Showing car loans for
$
over
Advertised Rate

From

5.75

% p.a

Variable

Comparison Rate*

6.47

% p.a

Company
Monthly repayment

$577

Loan amount

$5k to $50k

Total repayments
Real Time Rating™

3.11

/ 5
Go to site
More details
Advertised Rate

From

3.25

% p.a

Fixed

Comparison Rate*

5.12

% p.a

Company
Monthly repayment

$542

Loan amount

$5k to $750k

Total repayments
Real Time Rating™

3.71

/ 5
Go to site
More details
Advertised Rate

3.97

% p.a

Fixed

Comparison Rate*

4.51

% p.a

Company
Monthly repayment

$552

Loan amount

$5k to $100k

Total repayments
Real Time Rating™

3.97

/ 5
Go to site
Awards

Winner of Best Green Car Loans, RateCity Gold Awards 2021

More details
Advertised Rate

4.67

% p.a

Fixed

Comparison Rate*

5.22

% p.a

Company
Monthly repayment

$562

Loan amount

$5k to $100k

Total repayments
Real Time Rating™

3.62

/ 5
Go to site
Awards

Winner of Best Used Car Loans, RateCity Gold Awards 2021

More details

Embed

Car loan lenders we compare at RateCity

Learn more about car loans

How does a secured car loan work?

Putting an asset up as collateral on a loan reduces the financial risk to the lender, so secured car loans typically have more competitive interest rates than unsecured car loans. Additionally, lenders may be prepared to offer a higher loan amount on a secured loan compared to an unsecured loan.

What are the benefits and risks of a secured car loan?

As a secured car loan is guaranteed against the value of your car or another asset, lenders won't generally lose money if you default. This means they will charge lower interest rates compared to unsecured car loans. 

Secured car loans may be a competitive option for borrowers with less stable finances such as contractors or the self-employed, as they may be more likely to be get approved finance.  Those with poor credit history too have a higher chance of receiving approval for a secured car loan. This is because the security of the car reduces the risk to the lender. However, be aware that if you default on your secured car loan, you can lose the car itself.

There may also be limitations as to what kind of car you can buy with your secured loan. As mentioned above, some lenders only offer secured car loans for brand new cars, or used cars under a certain age. Others may refuse to offer secured loans for certain car models or sports cars.

How do you choose a secured car loan

The best way to compare secured car loans is to look at their rates, features and fees. Use RateCity’s comparison table to examine the following loan characteristics: 

What to look for About
Loan amount How much you want to borrow for the vehicle.
Loan term How long the loan will be. Typically around 5 years but can go as high as 10.
Loan type Choose between secured or unsecured loans.
Interest rate The lower the rate, the less interest you’ll pay over the life of your loan. This is important, but not the only thing to consider when comparing loans.  
Interest rate type Choose between a fixed or variable loan. Fixed rates allow for easier budgeting as your repayments won’t change. Variable rates mean if your lender passes on a rate cut, you’ll pay less. However, if there’s a rate hike, you’ll have to pay more. 
Fees Can include upfront, annual, ongoing or early exit fees.
Features Some loans come with helpful features. These can include the ability to make extra repayments and a balloon payment, or a  lump sum that you pay at the end of your car loan.

How do I get the cheapest secured car loan?

It’s important to note that there is no one ‘best’ car loan option in Australia, and the right car loan for you will depend on a range of factors, including your personal financial situation and circumstances, and the vehicle you’re interested in. 

That being said if you’re hoping to nab the cheapest car loan for your financial situation, you’ll want to present yourself as the most ideal borrower to a lender, which can include:

  • Stable employment. Car loan lenders will have eligibility criteria around the length of and type of employment you have. Generally speaking, being employed full-time for at least 12 months may help to boost your chances of approval, as it showcases a high level of financial stability and certainty in your income.
  • Excellent credit score. Another key part of a lenders eligibility is around your creditworthiness, as expressed by your credit history and credit score. The higher your credit score, the more likely you may be to be offered a competitive interest rate. This is because lenders typically reserve their most competitive rates for the most ‘reliable’ and ideal borrowers who pose a low level of risk. There are ways you may be able to boost your credit score before you apply.
  • New vehicles. While interest rates vary across each lender in the market, often a car loan lender may offer lower interest rates for borrowers of new vehicles (1-2 years old) versus used vehicles. This is because there is less risk that the newer vehicle will break down during the length of the car loan. 

What documentation do you need for a secured car loan?

Before you apply for a secured car loan, make sure you’ve organised your paperwork.

This may include, but is not limited to:

  • Personal identification such as a driver's licence or passport
  • Proof of income
  • Copies of bank statements
  • Copies of bills
  • Information on any debts you may have (such as credit cards) 
  • Information about the car you want to buy

Secured versus unsecured loans

There are a few differences between secured and unsecured car loans. Most significantly, unsecured loans are not guaranteed against the value of your vehicle or another asset. This means that if you default, the lender can’t possess your car to minimise their losses, so they are riskier for lenders.  Because of this, unsecured loans tend to charge higher interest rates than secured loans. 

Unsecured loans offer greater flexibility in terms of how you can spend the money. They can be used to pay for your car registration, insurance and other costs, for example. Secured loans are limited to the value of the vehicle itself. 

What about encumbrance/PPSR check fees?

It pays to confirm a car’s financial history before agreeing to a purchase. This is just in case the vehicle still has money owing on it. You can confirm a car’s history with a report from the Australian Government’s Personal Property Securities Register (PPSR), formerly known as REVS. Some lenders can organise this check for you as part of their service, though this may cost you extra.

Frequently asked questions

What is an unsecured car loan?

An unsecured car loan is a loan that is not connected to a form of security, or collateral. Not all lenders provide unsecured car loans – and if they do, they generally charge higher interest rates for their unsecured car loans than their secured car loans.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

Can you put a deposit on a car to hold it?

It’s up to individual car dealers to decide whether to promise to hold on to cars in exchange for deposits.

Some car dealers will request a deposit and promise, in return, to hold on to the car for a certain period of time. Others will request a deposit but make no guarantees, other than to return the deposit if they end up selling the car to someone else.

Some car dealers ask for deposits; others don’t. If you get asked for a deposit and you decide to pay it, make sure the dealer gives you signed paperwork before you make the payment and a receipt after you’ve made the payment.

What is collateral?

Collateral, or security, is an asset you agree to surrender to a lender if you fail to repay a loan. Generally, the collateral for a car loan is the car itself. So if you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

What is repayment frequency?

Repayment frequency is how regularly you have to make car loan repayments to your lender. The most common repayment frequency is monthly, but many lenders will also give you the option of making fortnightly or weekly repayments.

What is an LVR?

The LVR, or loan-to-value ratio, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have an LVR of 75 per cent. LVRs change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the LVR would now be 67 per cent.

What is a balloon payment?

Some lenders will offer borrowers reduced monthly repayments in return for a one-off lump sum – or balloon payment – that the borrower has to pay at the end of the loan. Generally, the total repayments on a loan with a balloon structure will be higher than a loan without.

What is a refinance?

A refinance is when you swap one car loan with another. For example, you might take out a car loan with Lender X because it is the best on the market at the time – but two years later, you might switch to Lender Y because you discover that it now has the best loan. Conditions and fees often apply when you refinance.

What is a redraw facility?

A redraw facility allows you to re-borrow any funds you may have repaid ahead of schedule – although conditions and fees often apply. Not all car loans come with a redraw facility.

What are repayments?

Repayments are the regular payments you make to pay off your car loan. Repayments generally occur on a monthly basis, although many lenders will also give you the option of making fortnightly or weekly loan repayments.

What are loan repayments?

Loan repayments are the regular payments you make to pay off your car loan. Loan repayments generally occur on a monthly basis, although many lenders will also give you the option of making fortnightly or weekly loan repayments.

What is salary packaging?

Salary packaging is an arrangement you can make with your employer that can allow you to buy a car from your pre-tax salary. The advantage of salary packaging is that it will redue your taxable income.

What is the principal?

The principal is the value of the loan that is still outstanding. So if a borrower takes out a $20,000 loan, the principal is $20,000. If the borrower repays $5,000 in the first year, the principal is now $15,000.

What is equity?

The equity is the share of the car that you own. For example, if you take out a $15,000 loan to buy a $20,000 car, you have $5,000 of equity in the vehicle, or 25 per cent. (The lender has the other 75 per cent.) Equity changes over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, you would still have $5,000 of equity in the vehicle, but your share would be 33 per cent.

Where can I get a student car loan?

Student car loans are not a necessarily a product in and of themselves, but what you may be looking for is a guarantor car loan.

A guarantor car loan has a third-party act as a form of guarantee for your loan application, telling the bank or lender that if you default on your loan, someone will pay the loan repayments.

Going guarantor on a car loan is no new thing, and before internet-based credit scores, guarantor car loan applicants would apply for loans with a guarantor or property owner who could vouch for the person borrowing the loan.

To get a guarantor car loan, you’ll need someone willing to act as a guarantor for your car loan.

What is a guarantor on a car loan?

A guarantor on a car loan is a third party, usually a relative or friend, who guarantees to meet the repayments of a loan for the purchase of a car, if the borrower/owner of the car defaults on the loan.

Guarantor car loans can be useful for people who would otherwise struggle in being accepted for credit to purchase a vehicle. These may include people with bad credit, students and young people who may have no credit history, as well as some pensioners.

Many lenders offer guarantor car loans, guarantor personal loans and guarantor home loans, because of the significantly reduced risk to the lender.

What is a guarantor car loan?

A guarantor car loan is a type of loan that features a guarantor on the agreement. The guarantor is a third-party individual, often a friend or relative, who guarantees the loan will be repaid if the borrower defaults on the car loan.

Guarantor car loans are often geared at people who might otherwise struggle being accepted for a secured car loan when purchasing a vehicle. Some of the reasons might include a lack of credit history such as with a student or young person, if there’s bad credit, or age as a factor such as with pensioners.

Can I get a car loan with poor credit?

Poor credit doesn’t necessarily mean you won’t be able to get finance for your car purchase, though your options aren’t likely to be the same as someone with good credit.

In fact, a number of specialist lenders exist offering car finance for customers with poor credit, able to provide access to bad credit car loans.

However having a history of poor credit will likely mark you as a potential risk to lenders, so your car financing needs could see higher fees and interest rates. Alternatively, consider a secured car loan, which is a type of loan that uses the car you purchase as collateral, reducing the risk.

Other options include getting someone close to act as a guarantor for your car loan, or to talk to a broker about a personalised rate specific to your circumstances.

How to find a great car loan

Historically, finding a great car loan would require excess research ranging from visiting an excess of websites or making phone calls, but technology has moved on. Using RateCity, Australia’s leading financial comparison service, you can check out great deals from a range of lenders on the one site.

To start, select the amount you want to borrow and the length of the loan, narrowing your search to show just fixed or variable interest rate results.

Once you’ve indicated your search criteria, you’ll see an immediate list of lenders, ranked by interest rate or application fees. You’ll also be able to view the monthly repayment amount for each result, helping you to know what you can afford.

Up to six products can be compared side-by-side, complete with more information about each car loan, giving you more information about your options.

When comparing your car loan options, it’s ideal to keep in mind some points find a great car loan for your needs. Consider the following:

  • Choosing a low interest car loan can reduce costs
  • Selecting an option with low fees and charges is ideal, because these can really add up
  • Be aware of penalties, such as early exit penalties if you pay off the loan sooner than expected
  • Consider the features that best suit your situation

There are many ways to ensure that you get a great car loan. Ultimately, you’ll end up with the best deal by doing your research and selecting the most suitable product for you.

Can I get a no credit check car loan?

You may be able to get a no credit check car loan in certain circumstances, although it’s important to weigh up your options before doing so.

Most lenders refuse to provide no credit check car loans, because they don’t want to give loans to borrowers without first confirming that they have a track record of repaying debts. So any lenders that do provide no credit check car loans would take measures to protect themselves against the risk of default.

That’s why no credit check car loans have higher interest rates than other car loans. Also, borrowers often have to provide security and put down a larger deposit.