73% comparison rate*). Of the the big four banks, Westpac’s Car Loan at 7.49% fixed rate (8.68% comparison rate*) is the most competitive available.
It is great to see some lenders offering competitive rates in the green car loans space. The best fixed rate is currently loans.com.au’s Green Car Loan at 3.97% (4.52% comparison rate*) whereas Transport Mutual Credit Union offers the lowest green variable rate at 4.74% (5.04% comparison rate*).
To find out how interest rates are tracking in other banking products for October check out our snapshot for Home Loan Interest Rates, Savings Accounts Interest Rates or Term Deposit Interest Rates.
Search promoted car loans below or do a full Mozo database search. Advertiser disclosure.
4.67% p.a.
5.22% p.a.based on $30,000
over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.67% would cost $34,096.76 including fees.
Including Demo, Fixed, Secured
4.67% p.a.
5.22% p.a.based on $30,000
over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.67% would cost $34,096.76 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. Apply now for your chance to win one of 9 $1,000 fuel vouchers (T&Cs apply). Mozo Experts Choice Awards 2019 – Car Loan.^
4.89% p.a.
5.53% p.a.based on $30,000
over 5 years
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,377.58 including fees.
Up to 5 years old, Fixed, Secured
4.89% p.a.
5.53% p.a.based on $30,000
over 5 years
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.
5.19% p.a.to 18.95% p.a.
6.08% p.a.to 19.91% p.a.based on $30,000
over 5 years
Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 5.19% would cost $34,730.13 including fees.
Fixed
5.19% p.a.to 18.95% p.a.
6.08% p.a.to 19.91% p.a.based on $30,000
over 5 years
Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 5.19% would cost $34,730.13 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 $50,000. Easy online application, receive a response in minutes and approved funds within 24-48 hours!
5.50% p.a.
5.85% p.a.based on $30,000
over 5 years
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.50% would cost $34,632.09 including fees.
Fixed, Secured
5.50% p.a.
5.85% p.a.based on $30,000
over 5 years
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.50% would cost $34,632.09 including fees.
A quick and easy, 100% online application. No printing. No paper. No fuss. No monthly account keeping fees, no exit fees and no early repayment fees.
6.79% p.a.
7.16% p.a.based on $30,000
over 5 years
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 6.79% would cost $35,729.09 including fees.
Fixed
6.79% p.a.
7.16% p.a.based on $30,000
over 5 years
Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 6.79% would cost $35,729.09 including fees.
Reach your goal sooner without being penalised with $0 early payout fee. $0 monthly fees. Choose to make either monthly, fortnightly or weekly repayments to suit your income and budget.
3.97% p.a.
4.51% p.a.based on $30,000
over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 3.97% would cost $33,525.38 including fees.
New, Fixed, Secured
3.97% p.a.
4.51% p.a.based on $30,000
over 5 years
Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 3.97% would cost $33,525.38 including fees.
Winner of Mozo's Experts Choice Best New Loan Product for 2018. No monthly or ongoing fees. Get a 0.70% discount on your car loan interest rate if you buy a qualifying green car.^
4.89% p.a.to 8.89% p.a.
5.44% p.a.to 9.46% p.a.based on $30,000
over 5 years
Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,276.58 including fees.
Fixed
4.89% p.a.to 8.89% p.a.
5.44% p.a.to 9.46% p.a.based on $30,000
over 5 years
Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,276.58 including fees.
Enjoy competitively low rate car loans from 4.89% p.a. (comparison rate 5.44% p.a.) between $10,000 and $100,000 for new, demo and used vehicles. Take advantage of flexible 3, 5 or 7 year loan terms. No early repayment or exit fees. You must be 21 years or over to qualify and earn above $35,000.
^See information about the Mozo Experts Choice Car loans Awards
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Reviews, news, tips and guides to help find the best car loan for you.
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.
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.
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.
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.
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.
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.
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:
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.
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:
