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What are the lowest car loan interest rates?

Written by

Shaun McGowan

The lowest car loan rates are generally reserved for newer vehicles that are financed with a secured car loan.

In addition, having a strong credit score and history will strengthen your ability to get alow rate car loan (even if you aren't buying a new car).

How lenders determine an interest rate

How long you have been employed is an interest rate factor.

employment history applicant

How lenders view credit history

Your credit score and history make a big impact on what interest rate you will pay. Generally, the higher your score, the lower your rate will be.

credit history applicant

What cars get the lowest rates

Lenders prefer to finance new cars over older cars and therefore provide lower rates for them.

age of car being purchased

Lowest car loan interest rates in Australia

LenderInterest Rates


Rates from 5.99% p.a Comparison Rates from 6.54% p.a


Rates from 4.74% to 16.01% p.a Comparison Rates from 5.56% to 16.93% p.a

Finance One

Rates from 14% to 24% p.a

Greenlight Auto Finance

Rates from 16.99% to 27.99%


Rates from 5.29% to 24.99% p.a Comparison Rates from 5.84% to 29.99% p.a

Variable Rates from 3.14% to 8.44% p.a Variable Comparison Rates from 3.68% to 9.01% p.a Fixed Rates from 4.89% to 10.19% p.a Fixed Comparison Rates from 5.44% to 10.76% p.a

Now Finance

Rates from 4.45% - 15.45% p.a Comparison Rates from 4.45% - 15.45% p.a

FairGo Finance

Rates from 15.92% to 27.99% p.a Comparison Rates from 26.69% to 36.32% p.a

Society One

Rates from 4.95% - $19.99% Comparison Rates from 4.95% - 21.70%

Alex Bank

Rates from 4.99% to 12.99% p.a Comparison Rates from 4.99% to 12.99% p.a

Notice how all these rates are ‘from’ a certain percentage?

That’s because you won’t know exactly what rate you get until you apply.

When you apply, lenders will look at you and your application and adjust your rate.

How do lenders decide what interest rate you’ll get?

Lenders assess an application for a car loan and assign an interest rate based on a number of factors:

  • The age of the vehicle - best rates will be for brand-new vehicles
  • The type of vehicle - lowest rates will be for vehicles under 4.5 tonne
  • The amount you wish to borrow - best rates will be for an amount you can easily repay
  • The length of your loan - lowest rates will be for the shortest term
  • Your credit history - best rates will be for perfect credit scores
  • Your net income - lowest rates will be for stable, high-income applications
  • If you own a property - best rates will be for homeowners
How lenders determine interest rates

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Are there other ways to get a better rate?

You can get the lowest interest rates on a car loan by presenting as little risk to a lender as possible.

Interest rates are often directly tied to your risk level - the lower the perceived risk of failing to meet your repayment obligations throughout the term, the lower the interest rates available.

The lowest interest rates on a car loan are offered to borrowers who fit the profile below:

  • Clean credit history
  • Regular, stable employment for two years
  • Living at the same address for two years
  • Financing a brand-new vehicle

Now you know a little more about how to get the lowest rate, it’s time to look at why a low interest rate doesn’t always mean the cheapest loan

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Will the lowest rates get me the cheapest loan?

First, answer this: what does ‘the cheapest car loan’ mean to you?

  • Cheaper repayments over your car loan term
  • Lower total interest (cost) over your car loan term

If you want to get cheaper repayments on your loan, you can consider:

  • Choosing a longer term
  • Including a balloon payment
  • Buying the newest model car you can afford
  • Avoid using a broker or intermediary like a car dealer

If you want to pay a lower amount of interest, you should consider:

  • A shorter-term car loan
  • A car loan that allows you to make additional repayments; and
  • Pay out the loan early without penalties.
  • Go direct to the lender to pay the least amount of fees

So how can I tell if the advertised rate is the cheapest?

To find the cheapest loans with the best rates, you’ll need to understand how loans are advertised.

In Australia, you’ll find two types of interest rates listed with loans:

  • The advertised rate
  • The comparison rate

The advertised rate is determined only by the interest rate applied to the loan.

Ignore this - it’s a trap.


Well, the only time this will matter at all is when your loan has no fees, but this doesn’t matter either because…

The comparison rate is a more realistic assessment of the loan cost - it combines the advertised rate and all the fees included with the loan.

Guess which one you’ll see more often when looking for cheap car loans or low interest car loans.

That’s right, the advertised rate. Again, ignore this and only look at the comparison rate.

This is because a comparison rate will be much higher if there are significant fees attached to the loan - which makes them unappealing to borrowers wanting the best deal.

Don’t get tricked by a deal that looks too good to be true.

What exactly makes up the comparison rate for a loan?

You can compare cheap car loans by looking at all the factors that influence your total interest amount, total repayment amount, and your regular repayment amount. These will be influenced by:

  • The interest rate on your loan
  • Whether your loan is assigned fixed-rate or variable-rate interest
  • The establishment fee for your loan
  • Any ongoing fees
  • Early repayment penalties
  • Brokerage fees - if applying through a broker
  • Balloon amount - if applied to your loan
Fees on loans to be aware of

What is the average car loan interest rate?

The average interest rate for a car loan is between 5 and 10%.

New cars generally attract lower averages around 5-8% depending on your credit profile.

Used cars are often slightly higher.

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About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.

*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.


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Money Pty Ltd (trading as provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.