Compare Car Loans Interest Rates

Cheap August Car Loan Interest Rates & Deals

One of the lowest car loan rates in our database is currently 5.67% (comparison rate 6.10%) from Stratton Finance with its Car Loan (New) (1 Year).

There's a huge range of car loans on the market, with rates varying widely depending on a number of factors. These can include the age of the car, whether the loan will be secured or not, and whether you're buying an electric or a hybrid vehicle. (Those rates can be significantly lower.)

Whatever your circumstances, the difference between the lowest and highest rates you may be offered can be pretty significant. That's why it's well worth your time to do your research and find the cheapest car loan rates you qualify for.

Which lenders are offering the lowest car loan rates?

According our database, here are a few of the lowest car loan offers on the market for different circumstances:

• Used Car Loans - Harmoney: Unsecured Car Loan (3 Years) rates from 5.76% p.a. (5.76% p.a. comparison rate*) 
• Secured Car Loans - MoneyPlace: MoneyPlace New Car Loan Excellent Credit (5 Years) rates from 5.67% p.a. (6.10% p.a. comparison rate*)
• Unsecured Car Loans - Harmoney: Unsecured Personal Loan (Excellent credit) (5 Years) rates from 5.76% p.a. (5.76% p.a. comparison rate*) 
• Green & Electric Car Loans - MoveBank: Green Car Loan (1 Year) rates from 5.89% p.a. (6.16% p.a. comparison rate*) 

How do I get a low interest car loan?

There can be a number of ways to get a low-interest car loan, but one of the best is to maintain a clean credit history. This lets lenders know you're a trustworthy borrower, making them more likely to offer you a good interest rate.

Also, it's well worth shopping around to see which lenders are offering the lowest rates for your particular circumstances. Keep in mind secured car loans tend to have lower interest rates than unsecured loans, while loans for newer cars often have lower rates than those for older models.

See you next month!

Denise Raward - Senior Finance Journalist

For more information on how we’ve selected these products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of 24 August 2026. View disclaimer

What is a car loan?

A car loan is type of personal loan used to finance the purchase of motor vehicle, including cars, trucks, or motorbikes. The lender provides funds to purchase the vehicle and the borrower pays back that amount, plus interest, over an agreed period.

Types of car loans in Australia

• Secured car loan: This is the most common type of car loan in Australia, where the vehicle is used a security, or collateral, for the loan. It means the lender can repossess the vehicle if the borrower fails to make repayments. 

• Unsecured car loan: An unsecured car loan is effectively a personal loan, as the lender won't have the right to repossess the car the loan is for. Unsecured loans typically give the buyer more flexibility with how funds are spent, but they come with higher interest rates and fees.

• Used car loan: Many car loan products can only be used for cars up to a certain age. For those looking to buy something with more miles on the clock, there are specialist loan products that can be used for older vehicles.

• Green car loan: To incentivise the uptake of environmentally friendly vehicles, the Clean Energy Finance Commission subsidises car loans for them. This sees some lenders offer car loan products with lower interest rates that can only be used to buy electric or other 'green' vehicles.

Car loans explained

These are the main things to consider when choosing a car loan:

Interest rates

Car loan products often have a range of interest rates rather than a single advertised rate. The spread can be substantial - higher rates can be more than double lower rates.

The interest rate you pay can depend on factors like:

• Your credit score: Borrowers with a lower credit score are deemed riskier, so lenders often compensate for this risk with higher interest rates.

• The age of the car: As older vehicles usually depreciate faster, there's a higher chance that if you default on your loan the lender still won't be able to recoup all their losses by repossessing and selling the vehicle. This makes the loan riskier, so you may find older cars will often incur a higher interest rate than newer vehicles.

• The type of car: Thanks to government subsidies, some lenders offer discounted rates for green vehicles.

Fees

Car loans may also have several fees on top of the interest rate. These may include:

• establishment fees

• ongoing loan maintenance fees

• break fees

• discharge fees

• late payment fees

Read more: Car loan fees

Hidden fees and costs

Some low-rate loans can come with high fees which is why it's important to look beyond the advertised interest rate.

This is one of the reasons why all loan products need to include a comparison rate alongside the advertised rate. It essentially reflects the advertised interest rate plus these additional charges.

So if you see a loan with a comparison rate that's much higher than its advertised rate, it's likely to have high fees.

Loan terms

The loan term for car loans is usually between 1-7 years. Longer terms can mean smaller repayments, but you may also pay more interest overall.

Repayment amount

Be clear on the minimum repayment amount and ensure this fits in with your budget and can be covered by your current income.

Repayment structure

It's just as important to know how often you need to make repayments and whether you can make extra payments or pay off your loan earlier without penalty.

Many car loans include a balloon payment, or a significant lump sum due at the end of the loan term. This can lower regular repayments, but usually means paying more in interest in the long run so you'll need to calculate whether this structure best suits your personal financial goals.

What is a balloon payment?

A balloon payment means paying off a sizeable portion of the loan (often between 30–50% of the total amount) in a lump sum at the end of the loan term.

Since you're paying off less of the principal, your monthly repayments are lower but you'll still likely be charged interest on the balloon amount, so it can make the loan more expensive in the long run.

Balloon payments can be particularly useful if you plan to sell the vehicle before the end of the loan term. You can then use the proceeds to pay off the balloon amount.

How to compare car loans

There are a few things open to you if you're seeking the lowest-rate car loan:

Ask for a lender's best rate

Since car loan lenders generally offer a rate range rather than a single advertised rate, pricing can be a bit opaque.

It's worth getting a few different quotes from a range of providers to arrive at your best option. If you don't have the time or willingness to do your research, you could consider hiring a car loan broker who can do the legwork work for you.

Consider newer vehicles

Newer vehicles generally attract lower interest rates because they typically retain a higher resale value and many will still have a manufacturer's warranty should the lender need to repossess and on-sell.

However, newer cars are generally more expensive so it's wise to crunch the numbers and work out whether paying a slightly higher interest rate for a used car is really better value overall.

Improve your credit score

Your credit score is one of the biggest determinants as to what interest rate your lender will offer you. An excellent credit score could be a major factor in your favour.

Marie Mortimer

Director,
loans.com.au

Do your research, choose an honest & transparent lender.

When it’s time for a new car, you might think it’s worth paying an extra percent or two at the dealership to get the car sooner - but we assure you that is not the case.

Many lenders, particularly online lenders like us, offer car loan pre-approval, and far lower interest rates than dealerships, potentially saving you hundreds, if not thousands on your car finance. Some can even turn around an approval and settlement for you in record time, so there’s no reason not to head to the dealership with your finance sorted so you’re prepared to buy.

Our top tip - always read through the fine print and opt for someone transparent and honest to help you with your car loan.

View Car Loans

Eligibility Criteria

Every lender will have slightly different criteria depending on policies and market sectors, but in general terms:

• you must be at least 18 years old

• you must be an Australian citizen, permanent resident, or hold a valid visa acceptable to the lender

• you must have a regular income and be able to provide proof of it

Documents needed for a car loan application

These may also vary between lenders, but every lender will generally require official documents covering the following:

• Personal information

  • Full name

  • Age

  • Date of birth

  • Citizenship

A driver’s license can suffice. Some lenders may ask for additional identification such as a passport or Medicare card in some circumstances.

• Proof of income

  • Two most recent pay slips

  • Bank statements for at least the past three months

Be aware, some lenders may not recognise government benefits as income. Others will accept some forms of regular payments, such as the age pension or rent assistance, but not other temporary payments such as Youth Allowance.

• Proof of assets and liabilities

  • Details of all existing loans and debts, such as home loan and/or personal loans as well as credit card and other consumer debt products

  • Summary of any shares or other investments (may not be required by all lenders)

• Information about the car and insurance

  • Dealer invoice or contract of sale

  • Vehicle Identification Number or chassis number

  • Year, make, model of the car

  • Registration details

  • Roadworthy certificate (for used cars)

  • Certificate of Currency to show proof of comprehensive car insurance

Many lenders will need you to provide proof of comprehensive car insurance before they’ll formally approve a car loan. This is so they can be sure you’ll be able to repay the loan in full should the car be written off. Providing proof of insurance is generally mandatory for a secured car loan.