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How to get the best used car loan deal in 7 steps
- Get a secured car loan if you can. This is usually cheaper than an unsecured loan. Unless the car is very old, it should still be eligible for a secured loan.
- Negotiate on the interest rate. Particularly if you have a good credit history, lenders may have wiggle room to offer a lower rate if you ask.
- Shop for low fees as overpaying on up-front and ongoing fees can significantly inflate the actual cost of a used car loan.
- Get the shortest loan term you can to save on interest. Our research shows the vast majority of borrowers request a five-year loan, but reducing the term by even a year will make a big difference to overall cost.
- Look for loan flexibility. Particularly second-hand car loans enabling you to pay off the loan early with no penalty.
- 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.
- Check the fine print before applying, as some used car loans have an upper limit on car age.
How do used car loans work?
Getting finance for a used car is very similar to getting a 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 loan.
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 are the interest rates on used car loans?
For a secured used car loan, interest rates generally start from around 7% p.a.
For unsecured 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.
- Where you're buying the car from: Some lenders offer lower rates on car loans for dealer-bought cars compared to private sales 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 particularly 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. Here’s a quick preview to give an idea of what your rate could mean for your monthly repayments.
Best used car loan interest rate comparison
Compare a selection of used car loan interest rates in Australia, with ranges based on the borrower's credit score and other factors potentially including the age of the used vehicle. The table is sorted by lowest comparison rate.
Harmoney | |
|---|---|
| Car loan interest rate | 5.76% p.a. - 6.55% p.a. |
| Comparison rate* | 6.55% p.a. - 24.98% p.a. |
Now Finance | |
| Car loan interest rate | 6.75% p.a. - 21.65% p.a. |
| Comparison rate* | 6.75% p.a. - 21.65% p.a. |
Great Southern Bank (used vehicles up to 7 years old) | |
| Car loan interest rate | 6.49% p.a. - 15.04% p.a. |
| Comparison rate* | 6.86% p.a. - 15.44% p.a. |
Moneyplace | |
| Car loan interest rate | 6.52% p.a. - 19.19% p.a. |
| Comparison rate* | 6.95% p.a. - 20.77% p.a. |
Liberty Financial | |
| Car loan interest rate | 6.52% p.a. - 19.19% p.a. |
| Comparison rate* | 6.95% p.a. - 20.77% p.a. |
ING | |
| Car loan interest rate | 6.89% p.a. - 18.99% p.a. |
| Comparison rate* | 7.10% p.a. - 19.23% p.a. |
OMM | |
| Car loan interest rate | 6.57% p.a. - 18.99% p.a. |
| Comparison rate* | 7.19% p.a. - 21.78% p.a. |
Westpac (used vehicles up to 7 years old) | |
| Car loan interest rate | 5.99% p.a. - 12.99% p.a. |
| Comparison rate* | 7.20% p.a. - 14.14% p.a. |
Commbank (used vehicles up to 7 years old) | |
| Car loan interest rate | 5.99% p.a. - 11.99% p.a. |
| Comparison rate* | 7.41% p.a. - 13.35% p.a. |
St.George (used vehicles up to 7 years old) | |
| Car loan interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
BankSA (used vehicles up to 7 years old) | |
| Car loan interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
Bank of Melbourne (used vehicles up to 7 years old) | |
| Car loan interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
Macquarie Bank | |
| Car loan interest rate | 6.99% p.a. - 11.60% p.a. |
| Comparison rate* | 7.97% p.a. - 12.55% p.a. |
NAB | |
| Car loan interest rate | 6.99% p.a. - 20.49% p.a. |
| Comparison rate* | 7.91% p.a. - 21.33% p.a. |
Plenti | |
| Car loan interest rate | 7.49% p.a. - 12.99% p.a. |
| Comparison rate* | 8.05% p.a. - 13.08% p.a. |
ANZ | |
| Car loan interest rate | 7.49% p.a. - 19.99% p.a. |
| Comparison rate* | 8.18% p.a. - 20.58% p.a. |
Society One | |
| Car loan interest rate | 8.20% p.a. - 24.89% p.a. |
| Comparison rate* | 8.27% p.a. - 25.64% p.a. |
Loans.com.au | |
| Car loan interest rate | 7.74% p.a. - 12.79% p.a. |
| Comparison rate* | 8.85% p.a. - 13.90% p.a. |
NRMA | |
| Car loan interest rate | 8.34% p.a. - 16.99% p.a. |
| Comparison rate* | 9.21% p.a. - 17.77% p.a. |
RACV | |
| Car loan interest rate | 8.34% p.a. - 16.99% p.a. |
| Comparison rate* | 9.21% p.a. - 17.77% p.a. |
Wisr | |
| Car loan interest rate | 9.74% p.a. - 21.49% p.a. |
| Comparison rate* | 9.90% p.a. - 22.46% p.a. |
Latitude Financial | |
| Car loan interest rate | 9.49% p.a. - 29.99% p.a. |
| Comparison rate* | 10.93% p.a. - 31.83% p.a. |
Fair Go Finance | |
| Car loan interest rate | 15.95% p.a. - 27.99% p.a. |
| Comparison rate* | 26.69% p.a. - 36.32% p.a. |
| Car loan interest rate | Comparison rate* | |
|---|---|---|
Harmoney | 5.76% p.a. - 6.55% p.a. | 6.55% p.a. - 24.98% p.a. |
Now Finance | 6.75% p.a. - 21.65% p.a. | 6.75% p.a. - 21.65% p.a. |
Great Southern Bank (used vehicles up to 7 years old) | 6.49% p.a. - 15.04% p.a. | 6.86% p.a. - 15.44% p.a. |
Moneyplace | 6.52% p.a. - 19.19% p.a. | 6.95% p.a. - 20.77% p.a. |
Liberty Financial | 6.52% p.a. - 19.19% p.a. | 6.95% p.a. - 20.77% p.a. |
ING | 6.89% p.a. - 18.99% p.a. | 7.10% p.a. - 19.23% p.a. |
OMM | 6.57% p.a. - 18.99% p.a. | 7.19% p.a. - 21.78% p.a. |
Westpac (used vehicles up to 7 years old) | 5.99% p.a. - 12.99% p.a. | 7.20% p.a. - 14.14% p.a. |
Commbank (used vehicles up to 7 years old) | 5.99% p.a. - 11.99% p.a. | 7.41% p.a. - 13.35% p.a. |
St.George (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
BankSA (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
Bank of Melbourne (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
Macquarie Bank | 6.99% p.a. - 11.60% p.a. | 7.97% p.a. - 12.55% p.a. |
NAB | 6.99% p.a. - 20.49% p.a. | 7.91% p.a. - 21.33% p.a. |
Plenti | 7.49% p.a. - 12.99% p.a. | 8.05% p.a. - 13.08% p.a. |
ANZ | 7.49% p.a. - 19.99% p.a. | 8.18% p.a. - 20.58% p.a. |
Society One | 8.20% p.a. - 24.89% p.a. | 8.27% p.a. - 25.64% p.a. |
Loans.com.au | 7.74% p.a. - 12.79% p.a. | 8.85% p.a. - 13.90% p.a. |
NRMA | 8.34% p.a. - 16.99% p.a. | 9.21% p.a. - 17.77% p.a. |
RACV | 8.34% p.a. - 16.99% p.a. | 9.21% p.a. - 17.77% p.a. |
Wisr | 9.74% p.a. - 21.49% p.a. | 9.90% p.a. - 22.46% p.a. |
Latitude Financial | 9.49% p.a. - 29.99% p.a. | 10.93% p.a. - 31.83% p.a. |
Fair Go Finance | 15.95% p.a. - 27.99% p.a. | 26.69% p.a. - 36.32% p.a. |
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Should I get my used car loan through the dealership?
Car dealers will generally offer car finance to you as part of the car sale process.
This can be convenient, BUT you could end up paying a premium for the 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.
Comparing used car finance: dealer versus lender
Let’s say it’s a quiet Saturday and you end up at a car dealership for a browse. You didn’t intend to actually buy a car today. But things can escalate quickly.
Before you know it you’re in the dealer’s office with a car picked out, clasping a glossy finance brochure.
Before making any decisions, here are some questions to ask:
- 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.
- What commissions and fees does the dealer charge? Always ask for the loan comparison rate as this is the actual rate you will be paying on your used car finance.
- 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.
- Is the dealer offering you any sweeteners in return for choosing their finance? For example, some dealers may offer a small discount on the purchase price. Be wary of this as the discount could be easily wiped out by the cost of your finance.
In short, it can pay to go car shopping pre-armed with the best used car finance deal you can find.
That way when you arrive at the dealership to find the best car for you and your family, you can focus on doing just that.
Used car loans in Australia in 2023
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 in 2023 so far were for a used car, according to Money.com.au data.
Our analysis also shows:
- The average used car loan amount requested was $32,528 for borrowers buying a car through a dealer, based on an average used car age of 6.1 years.
- For private sale car loans, the average was $26,396, with an average car age of 9.8 years.
The majority of used car loans we analysed (55%) were for borrowers buying through a dealer.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
Used car loan FAQ
Get help from a real-life Money Matchmaker® from start to finish.
Can I get a used car with bad credit?
Yes it’s possible to get a used car loan with bad credit. There are a number of lenders in Australia that specialise in loans for people with a low credit score or defaults on their credit report.
You may have to accept a higher interest rate in order to be approved. But if you make your repayments consistently, your credit score may approve and you could refinance the car loan to a lower rate down the track.
It can be a good idea to check your credit score before you start applying for car finance.
How quickly can I get approved for a used car loan?
It’s usually possible to have your used car finance approved and paid to you or the car seller within a couple of days.
If you have a complex situation, such as needing to apply for a low doc car loan, the process may take slightly longer.
Likewise the process may take longer for a business applying for an ABN car loan, as both personal and business documents are generally required by the lender.
How much can I borrow with a used car loan?
Lenders typically offer used cars from $5,000-150,000.
But your actual borrowing capacity will be determined by the lender based on factors including your income, other expenses, the car you’re buying and your credit score.
Which cars qualify for a used car loan?
If you want a secured used car loan, the vehicle will need to be below the lender's maximum age limit (up to 15 years depending on the lender). The lender will also generally do a vehicle check to make sure the vehicle has never been written off, reported stolen and does not have finance owing on it.
With an unsecured car loan, the loan funds can be used for more or less any purpose. This means the lender will generally offer funds for any vehicle, provided you are otherwise eligible for the loan.
What is a good used car loan rate?
Currently, used car loan interest rates starting from around 7% are among the most competitive available. But remember, the older the car you’re buying, the higher your rate is likely to be. Your credit score and other factors to do with your financial situation can also impact your used car loan interest rate.
What is the average used car loan amount?
Money.com.au data shows the average used car loan amount requested in 2023 is $32,528 for borrowers buying a car through a dealer. For private sale car loans, the average is $26,396.
What is the maximum age of car for a used car loan?
The maximum age of a car for a used car loan varies depending on the lender you apply with. It can range anywhere from five to 15 years. The maximum is often based on the age of the car at the end of the loan term, so if you're buying an older car, you may only be able to apply for a short loan term.
Car Loans guides and resources
Where to next? Read our other car loan guides to understand more about your options for financing your next car.
Written by
Loans Expert
Shaun McGowan
Reviewed by
Editor
Sean Callery
AS FEATURED IN
*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.
