Used Car Loans

After a car loan to help you buy a second-hand car? Our car loan comparison tool can help you to compare a range of car loans on the market so that you can find a used car loan that’s right for you.

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What is a used car loan?

Similar to a new car loan, a used car loan allows you to borrow money to purchase a second-hand car.

How much will I be able to borrow?

Depending on your income, you’ll typically be able to borrow between $2,000 to $70,000 for a used car and pay it off anywhere between 1-7 years. However many personal loans have ranging amount they come in, from $5000 personal loans, to $50000 personal loans.

How do I compare used car loans?

With the help of our used car loan comparison tool, your perfect loan could be one click away. A good tip when comparing loans is to look at the comparison rate and use this, not the headline interest rate. Why, well the comparison rate also includes fees so it gives you an overall indication of the true cost of a loan. Once you’ve found the loan in our comparison tables that  right for you, click the ‘go to site’ button. This will redirect you to the provider’s site where you can begin your application.


Page last updated December 12, 2018

Used car loan comparisons on Mozo - rates updated daily Mozo has robust processes to ensure our site is updated to reflect the latest information from providers. There may be the odd occasion where updates are delayed, so please confirm information before purchasing.

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*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

**Representative example figures and monthly repayment figures are estimates only, based on the advertised rate, mandatory fees, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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Car Loan Resources

Reviews, news, tips and guides to help find the best car loan for you.

Finding the best used car loan for you

Once you start searching for a car loan, you’ll notice there’s a fair few to choose from as most Australian banks and online lenders like peer to peer lenders will offer car loans that can be used to fund a used car purchase. So to help you become your own car loan expert, we’ve pulled together this short guide which answers all the questions you’ll have about finding the perfect car loan.

Is there a difference between a new and used car loan?

Yes there is. One of the major differences you’ll find when you start comparing car loans is that there are generally two types of car loans, secured and unsecured loans. With a secured car loan, you secure an asset ie, your new car against the loan. Most lenders will only offer secured loans for the purchase of a new car or a car that is less than 3 years old. The majority of used car loans are unsecured loans, which means that you don’t need to secure the loan against your car.    

Secured car loans will have a lower interest rate than unsecured loans, so if you are getting your loan to buy a used car, it is a good idea to also look for a loan that has some flexibility with repayments so that you can reduce the amount of total interest you pay if you make extra repayments.

Fixed or variable rate, what’s the better car loan deal?

As you start to compare car loans, in addition to having the choice of a secured or an unsecured loan,  you’ll also find that you have the choice between two different types of interest rates - fixed or variable. The interest rate you choose should depend on your personal circumstances.

  • Fixed rates: If you choose a fixed rate loan, you’ll be ‘locking in’ your rate for entirety of the loan term. This means that no matter how the market moves, your interest rate and repayments will always stay the same. One of the downsides to a fixed rate loan is that if you get ahead on your repayments you may have to pay a fee if the loan is repaid early.
  • Variable rates: On the other hand, variable interest rates change in accordance to the market, and can either rise or fall during your loan term. With this type of interest rate, there is rarely an early repayment fee and no exit fees, so if you can you’ll be able to pay off your loan with no additional cost.

What is a comparison rate?

Once you start shopping around on car loans you’ll notice another rate sitting beside the interest rate in our tables, this is called the comparison rate. A comparison rate gives you a more accurate idea of the ‘true’ cost of the loan by taking into account not only the interest rate on the advertised loan, but any fees that may be charged with the used car loan. Just be aware that the advertised comparison rate is only a guide, the actual comparison rate for your used car loan will depend on your loan amount and the loan term.   

What features should I look for in a used car loan?

Like any time that you are going to be borrowing money, the most important features to consider are the ones that are going to help you to save money. They include:

The loan term 

With most used car loans, you’ll get to choose the loan term that you’d like to repay the loan within. This can be anywhere between 1 to 5 years for used car loans. The choice of loan term will usually come down to your ability to repay the loan. The shorter your loan term, the higher your repayments will be.

To look at the difference between the cost and repayments between a 3 and 5 year loan, let’s look at the following scenario:

Loan amount: $15,000
Interest Rate: 6.99%
Repayment frequency: monthly

On a five year loan with these terms, you would pay a total of $2,817 in interest with a monthly repayment of $297, whereas a three year loan would see you only pay $1,671 in interest but you would have a monthly repayment of $491.

Fees - Upfront vs Ongoing

Like any loan, there are usually some fees attached to used car loans. Some of the fees a car loan may have include:

  • Upfront fees
  • Ongoing fees
  • Annual fees
  • Late repayment fees
  • Early repayment fees
  • Break fees (fixed rate loans only)
  • Loan discharge fees

When you’re getting a used car loan, you are likely to pay some upfront fees. Upfront fees are a one-off payment you are charged at the time of opening your loan and depending on the lender can be between $0-$600. If you happen to find a car loan with a high upfront fee, make sure the interest rate and other features that you will be able to access outweigh this cost.

Ongoing fees are generally charged by the lender for the maintenance of your loan. While these fees can be as little as $10 a month, its important to remember that you will be paying these every month of your loan. So for instance, with a $10 monthly fee on a 5 year used car loan, you will pay $600 just to keep the loan going.

Flexible repayment options

Used car loans may also come with handy features that can give you a lot more flexibility with repayments, like extra repayments and redraw facilities. Having the option to make extra repayments towards your loan could really help you save in interest.

A redraw facility allows you to redraw any of these extra repayments if an unexpected bill comes up - but there may be limits to how much money you’ll be able to redraw, as well as a fee you may have to pay.

Are there any restrictions with a car loan for second-hand cars? 

One of the most common restrictions you’ll find when you apply for a loan for a used car is what is defined as an ‘old car’, especially if you are looking to secure the loan. For example, some providers may consider a car over 2 years to be old, while others may not approve a loan for a car that’s over 12 years old.  

How will I receive my funds to buy my used car?

Once your loan has been approved, then funds will either be deposited into your bank account or if you are buying through a dealer they can be sent directly to the car dealership.

Can I switch car loans?

Yes you can. If you find that your financial circumstances change during the course of your loan term there is an option to refinance. So if you ever need to refinance your used car loan, you can check out our car loan refinance table.

What else should I consider if i'm borrowing money for a used car? 

If you’re going to be buying a used car and borrowing money to finance it, you are going to want to make sure that the car is in the best possible shape it can be for its age. You don’t want to be in the position of repaying a car loan for a car that spends more time in the garage than on the roads or worse for a car that is no longer even yours.

When buying a used car it’s a good idea to get an independent inspection that checks:

  • The number of kilometres the car done compared to its age
  • Whether there any dents, scratches or bubbles in the paint or cracks in the windscreen
  • Checks for rust
  • The tyres exceed the legal tread depth of 1.5mm
  • Air conditioning, windows and lights work

What do I need to apply for a car loan?

When you find the right loan for you, you’ll need to have the relevant documentation prepared for when you fill out the loan application form. This could include things like:

  • Proof of income - This could include bank statements or payslips, as lenders will need to see that you are able to repay the loan through a steady income.
  • Proof of savings - Lenders also want to see genuine savings and that you are able to spend your money wisely.
  • Proof of liabilities - This involves any debt you may have on either a credit card or home loan.
  • Proof of insurance - Depending on the lender, you may not be approved for a car loan unless you have comprehensive cover beforehand. You can use our car insurance comparison too to sort out your car insurance policy.

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