- The average car loan term in Australia is five years although seven-year terms are growing in popularity
- Longer loan terms generally mean higher interest costs overall
- Select lenders may offer car loan terms up to 10 years but this can depend on individual circumstances
We’ve covered seven-year car loans before which continue to grow in popularity amid a higher interest rate environment and ongoing cost-of-living concerns.
At the same time, the average age of vehicles has steadily increased to 11.5 years in 2025 (up from 10.1 in 2021) according to government statistics. This indicates many Australians are choosing to hold onto their cars for longer.
See also : Car Statistics Australia
Select car lenders are now providing options for buyers who may want to extend their car loans for as long as they hang on to their vehicles.
But it comes with a catch - you'll be paying it off for a lot longer and that will likely mean a higher interest cost overall, as illustrated below:
Car loan example
Let's run the numbers on a fixed-rate car loan of $30,000 at an interest rate of 7.50% p.a. being paid off monthly over various terms.
Monthly repayment Total interest charged 5 years $601 $6,068 7 years $460 $8,652 10 years $356 $12,733 Source: Moneysmart.gov.au calculator
As you can see, longer-term loans deliver lower regular repayments but higher interest costs overall.
Pros and cons of long-term car loans
There are a few things you’ll need to weigh up with a longer car loan term . It largely comes down to striking a balance between a repayment that works with your budget and the total interest you'll be paying overall on your loan.
Here are some considerations:
Pros of long-term car loans
- Lower monthly payments : This can provide access and flexibility for some borrowers who may have other financial commitments
- May see lenders approve larger loans : This will depend on many factors, including your financial situation and credit history , but some lenders may equate lower monthly repayments with lower risk of default
- May help reduce upfront costs of car ownership : Lower monthly repayments may ease the initial costs of buying a car which include loan fees and stamp duty .
Cons of long-term car loans
- More interest and costs accrued overall: As well as paying more interest overall, you'll also be paying any ongoing fees for longer
- Higher risk of negative equity: Negative equity means owing more on the car than what it's worth at market value. If you write-off your car , it could be a significant gap that your insurer doesn’t pay to your lender and you'll have to cough up the rest of your outstanding loan out of your own pocket. Of course, this is true for any loan term but cars generally dwindle in value past the seven-year mark.
Savings.com.au’s two cents
If you’re thinking of a car loan, you’ll need to work out how the monthly repayment works into your budget and go from there. Short-term car loans can see you pay less interest overall, but you might not be in a position to meet the larger loan repayments every month.
Longer-term car loans aren’t inherently a bad thing, but consider your motivations with opting for one in the first place. A lower-cost car may still meet your needs and keep your repayments down at the same time.
What are the longest car loan terms offered by big bank lenders?
Collectively, banks account for just under half of automotive financing market share in Australia. Below are the longest terms offered by the big four:
| Lender | Longest term |
| CommBank | 7 years |
| ANZ | 7 years |
| NAB | 7 years |
| Westpac | 7 years |
(Note: Macquarie Bank ceased new car lending in April 2024. Car loans may be marketed as personal loans for cars at some banks.)
Lenders advertising car loans with 10-year terms
| Lender | Longest term | Conditions |
| People's Choice | up to 10 years | Loans $20,000 & over. First 5 years fixed rate and reverts to variable rate for remainder of loan |
| People's Choice Green Car Loan | up to 10 years | Loans $20,000 & over. Vehicle must be used as security |
(Note: As at January, 2026. Lender conditions apply for vehicles to qualify for green car loans.)
Competitive car loan interest rates
It's worth checking the rates against those in the table below which features some of the lowest interest rates on the market:
| Lender | Car Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Interest Type | Vehicle Type | Maximum Vehicle Age | Ongoing Fee | Upfront Fee | Total Repayment | Early Repayment | Instant Approval | Online Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 7.07% p.a. | $579 | Variable | New | $8 | $400 | $34,749 |
| Promoted | Disclosure | |||||||||
5.95% p.a. | 5.95% p.a. | $579 | Fixed | New | $0 | $0 | $34,757 |
| Promoted | Disclosure | |||||||||
5.95% p.a. | 5.95% p.a. | $579 | Fixed | New, Used | $0 | $0 | $34,757 | Disclosure |
Longest terms offered by other major car loan providers
Toyota Finance Australia is one of the biggest providers of car loans, holding a dominant market position.
| Lender | Longest term |
| Toyota Finance | 7 years |
| Volkswagen Financial Services | 7 years |
| Latitude Financial Services | 7 years |
| Pepper Money | 7 years |
| Plenti Finance | 7 years |
| Firstmac Asset Finance | 7 years |
| Stratton Finance (car & asset finance brokers) | 7 years |
(Note: Advertised products)
It's worth noting some specialist and alternative lenders may offer select borrowers 10-year loan terms depending on their individual circumstances and lender policies.
See also : How do car loans work?
Using a balloon payment to lower your car loan repayments
Rather than extending your loan term, some lenders may suggest the option of a balloon payment to keep your regular car loan repayments down.
A balloon payment is a portion of the loan amount - generally 30-50% - that a borrower must repay as a lump sum at the end of their loan agreement.
But, beware, this option may not suit all borrowers with such a sizeable chunk of the loan balance due as a lump sum at the end of the loan term.
Balloon loans also see borrowers pay substantially more in interest.
The US experience
In August 2025, financial publication Bloomberg noted the rise of the seven-year car loan in the United States, corresponding with the fall of five-year terms as vehicle costs have risen in real terms over the past 20 years.
The most common car loan term in the US is now six years while the average car loan term in Australia remains at five years.
Below is a chart showing the shift in car loan terms in the US over the past two decades:
Car loan terms - United States - 2005-2025 
Source: Bloomberg
Quick car loan stats - Australia - 2025
- Average car loan amount - $46,583 (all vehicle types)
- Average car loan term - 5 years
- 35% of car loans are for new cars; 65% are for used cars
- Used car sales via dealer - 38.9%;via private sale - 61.1%
Source: ABS, Australian Automotive Dealer Association (AADA)
