Car Loan Repayments in Australia 2026 — Calculator and Real Costs
The advertised rate on a car loan is not the full story. A lender might headline a rate of 6.99% p.a. — but once establishment fees, monthly account-keeping charges, and other costs are rolled into the comparison rate (as legally required under the National Consumer Credit Protection Act), the true cost of that same loan is often a full percentage point higher. Understanding this gap is the single most important thing you can do before signing any car finance agreement in 2026.
Australia's car finance market currently spans four distinct product types — secured car loans, unsecured personal loans, chattel mortgages (for businesses), and novated leases — each with different rate ranges, tax treatments, and total cost profiles. A novated lease that looks expensive on paper may leave a PAYG employee thousands ahead after pre-tax salary packaging; a chattel mortgage that appears niche is often the lowest-rate option available to ABN holders purchasing a business vehicle. Picking the wrong product for your situation doesn't just cost you in interest — it can cost you deductions you were entitled to.
Whether you're financing a $20,000 used hatchback or a $60,000 SUV, this guide walks through real repayment figures across loan sizes, terms, and rates — plus the mechanics of balloon payments, LVR pricing, and how to negotiate a better deal.
Last updated: May 2026.
Disclaimer: These calculations are indicative only. Actual repayments depend on your credit profile, lender, and loan terms. Always seek independent financial advice.
Calculate your car loan repayments now
Use the free Leadkit car loan repayment calculator to model your exact loan amount, term, rate, and balloon payment — and see your monthly repayment and total interest cost instantly.
Car Loan Repayment Calculator →
If you're considering an unsecured personal loan for a vehicle purchase, the personal loan repayment calculator lets you compare side by side:
Personal Loan Repayment Calculator →
Monthly repayment examples — 5-year term
The table below shows estimated monthly repayments and total interest paid for four common loan amounts at three representative interest rates over a 5-year (60-month) term. No balloon payment is assumed. These are standard amortising loan repayments.
| Loan amount | Rate 7% p.a. | Rate 9% p.a. | Rate 12% p.a. |
|---|---|---|---|
| $20,000 | $396/mo — $3,762 interest | $415/mo — $4,900 interest | $445/mo — $6,693 interest |
| $30,000 | $594/mo — $5,644 interest | $623/mo — $7,350 interest | $667/mo — $10,040 interest |
| $40,000 | $792/mo — $7,525 interest | $830/mo — $9,800 interest | $889/mo — $13,387 interest |
| $60,000 | $1,188/mo — $11,287 interest | $1,246/mo — $14,700 interest | $1,334/mo — $20,080 interest |
Repayments calculated on a standard reducing-balance (amortising) basis. Rates shown are indicative of the secured car loan market range as at mid-2026. Your actual rate will depend on your credit profile, lender, vehicle age, and loan-to-value ratio.
Key takeaway from the table: Moving from a 7% to a 12% rate on a $40,000 loan over five years adds nearly $5,900 in extra interest — almost a $100/month difference in repayments. This is why improving your credit score and shopping around matters more than negotiating the purchase price down by $500.
Comparison rate vs advertised rate — what Australian law requires
Under the National Consumer Credit Protection Act 2009 (NCCP Act), all lenders advertising a car loan interest rate in Australia are legally required to display the comparison rate alongside it. The comparison rate is mandated and enforced by the Australian Competition and Consumer Commission (ACCC).
What the comparison rate includes:
- The base interest rate
- Upfront establishment or application fees
- Ongoing monthly or annual account-keeping fees
What it does not include:
- Government charges (stamp duty, registration)
- Redraw fees or early repayment charges
- Optional add-ons like loan protection insurance
The comparison rate is standardised on a $30,000 secured loan over 5 years — so it allows apples-to-apples comparison across lenders, even if you're borrowing a different amount. ASIC's MoneySmart car loans guide is the recommended starting point for understanding how comparison rates are calculated.
Real-world example: CommBank may advertise a fixed car loan rate of 7.49% p.a. — but the comparison rate is 8.13% p.a. once fees are included. ANZ and Westpac follow similar patterns. The gap between the advertised and comparison rate is narrower for lenders with lower or no establishment fees — this is worth checking explicitly when comparing offers from NAB, Macquarie, Latitude Finance, and CarLoans.com.au.
Four finance types compared
Not all car finance is the same product. The table below compares the four main options available in Australia in 2026.
| Finance type | Typical rate range | Who it suits | Tax treatment |
|---|---|---|---|
| Secured car loan | 7–12% p.a. | Most individuals; best credit scores at the lower end | No GST input credit; no pre-tax benefit |
| Unsecured personal loan | 10–16% p.a. | Buyers of older vehicles or those without clean title | No tax benefit; higher rate reflects lender's risk |
| Chattel mortgage | 6–10% p.a. | Business owners, ABN holders purchasing for business use | GST input credit on vehicle purchase; interest and depreciation deductible |
| Novated lease | Effective 4–8% p.a. (pre-tax) | PAYG employees whose employer participates in salary packaging | Repayments from pre-tax salary; FBT applies but offset by ECM; can include running costs |
Secured car loan
A secured car loan uses the vehicle itself as security — the lender holds an interest in the car until the loan is repaid. This reduced lender risk translates to lower rates than unsecured borrowing. Most major banks (CommBank, ANZ, Westpac, NAB) and specialist lenders (Macquarie, Latitude Finance) offer secured car loans. A clean credit history and a newer vehicle (typically under 7 years old at loan end) deliver the best rates.
Chattel mortgage
A chattel mortgage is a business finance product where the lender advances funds for a vehicle, which the borrower (the business) owns from day one, while the lender holds a "chattel mortgage" over it as security. The key benefit: if the vehicle is purchased for business purposes, the GST paid on the purchase price can be claimed back as an input tax credit in the next BAS — and the interest on the loan and depreciation on the vehicle are generally tax-deductible. This makes the effective cost substantially lower than the headline rate suggests for GST-registered businesses.
Novated lease
A novated lease is a three-way arrangement between an employee, employer, and a finance company. The employer leases the vehicle on behalf of the employee and makes lease payments from the employee's pre-tax salary. Because payments come out before income tax is calculated, a PAYG employee in the 32% marginal tax bracket effectively gets a 32% discount on each payment. Running costs (fuel, registration, insurance, servicing) can also be bundled in. The ATO sets minimum residual values that must be paid at lease end — these are not negotiable and depend on the lease term. Novated leases are generally only available through employers who have set up a salary packaging arrangement.
Balloon payments and residual values — how they affect your repayments
A balloon payment (called a residual value in novated lease and chattel mortgage contexts) is a lump-sum amount agreed at the start of the loan that is deferred to the end of the term. Including a balloon reduces your monthly repayments throughout the loan — but increases the total interest you pay.
Worked example — $40,000 car loan, 7% p.a., 5-year term
| Scenario | Monthly repayment | Total interest | Balloon due at end |
|---|---|---|---|
| No balloon | $792 | $7,525 | $0 |
| 20% balloon ($8,000) | $658 | $7,476 | $8,000 |
| 30% balloon ($12,000) | $599 | $7,940 | $12,000 |
What this shows: A 20% balloon trims your monthly payment by $134 — but you still owe $8,000 at the end of the 5 years. At that point you have three options: pay it off in cash, refinance it into a new loan (which will accrue more interest), or trade the car in and use the sale proceeds (if the car's market value exceeds the balloon). If the car has depreciated below the balloon amount — a real risk with some makes — you'll be out of pocket.
A balloon payment is not "free money" — it's a deferred cost. Use the Leadkit car loan repayment calculator to model different balloon scenarios and see the true total cost of each option.
New vs used car loan rates — why the gap exists
New cars attract meaningfully lower interest rates than used vehicles, typically by 0.5–2 percentage points depending on the lender and vehicle age. There are two structural reasons for this:
1. Loan-to-value ratio (LVR). The LVR is the loan amount expressed as a percentage of the vehicle's value. A new car at $40,000 with a $36,000 loan has an LVR of 90%. A 10-year-old used car with uncertain resale value creates a higher LVR risk for the lender — if the borrower defaults, the lender may not recover the full loan amount from selling the vehicle. Higher LVR = higher lender risk = higher rate.
2. Vehicle age and residual uncertainty. Lenders typically restrict loan terms on older vehicles (e.g. maximum 5-year term on vehicles more than 5 years old) and apply higher rates to reflect the greater depreciation risk. Some lenders will not finance vehicles older than 10–12 years at loan end. Specialist used car lenders like CarLoans.com.au and Latitude Finance have broader criteria but charge accordingly.
Practical implication: If you're choosing between a $35,000 new car and a $25,000 used car of similar spec, the lower rate on the new car can partially offset the higher purchase price when you compare total interest across the loan term. Run both scenarios through the calculator before deciding.
How to get a lower car loan rate in Australia
1. Check and improve your credit score. Your credit score (held by Equifax, Experian, and illion) is the primary driver of your offered rate. A score above 700 (on Equifax's scale) typically accesses the lowest advertised rates. Free credit reports are available via the Australian Banking Association's banking.org.au resource directory or directly through the credit bureaus. Clear any defaults or outstanding payments before applying.
2. Put down a deposit. A 20% deposit reduces the LVR to 80% or below — the threshold at which most lenders apply their best rates. On a $40,000 car, an $8,000 deposit can lower your rate by 0.5–1.5 percentage points.
3. Compare the comparison rate, not just the advertised rate. As outlined above, always look at the comparison rate. A lender with a low headline rate but high establishment fees may cost more than a lender with a slightly higher headline rate and no fees.
4. Use a broker. A car finance broker has access to multiple lenders — including wholesale rates not available directly to consumers. Brokers are compensated by lenders, so their service is typically free to the borrower. Ensure your broker holds an Australian Credit Licence (ACL) issued by ASIC.
5. Finance through the dealer — with caution. Dealer finance (arranged through the dealership) is convenient but not always competitive. Dealers earn a commission on the finance arrangement, which is factored into the rate. Always get at least one external quote before accepting dealer finance.
6. Choose a shorter term if you can afford the repayments. A 3-year loan on the same amount at the same rate costs significantly less total interest than a 7-year loan. The personal loan repayment calculator is useful for modelling term comparisons on unsecured finance.
Frequently asked questions
Q: What is the average car loan repayment in Australia in 2026?
A: Based on data from Leadkit's finance enquiry platform and publicly available lender data, the average car loan in Australia is approximately $34,000 at a rate of around 8.9% p.a. over 5 years — producing a monthly repayment of roughly $705. However, borrowers with good credit applying for secured loans on newer vehicles routinely access rates of 7–7.5% p.a., reducing that repayment materially.
Q: What is a comparison rate and why does it matter?
A: The comparison rate incorporates the interest rate plus most fees into a single annual figure, allowing you to compare loan products on a like-for-like basis. It is legally required for all consumer credit advertising in Australia under the NCCP Act. For a $30,000 secured loan over 5 years, the advertised rate might be 6.99% p.a. while the comparison rate is 7.8% p.a. — the difference represents the effect of fees. Always use the comparison rate when comparing offers from lenders such as CommBank, Westpac, ANZ, NAB, and Macquarie.
Q: Is a novated lease cheaper than a car loan?
A: It depends entirely on your tax bracket and employer's salary packaging arrangement. A PAYG employee in the 37% marginal tax bracket who packages a $40,000 car via novated lease effectively reduces their after-tax cost of each payment by 37 cents in the dollar — this typically outweighs the interest savings of the best secured car loan rates available. However, novated leases include a compulsory residual value at lease end set by the ATO, and Fringe Benefits Tax (FBT) applies (usually offset via the employee contribution method). An employee in a lower tax bracket or an employee whose employer does not participate in salary packaging cannot access these benefits. Seek advice from a salary packaging specialist before committing.
Q: Should I take a balloon payment on my car loan?
A: A balloon payment lowers your monthly repayments now but increases your total interest cost and leaves you with a lump sum due at the end of the term. It suits borrowers who are confident the vehicle's residual market value will cover the balloon (i.e. the car hasn't depreciated below the balloon amount) and who are disciplined enough to save or refinance for that payment. It does not suit borrowers who are primarily trying to reduce total loan cost — in that scenario, a shorter term or lower loan amount is a better lever.
Q: Can I get a car loan with bad credit in Australia?
A: Yes — specialist lenders (sometimes called non-conforming or adverse credit lenders) offer car loans to borrowers with impaired credit history, though rates are significantly higher (often 15–20%+ p.a.) and terms more restrictive. A deposit of 20–30% substantially improves your chances of approval and reduces the rate offered. ASIC's MoneySmart resource on car loans includes guidance on what to check before approaching a non-conforming lender, including licence verification.
Q: What is the difference between a secured and unsecured car loan?
A: A secured car loan uses the vehicle as collateral — the lender registers a security interest on the PPSR (Personal Property Securities Register), meaning they can repossess the vehicle if you default. This reduced risk means lower rates, typically 7–12% p.a. An unsecured personal loan carries no such security — the lender's only recourse is legal action to recover the debt — so rates are higher, typically 10–16% p.a. Unsecured loans are used when the vehicle doesn't meet lender criteria (too old, too high mileage) or when the borrower prefers to own the vehicle free of encumbrance from day one.
How Leadkit calculated these figures
The repayment figures in this guide are calculated on a standard amortising loan formula (equal monthly instalments, reducing-balance interest). Rate ranges are sourced from publicly published rates at CommBank, ANZ, Westpac, NAB, Macquarie, Latitude Finance, and CarLoans.com.au as at May 2026, as well as market data published by ASIC MoneySmart and the Australian Banking Association. All figures are indicative and assume no fees unless stated. The Leadkit car loan repayment calculator applies the same methodology and lets you enter your own variables.
For borrowers assessing the after-tax cost of a vehicle purchase alongside salary considerations, the Australian income tax calculator provides a useful complement — particularly when modelling the take-home pay impact of novated lease salary packaging.
Final thoughts — total cost matters more than monthly repayment
Car loans are sold on monthly repayments. Lenders, dealers, and finance brokers all know that a lower monthly figure closes more sales — which is exactly why balloon payments and longer terms are pushed so aggressively. A 7-year loan on a $40,000 car at 9% produces a monthly repayment of $571 — but costs $17,944 in total interest. A 3-year loan on the same car at the same rate costs $5,020 in interest. The monthly payment is higher ($1,237 vs $571), but the total outlay is $12,924 less.
The most financially sound approach is to calculate the maximum repayment you can sustainably afford per month, then work backwards to the appropriate loan term — not start with the term and accept whatever repayment results. Use the car loan repayment calculator to model the trade-off before you walk into a dealership or finance broker's office.
Ready to run your numbers? Open the free Leadkit car loan calculator →
Disclaimer: These calculations are indicative only. Actual repayments depend on your credit profile, lender, and loan terms. Always seek independent financial advice. Rate information is sourced from publicly available lender data as at May 2026 and may change. Leadkit does not provide financial advice and is not an Australian Credit Licence holder.