Best Car Loan Rates Australia – Monzi’s Guide

The best car loan rates Australia – where can I find them? While Monzi does not offer car loans, we do know a thing or two about them. Therefore, we’re here to give you a quick rundown of car loan interest rates and how you can compare different lenders. Let’s go!

Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

Best car loan rates Australia: explained

All car loans come with an interest rate. In short, this rate calculates your interest payment. This is simply the additional cost applied by lenders to account for the risk of lending you money.

Interest rates come as annual percentages and are applied to the balance of your loan. As you’ve probably realised, when it comes to the best car loan rates, people generally refer to lowest rate possible. That way, you can minimise the interest you pay, while still being able to purchase a new car. Despite this, there are a number of other loan features you may want to consider.

In short, there are a few ways that you might make it possible to access a better rate. To guide you through all the tips and tricks as well as some important car loan information, we’ve assembled this comprehensive guide.

What is a good interest rate for a car loan?

Lenders consider a number of factors to determine your interest rate. As a result, a good interest rate for you, may not be for someone else.

As a quick outline, in determining your rate, lenders will look into the following:

  • Secured or unsecured: you can often access better rates if you guarantee the loan.
  • Your credit history: lenders offer more favourable terms to reliable, trustworthy borrowers.
  • The loan: interest rates on small loans may be different to those offered on large loans.

What is the lowest interest rate on a car loan?

Unfortunately, we cannot say what the lowest rate is. After all, it will vary based on a range of factors related to both your financial situation and the loan you’ve applied for.

However, there may be a few ways that you can potentially access a better rate.

Firstly, lenders prefer low-risk borrowers. So, if you’ve got good information in your credit report and are in a solid financial position then lenders may be willing to offer better rates.

Alternatively, you could apply for a secured loan. Guaranteeing the loan with one of your assets reduces the risk for your lender. As a result, you can potentially get a better rate.

However, at the end of the day, your lender will determine the rate you are offered.

Car loans comparison

Sure, we all want to find the best car loan rates Australia, but if you’re looking to purchase a used vehicle, that shouldn’t be your only consideration.

Car loans are made up of a number of elements. So, if you want to find the best deal, it pays to shop around.

As a guide, compare loans on the following:

  • Interest rate and fees: lower rates and fewer fees is usually the way to go.
  • Comparison rate: this combines your interest rate, fees and loan to give you an idea of your total loan costs. It’s a simple way to compare loans side by side.
  • Loan features: how much can you borrow and what repayment terms are on offer?
  • Secured or unsecured: are you required to attach security?
  • Lenders: check their reviews to find out how they treat their customers.

However, this is just a brief overview. For more information, check out the MoneySmart guide to car loans. You might learn all you need to know.

Best car loan rates Australia calculator

Car loan calculators are offered online by a range of lenders and financial institutions. Best of all, they’re free too.

In short, they provide estimates of your total loan costs and regular repayments. All you need to do is enter the details of your proposed loan. This can include your interest rate, loan amount and term.

However, keep in that they’re estimates. Only use these figures to get an idea of how the loan would work for your budget. Your actual repayment terms may vary.

Is it better to finance a car through a bank or dealership?

It’s up to you. Both options have their pros and cons so do your research to decide which is best for you.

As a guide, dealership finance may be the more convenient option. It can be arranged when you purchase your vehicle. As a result, there’s minimal hassle.

On the other hand, with a car loan, you apply and get the cash you need first. Then you can head to the dealership to purchase the car of your dreams. The benefit with this is you will know your exact your repayments and costs before you arrive.

However, this is just a quick overview. There’s so much more to consider, so, put in the time to determine which option works best for your needs.

Can you negotiate interest rates on car loans?

If you are accessing dealership finance then you may be able to negotiate a better deal. Obviously, if you’re in a solid financial position and have good credit, your likelihood of success will increase. However, ultimately, the dealer will determine your rate.

Unfortunately, you won’t be able to negotiate the interest rate on a loan through a lender. Lender’s consider a number of factors and determine your rate from there. This rate will be clearly listed in your loan contract. Ensure you read it carefully so you know exactly what you will be paying.

What is the best month for new car incentives?

Usually, the end of year and the end of financial year are the best times to score a deal. Through November and December, dealers are often trying to reach yearly sales goals. As a result, it can be a great time to purchase a vehicle at a great price.

In addition to this, the end of financial year often comes with sales. In short, lenders are trying to clear stock before the new models begin to arrive.

Ultimately though, you will need to do your own research to find the best deal. Shop around and compare vehicles, interest rates and any other relevant factors. It will be worth it.

Best car loan rates Australia: does refinancing car loans hurt credit?

Yes, refinancing can potentially hurt your credit score.

In the short term, when you apply for refinancing, there will be a hard inquiry listed on your credit report.

In addition to this, refinancing will lower the average age of your credit accounts. This may also lower your credit score.

On the bright side, if refinancing makes your loan more affordable and you make your repayments on time, then you could see long-term benefits.

Best car loan rates Australia hand holding car keys parked car in background

How much can I borrow with a car loan?

If you apply through Monzi, we might be able to pair you with a lender offering cash loans from $300 to $10,000. That’s cash you can put towards the purchase of your new vehicle.

Best of all, your loan may come with repayment terms ranging from 12 to 24 months. As a result, your costs are spread out over the loan term.

If you wish to borrow more than $10,000, you may need to do your own research. There are a number of lenders, banks and dealerships who may offer this finance. However, Monzi will be unable to help you access it.

Finally, please note that loans available through Monzi do not function as typical car loans. In other words, you will need an existing asset to use as security for loans over $2,000; you cannot use the car you intend to purchase as security.

Get a rough idea of how much you can borrow here.

Can I pay my car loan off early?

Yes. However, check your contract to ensure that you can do so without a fee.

Some lenders offer the option to pay your loan off early. Although, itmay come at a price. You may have to pay an early exit fee in order to make it happen.

As a result, before you decide to pay your loan off early, ensure you know exactly what it will cost.

If you can’t pay your loan off early, that’s ok too. Your repayments are divided evenly over a fixed term. As long as you make your repayments on time, you might have your debt repaid before you know it.

Best car loan rates Australia: Is car financing a bad idea?

Car financing is extremely common. After all, cars are expensive and paying cash is unrealistic.

With a car loan, you can spread the costs evenly over a long period, which for many people is the only viable option, especially if you need a vehicle soon.

In any case, whether or not it’s a bad idea, will come down to how you manage your loan. If you only borrow what you can afford to repay and make your repayments on time, then it is a perfectly reasonable strategy to purchase a car.

On the flip side, if you over-extend yourself and cannot afford your repayments, then car financing can quickly turn into a disaster.

As a result, it’s up to you. Find a vehicle and loan that are manageable and realistic for your circumstances.

Find the right car

Before you get a car loan, you’ll need to find a car. Cars come in a range of different makes and models, so while you will be spoilt for choice, making a decision can be tough.

Luckily, Monzi’s here to help. We’ve assembled this quick list of considerations that can help you pick your perfect vehicle. Check it out:

  • New or used car: used cars may have a little wear and tear but new cars lose value as soon as you drive them off the lot.
  • The manufacturer: are you loyal to a certain brand or keen to shop around?
  • Size: are you looking for a large family car, something you can take off-road or do you just need something to get you to and from work?
  • Colour: sure it’s superficial, but you want a car that looks good too.
  • Price: this is the major factor. Have a budget and stick to it.

What is the average car payment?

Repayments vary depending on your loan amount, interest rate and loan term. As a result, calculating an average repayment simply isn’t possible.

Obviously though, as you would expect, the longer your payment term, the smaller your regular repayments will be. The opposite is true if you select a shorter term.

Given this, it’s crucial to find the right balance when you apply. Combine a concise repayment term with repayments that you feel are manageable and affordable for your budget.

Car loans through Monzi

While we cannot guarantee that you will be offered the best car loan rates Australia, Monzi can make it quick, simple and convenient to access personal loans online. Moreover, we can explore how to potentially find the best personal loan rates for your situation.

In short, if you apply through our lender-finder service, we may be able to match you with an available lender in just 60 minutes. You can potentially access up to $10,000 to fund the purchase of your new vehicle.

Best of all, it’s 100% meaning there’s no paperwork and you whenever and wherever you like.

Check out a few examples of loans past Monzi customers went on to be approved for:

LoanAmountApproved
Quick cash loans$2,000
Fast loans online$4,500
Secured personal loans$9,000

Keen to begin? Enquire about a loan today.

Want more Monzi? We have plenty more useful information available. For example, check out our guide to business loan calculators. Alternatively, find out how an investment loan works.

Factor In

Costs

Two credit cards
Two credit cards

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.