Car Loan Tips and Tricks

By Mozo ·

Whether you’re about to apply for a car loan or still just thinking about it, it’s a good thing you’re here.

Before even choosing your lender, it's wise to familarise yourself with these tricks and tips. Because at the end of the day, being even a little clued up can save you thousands over the life of the loan.

Keen to start comparing already? Look below.

Car Loan Comparison Table - last updated November 21, 2020

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  • mozo-experts-choice-2021

    4.67% p.a.

    5.22% p.a.based on $30,000
    over 5 years

    Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.67% would cost $34,096.76 including fees.

  • 4.89% p.a.

    5.53% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,377.58 including fees.

  • 4.89% 8.89% p.a.

    5.44% 9.46% p.a.based on $30,000
    over 5 years

    Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,276.58 including fees.

  • 5.19% 18.95% p.a.

    5.46% 19.26% p.a.based on $30,000
    over 5 years

    Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 5.19% would cost $34,320.13 including fees.

  • 5.50% p.a.

    5.85% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.50% would cost $34,632.09 including fees.


Mozo's top 5 tips and tricks to finding the right car loan 

1. Get finance-ready

Dealer finance may seem like a good idea at the time, especially being a one-stop-shop for all your car needs! But when you do the sums and comparisons lenders outside of the car dealership is often the savvier option.

The truth is, it can be tempting when dealer finance offers a low interest rate. But there's a catch. With dealer finance there is little room for negotiation on the actual vehicle, so you need to consider your options closely.

Sorting out your car loan before you walk into a dealership will make all the difference to your negotiating power. They’ll see you as a serious contender if you’re not depending on dealer finance to convert the enquiry to a sale.

This also applies when looking for a secondhand car, in regards to setting up your used car loan.

2. Special deals ain’t all that

It’s so appealing when a dealership offers you free service for 5 years or up to 80,000km, isn’t it? Especially if you’ve got a fancyish car that requires dealership service to keep the warranty viable, it can costs anywhere between $450 - $900 each service! 

Essentially, you could be saving up to $5000 in the first five years of your car's life, right?

Not exactly. With these kind of ‘special offers’, just as in the dealer finance scenario, you may not shave all that much off the price of the car, if at all. Wouldn’t you rather negotiate $5000 off the sale price and take your car to get serviced at an independent mechanic for $200?

Also, don't fall into the ‘for a limited time only’ trap. Heard that one before?

You want to make a decision about buying an expensive item at the right pace. Maybe rethink the special offer so you can stay level headed and negotiate the car you want at the price you can afford. No harm in trying anyway.

3. Fix that rate

Yes, some people prefer the excitement that a variable rate has to offer. Anticipating low rates for some or all of the term of their loan.

But what if the RBA cash rate falls and your lender doesn’t pass on the benefits? Kinda feel like you’re being ripped off, right? What if the cash rate goes up and your lender generously increases their rate? Not. Cool.

That’s kind of why a fixed rate may be a better option for you. Not only will you (hopefully) secure a reasonable rate, but you will have the same predictable repayment every month. 

It means you can budget for your other monthly expenses around your car repayment. If you always know what your expenses are, you technically shouldn’t ever be out of pocket unless your income decreases or your other expenses increase. Even more reason to avoid the gamble of a variable rate and opt for a safer, more predictable one.

4. Bonus payments

Well hey there extra money. That cash bonus you received at work, in lotto, as a gift or from your tax return. You know where you’re going to go? Towards your debt. 

Whether it's on your credit card, mortgage or car loan repayment, try and put as much as you can towards what you owe the bank. Why? Because you can pay off your debt quicker, which also means less interest paid in the long run.

Thing is, if you want the freedom and flexibility to repay more when you can, then you need to sign up to the right lender and product that offers free extra repayments. This is part of the open conversation you need to have with your lender before signing your name to that car loan. 

5. Car loan flexibility

Ever heard of a lender that offers car loans that give you the flexibility of using some of it for other things like a small renovation at home or pay for your next holiday? These loans are likely called personal loans

If you want to borrow more than the value of your car so that you can have the freedom to do so much more, than a personal loan is the one you should be enquiring about.

What’s the catch? You’ll likely pay more in interest with a personal than if you were to secure a car loan. Although, in some cases you can use the value of the car as security. 

6. Fees

It’s one thing to be charged an application fee, but an ongoing monthly service fee or early repayment penalty? For what?

One of the best things you can do when shopping for a car loan is opt for a lender who has a low amount of fees. It's also important to calculate whether the amount of fees you pay is offset by a low interest rate, or vice versa. 

Need a little nudge or help exploring your car loan options? We’re here to help! Visit Mozo’s car loan comparison table for the best wheel forward.

^See information about the Mozo Experts Choice Car Loans Awards

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