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Why compare used car loans with Money.com.au
20+ Australian lenders to choose from
Personalised rates
No credit score impact
Expert guidance on your used car finance
How to get the best used car loan
1
Get a secured used car loan if you can
This is usually cheaper than getting an unsecured loan for a used car. Unless the car is very old (over 12 years old), it should still be eligible for a secured car loan.
2
Negotiate the interest rate
Particularly if you have a good credit history, lenders may have wiggle room to offer a lower rate if you ask. Or, if you’re using a car loan broker, they will be able to negotiate on your behalf.
3
Get the shortest loan term you can
Our research shows the vast majority of borrowers request a five-year loan, but reducing the term by even one year on the same loan could mean paying around 20% less in interest.
4
Look for loan flexibility
In particular, second-hand car loans that allow you to pay off the loan early with no penalty can be a big money-saver. Or, if you’re ahead on your repayments and need to access the extra cash, you may be able to redraw depending on the lender and product.
5
Get pre-approval on your loan
This will mean you can go hunting for a used car knowing how much you can borrow. It also means you will be able to act fast if you find the ideal used car.
6
Check the fine print before applying
Some used car loans have age limits for the vehicle (e.g. max. 5 years old). You don’t want to find this out after you’ve already chosen a car that exceeds the limit and paid a holding deposit.
How do used car loans work?
Getting finance for a used car is very similar to getting a car loan for a brand new car.
In fact, it’s often the exact same kind of loan. That means a secured car loan where, in this case, the used car is the security. If you can’t repay the loan, the lender can reclaim and sell the car.
Most lenders will still accept used cars as security for a loan. Some lenders on our database will accept cars that are up to 15 years old. For other lenders we work with, the upper limit is lower e.g. 7 or 5 years.
If the car you're buying is not eligible for a secured used car loan, the alternative is an unsecured personal loan.
Some Australian lenders (such as OurMoneyMarket) have no upper limit on the age of the vehicle for their used car loans. If you get an unsecured loan, the vehicle’s age is also generally not considered.
Used car loan features
- Secured and unsecured options
- Loan terms of 1-7 years (most people choose five)
- Borrow up to $150,000
- Can be used for dealer or private sales
- Usually a fixed interest rate but there are variable options available
- Some lenders offer same-day approval
- Option to get pre-approval on your loan
- Establishment and ongoing fees can apply
- Balloon payment option typically available
What type of used car finance do people usually apply for?
Used car loans make up a significant proportion of the overall car finance market in Australia. In fact, more than 60% of all car loan requests made by Money.com.au customers are for a used car.
Our analysis of thousands of borrowers also shows:
- The average used car loan amount requested is $28,116 for borrowers buying a car through a dealer or private sale, based on a median used car age of 4 years.
- For private sale car loans, the average is $24,260, with a median car age of 9 years.
- For used car sales through a dealer, the average is $31,149, with a median car age of 5 years
- The majority of used car loans we analysed (56%) are for borrowers buying through a dealer.
What are the best used car finance rates? (And who gets them?)
For a secured used car loan, interest rates generally start from around 6% p.a.
For unsecured personal loans, rates are higher and generally start from around 8% but can be much higher in some cases.
The reality is your actual used car loan rate will be assessed by the lender based on your application. The main factors that affect used car loan rates can include:
- The age of the car: The older the car you’re buying, the higher the interest rate will be.
- The type of used car: The market for used electric vehicles in Australia is relatively small, but if you’re buying a used EV, you may qualify for a discounted rate on a ‘green’ used car loan. Westpac’s Electric Car Loan is one of the lowest rates available on eligible used cars up to seven years old.
- Where you're buying the car from: Some lenders offer lower rates on car loans for dealer-bought cars compared to private sale car loans as there is less risk for them.
- Your credit history: Borrowers with the highest credit scores qualify for the best rates.
- Your overall financial situation: In our experience, lenders take account of your income, expenses, existing debt levels, whether you own your home and your employment status.
Getting a second-hand car loan that’s even a couple of percentage points lower can make a big difference to your repayments. You can use our car loan calculator to see for yourself.
Don’t rely on ‘advertised’ rates on used car loans
Phil Collard, Money.com.au's Car Loans Expert
“A lot of the time you’ll see used car loan rates advertised that are identical to rates on brand new or demo cars. But this is typically a generic ‘starting from’ rate. Chances are the lender will take the age of the vehicle into account when calculating your actual rate. Many lenders will also charge rates in accordance with their perceived notion of ‘risk’. This is why you should compare personalised rates from multiple lenders or engage a trusted broker who will be able to source the right lender based on your circumstances.”
Phil Collard, Money.com.au's Car Loans Expert
Ready to compare used car loans?
Get your best offers from multiple lenders. There's no obligation and checking your rates won't impact your credit score.
Comparing used car finance: dealer versus lender
Car dealers will generally offer car finance to you as part of the sales process. This can be convenient, BUT you could end up paying a premium for that convenience factor.
Moneysmart.gov.au warns: “It's important to look at loans before you go to a car dealership. You'll be able to negotiate better, as you'll know exactly how much you can spend, the best interest rate you can get, and how much your repayments will be.”
This is where getting car loan pre-approval can be important.
Here are some questions to ask before deciding:
Is there an introductory interest rate on the loan?
These 0% or 1% finance offers can make the finance cheap to start off with but more expensive in the long run. This is because the introductory rate may apply only to part of the loan (e.g., the first year), or it may come with a large balloon payment at the end of the term, making regular repayments appear lower.
What commissions and fees does the dealer charge?
Dealers may charge additional commissions and fees, such as documentation fees, administration costs or dealer markups, which can significantly increase the overall cost of the loan, so it's important to review the full breakdown before committing.
What’s the term of the loan?
Repayments can be low on finance with a long term but you’ll pay more interest overall compared to a short term. For example, a $30,000 loan over 5 years at 7.5% would result in monthly repayments of $601.14 and total interest of $6,068.31. However, with a 4-year term, monthly repayments rise to $725.37, but the total interest paid decreases to $4,817.62.
Is the dealer offering you any sweeteners?
For example, some may offer a small discount on the purchase price. While this may seem appealing, be cautious. A discount could quickly be offset by the higher costs of financing, making it less of a deal than it initially seems.
Top-selling used cars in Australia
Australians bought more than two hundred thousand used cars in September 2024. These were the top-selling cars (up to 10 years old), according to the Australian Automotive Dealer Association.
1
Ford Ranger (5,704)
2
Toyota HiLux (4,322)
3
Toyota Corolla (3,533)
4
Toyota RAV4 (2,576)
5
Mitsubishi Triton (2,569)
6
Toyota Camry (2,462)
7
Hyundai i30 (2,438)
8
Mazda 3 (2,188)
9
Mazda CX-5 (2,076)
10
Volkswagen Golf (1,846)
