Cheapest Car Loan Guide – Explore Your Options

The cheapest car loan will save you money. However, finding the best car loan for your situation can be difficult. Luckily, Monzi is here to break down the process behind comparing car loans.

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.

Car loans explained

Quite simply, a car loan is a form of personal loan that provides you with the cash to new vehicle.

You get the funds you need right now, while the true payment is divided evenly into a series of manageable, regular repayments. It may make purchasing a vehicle more accessible than you ever thought it could be.

Depending on your lender, you may be able to apply for a range of cash loans that you may use to finance the purchase of both new or used vehicles. So, whether you’re looking for a new family car or need a vehicle for work, there may be a loan that works for you.

Now that we’ve covered what a car loan is, we’ll show you how to pick the best option for your situation. Read on and we’ll cover all the tips and tricks as well as some useful car buying advice. Let’s dive in.

Secured car loans

Secured car loans, also known as title loans, are guaranteed by a borrower’s asset. Sounds complicated, right? Don’t worry, it’s really simple when you break it down.

With traditional car finance, you use the vehicle you purchase as security. Therefore, if you cannot repay your loan, the lender can repossess the car to recover their losses.

Due to repossession, secured loans are generally seen to be less-risky for lenders than unsecured loans. As a result, the rates on secured loans are often more reasonable than unsecured loans.

Car loans comparison

In order to find the cheapest car loan, you’re going to need to do some research. Agreeing to the first loan that you are offered is a sure-fire way to cost yourself money. So, shop around, compare lenders to try and find the right deal.

Not sure what to look for? Compare loans on the following factors:

  • The interest rate
  • Fees and charges
  • Comparison rate: includes your interest rates and fees to give you an idea of your total loan cost.
  • Repayment terms: are there a range of options so you can tailor repayments to suit your budget?
  • The lender: compare lender reviews to ensure you select an understanding and reasonable lender.

For additional information, visit the MoneySmart article on car loans. It provides a more in-depth breakdown of car loans and how to compare them.

Car loans Australia calculator

Determine the loan that would be suitable for you. With a car loan calculator, simply enter all the key details and you’ll receive an estimate of your total loan cost and repayments.

These resources are available online and are free to use. Simply do a quick search online and you’ll find some great, easy-to-use calculators.

However, these payments are only an estimate. Use them as a guide to determine if the loan product would be right for you.

Which lender has the lowest car loan interest?

Unfortunately, we are unable to say which lender offers the cheapest car loan interest rates. Rates will vary from lender to lender and may change based on your application too.

In other words, not all interest rates will be the same. Lenders will take a range of information into account into order to determine the interest rate you are offered.

While not a complete list, typically considerations include:

  • Your credit history: higher interest rates are often charged on bad credit loans. If you’re a reliable borrower then you may be able to save on interest costs.
  • Secured or unsecured: lender’s prefer secured loans as there is minimal risk. As a result, they may offer more competitive rates.
  • Your loan details: loans may be small, medium or large. The size of your loan may influence your interest rate.

In saying all this, ultimately, your lender retains the right to determine your interest rate. As a result, read your contract to confirm you are happy with the offered rate before agreeing.

Is it better to get finance from a lender or dealership?

Given that there are pros and cons to both options, it is up to you.

Dealership finance is typically considered more convenient as it can be arranged when you purchase your vehicle. Moreover, they may be able to offer a range of flexible repayment options to suit your budget. However, you may be charged a higher interest rate and you will not have a range of options to compare.

On the hand, a car loan from a lender will involve an extra step. You must apply and be approved then go to the dealer and purchase your vehicle. The benefit however is that you can compare lenders to ensure you get the best deal possible.

Consumers looking for a loan do their own research.

Cheapest car loan – how long should I finance for?

This depends on what you can afford to repay.

To be technical, your repayments are inversely proportional to your repayment term. In other words, the longer your term, the smaller your regular repayments will be. While the shorter your term, the larger your regular repayments will be.

This is an important consideration when you apply for a car loan. While we all want to get out of debt ASAP, your repayments must fit comfortably with your current budget. As a result, try to find the right balance between your repayment term and regular repayment amount.

Should I finance a car or pay cash?

In short, it’s your decision. Moreover, it will depend on your financial situation.

If you have the cash in your savings then buying the car outright may be an option for you. Obviously, this comes with the benefit of avoiding debt. However, realistically, it won’t be an option for most people. After all, purchasing a car is expensive.

As a result, financing a car may be your only option. So long as you only borrow what you can afford to repay, this may be a manageable option. You’ll get the cash you need to purchase your vehicle and divide the cost evenly over a long period.

Ultimately though, before making any decision consider your financial situation and decide what is best for you.

Cheapest car loan woman leaning out car window driving through mountains

How can I get a lower rate on my loan?

While not certain, lenders offer lower rates in two cases.

First of all, if you have a good credit score and are in a strong financial position then lenders may offer lower rates. This is due to the fact that you are less of a default risk. Lenders can see that you have a history of making repayments on-time and may reward you with a more competitive rate.

On the other hand, applying for a secured loan could help too. This is particularly relevant if your credit score isn’t as good as it should be. Guaranteeing the loan mitigates the lender’s risk and as a result your interest rate may be lower.

However, keep in mind that the interest rate offered is at the lender’s discretion.

Depending on the lender you may be able to get a variable interest rate.

Choosing the right vehicle

Before you apply for a car loan, first, you need to find the right car. Ultimately, this will be different for everyone. While some of us want a car that’s small and zippy, others might need a big car to transport the family around.

Luckily, when it comes to cars, there’s no shortage of options. However, this can make it difficult to choose the right car.

To help you decide, a few key questions to ask include:

  • New or used: you can get a used car cheaper but there’s no wear and tear on a new car.
  • Make and model: do you have a preference for certain manufacturers?
  • Size: Are you looking for a hatchback, station wagon, SUV or ute?
  • Colour: sure it’s superficial but we all want a car that’s nice to look at.
  • Other considerations: safety, features, warranty, budget, etc.

Can I get a cheap car loan for my business?


If you’re a small business owner, then you may be able to access commercial car loans to purchase a new vehicle. However, note that the rate you are offered may vary based on your application.

In most cases, lenders will offer lower rates to established business who have shown to be trustworthy over time or can secure their loan with an asset. As a result, if your business is starting out and doesn’t quite have a strong track record yet, then you may need to pay a higher rate.

Cheapest car loans: the second-hand buying guide

Your new car loses its value as soon as you drive it out of the dealership. That’s why a second-hand car might be the right choice for you.

Not only can you potentially get a great price but if you shop around, you can find great vehicles with minimal wear and tear. However, there is an element of risk to buying a second-hand car. After all, you don’t necessarily know how it’s been treated in the past.

Luckily, there are steps you can take. If you opt to purchase a used car, make sure you check the following before agreeing to any deal:

  • The paperwork: make sure the car is roadworthy and registered.
  • Exterior: ensure all the panels are in place and there’s plenty of tread on the tires.
  • Interior: check the upholstery, seat belts and accessories. While you’re there, ensure there is a spare tyre and jack too.
  • Under the bonnet: check the oil and coolant levels. Keep an eye out for any issues.

Finally, make sure you take it for a test drive to ensure it runs as it should.

Does Monzi offer the cheapest car loan?

No, Monzi does not offer the cheapest car loan. Instead, we are a lender-finder service that may be able to match you with a lender offering personal loans online in minutes. In addition, each lender in our network is a separate company and we cannot speak on their behalf. As a result, we cannot guarantee the total cost of your loan.

Moreover, if the lender approves your application, you’re free to use your personal loan on any personal expense, including a car. Just be aware, if you apply for a guaranateed personal loan you must have an existing asset to use as collateral. You cannot use the vehicle you intend to buy as security. Lenders may can accept cars, motorbikes, caravans or boats as collateral.

What loans do Monzi’s network of lenders offer?

Monzi aims to help as many Aussies as possible. Therefore, it doesn’t matter whether you’re a pensioner or you’re looking for bad credit finance, we’ll do our best to help.

The table below displays the personal loans potentially available through our service.

Small personal loan$300 to $2,000Unsecured
Medium personal loan$2,001 to $4,600Secured
Large personal loan$5,000 to $10,000Secured

You may receive your small loan the same day you apply. Moreover, you could use your cash to cover an emergency shortfall.

If you have any questions about Monzi’s lender-finder service, reach out to us at

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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


12 months (minimum)

12 months (maximum)


20% upfront establishment fee

+ 4% monthly fee


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%. The minimum and maximum loan term is 12 months. 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.

Loan amount

$2,001 - $4,600


13 months (minimum)

24 months (maximum)


48% Annual Percentage Rate (APR)

67.41% Comparison Rate p.a.


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

The Annual Percentage Rate (APR) for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. 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


13 months (minimum)

24 months (maximum)


21.24% Annual Percentage Rate (APR)

48% Comparison Rate p.a.


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

The Annual Percentage Rate (APR) for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. The minimum loan term is 13 months and the maximum loan term is 24 months. 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.