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Car loan interest rates: April 2024

Following a long run of RBA rate hikes, not to mention the current cost-of-living crisis, we’re seeing many Australians navigating through increased financial pressure and uncertainty. 

The latest lending data from the Australian Bureau of Statistics shows a 5.7% increase in new loan commitments for vehicles as of January 2024. A real one-eighty when compared to December 2023’s stats, which showed a 4.9% drop.

The Federal Chamber of Automotive Industries reported a significant uptick in car sales for the year, up 12% in December compared to the same time a year prior. Passenger and SUV vehicles made up a large chunk of those sales, and this indicates that Aussie drivers are keen to make car purchases in the current market despite some of the more general economic headwinds.

How do interest rates impact car buyers?

There are two potential reasons car buyers might be more active in 2024: one is that car loans and their associated interest rates are minimally impacted by immediate cash rate movements, and so the recent rate hiking cycle should feel like it’s in the rearview mirror. 

Indeed, there are competitive car loan rates available for both new and used cars for those willing to shop around. Meanwhile, the supply and wait times for both new and used vehicles have improved in some locations lately, which seems to have helped to stabilise costs a little more.

Additionally, the RBA now seems intent on holding interest rates, or might even cut them, this year or in 2025. Generally speaking, this should help household budgets out a bit and see more car buyers thinking about upgrading their vehicles, often with the help of a good car loan.

Finally, fixed-rate car loans remain competitive compared to variable-rate options, so if you like the idea of fixed monthly repayments, it's worth considering locking in your rate. There are still a number of fixed rate options below 6.00% p.a (over a 3-year term), for example. Green car loans similarly have competitive rates as of February 1.

What is the current car loan interest rate in Australia? 

  • Average interest rate for a new car loan: 7.39% p.a.
  • Average interest rate for a used car loan: 8.07% p.a.

Current car loan rates in April 2024

These are currently the lowest car loan rates in the Mozo database at the time of writing:

New car loan (excluding green car loans):

Used car loan (excluding green car loans):

Green car loan:

To find out how interest rates are tracking in other banking products, check out our snapshots for home loan interest rates, personal loan interest rates, savings account interest rates or term deposit interest rates.

Latest car loan interest rates on Mozo - last updated 18 April 2024

Search promoted car loans below or do a full Mozo database search. Advertiser disclosure
  • Used Car Loan

    Fixed, Secured, No vehicle age limit

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured used car loan of up to $75,000 depending on your credit score. No vehicle age limits. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Details
  • New Car Loan

    Fixed, Secured, Excellent Credit Score [832+]

    Interest rate
    comparison rate
    Monthly repayment
    7.29% p.a.to 7.79% p.a.
    8.00% p.a.to 8.50% p.a.based on $30,000
    over 5 years

    Enjoy a quick application process and no monthly fees on NRMA new car loans. Finance also available motorcycles, caravans and motorhomes. Low fixed interest rates with terms of up to seven years. Plus, NRMA Blue Member benefits apply so you could enjoy even lower rates as an NRMA Member**.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 7.29% would cost $36,387.95 including fees.

    Compare
    Details
  • New Car Loan - Special

    Home Owner Discount, Including Demo, Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.24% p.a.
    7.36% p.a.based on $30,000
    over 5 years

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 6.24% would cost $35,880.27 including fees.

    Compare
    Details
  • New Car Loan

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 21.78% p.a.based on $30,000
    over 5 years

    Get a competitive fixed interest rate on a secured new car loan of up to $75,000 depending on your credit score. Easy online application. Fast pre-approval. Pre-approved funds held for up to 3 months. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Details
  • Used Car Loan

    Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    8.49% p.a.to 16.99% p.a.
    9.21% p.a.to 17.77% p.a.based on $30,000
    over 5 years

    Enjoy a quick application process and no monthly fees on NRMA used car loans. Finance also available motorcycles, caravans and motorhomes. Low fixed interest rates with terms of up to seven years. Plus, NRMA Blue Member benefits apply so you could enjoy even lower rates as an NRMA Member**.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 8.49% would cost $37,420.08 including fees.

    Compare
    Details
  • Used Car Loan

    Up to 5 years old, Variable, Secured

    Interest rate
    comparison rate
    Monthly repayment
    7.74% p.a.
    8.85% p.a.based on $30,000
    over 5 years

    Used Car Loan with no monthly or ongoing fees, with a fixed rate for the life of the loan. Fast online application. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 7.74% would cost $37,153.94 including fees.

    Compare
    Details
  • New Car Loan - Special

    Home Owner Discount, Including Demo, Fixed, Secured

    Interest rate
    comparison rate
    Monthly repayment
    6.99% p.a.
    8.11% p.a.based on $30,000
    over 5 years

    Eligible for homeowners only. Low fixed car loan rate for purchasing new and demo vehicles from dealers. Early payout options available. Winner of Mozo's Experts Choice Car Loan 2021 award^. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 6.99% would cost $36,513.67 including fees.

    Compare
    Details
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Car loan interest rate resources

Reviews, news, tips and guides to help find the best car loan for you.

How are car loan interest rates calculated?

Car loan interest rates are set by the lender, but they are based on the official cash rate set by the Reserve Bank of Australia (RBA).

Each month, on the first Tuesday (except January), the RBA meets and announces whether they have increased, decreased or kept the official cash rate steady. Changes to the rate may be a result of things like inflation, employment stats, economic growth and spending. Simply put, higher rates slow borrowing, economic activity and inflation, while lower rates encourage them.

Australia's lenders generally make changes to their loan products after an RBA announcement.

What types of car loan interest rates are there?

Like other loan products, car loans come with either a fixed or variable interest rate. Ultimately, the type of interest rate you choose can impact what you pay each repayment period. There are pros and cons to each option, so here's a breakdown of how they work.

graphic explaining types of car loan interest rates: fixed and variable

Fixed rates

A fixed rate car loan is where you receive the same interest rate over the entire life of the loan term. Essentially, if you stick to your regular repayments, you will pay exactly the same amount to your lender each payment cycle. Plus, if interest rates spike during your loan period, your loan won't be affected as you've locked in your lower rate.

The downfall of fixed interest rates is that you won't benefit from any market changes if rates are reduced. Some lenders also charge early repayment penalties on fixed rate car loans - meaning if you pay off your entire loan in full before your loan term is up, you could face a hefty fee.

Variable rates

The other option is a variable rate car loan. Unlike a fixed car loan, a variable interest rate can go up or down during your loan term, typically in line with benchmark interest rates set by the Reserve Bank Of Australia. On the one hand this could work in your favour, but on the flip side, it could end up costing you more if the rate goes up.

There is one solid benefit of a variable rate car loan though, you rarely will pay an early repayment penalty if you square things away ahead of time. So if you plan to throw a little extra cash towards your car loan, and don't mind the risk of a rate spike, a variable loan may be the option for you.

Comparison rate

The truth is the interest rate on your car loan is unlikely to be the only cost you face. There may be a range of other additional fees and charges that you need to factor in. This is where the comparison rate comes in.

According to the National Credit Code, Australian lenders must display comparison rates when advertising loan products. The comparison rate incorporates things like the interest rate, fees and charges, so that you, the customer, has a more rounded view of what the loan is going to cost. Make sure you check the comparison rate on a car loan before applying, it may be a lot higher than the headline rate.

If you'd like to compare the difference between a fixed or variable interest rate car loan, check out our car loan comparison calculator.

How are my car loan interest repayments calculated?

Your car loan repayments and how much you pay in interest depends on a few things, like the rate you receive, how often you make repayments and the length of your loan term. In short, your repayments are split between paying down your principal (what you borrowed) and paying back interest (what the bank charges).

graphic of how a car loan is repaid

When you first take out the loan, a larger portion of your repayment will go towards paying interest. As the principal on your loan lessens so does the amount of interest you pay on it. This means towards the end of your loan term, the majority of your repayment will go towards your principal rather than interest.

If you want to figure out how much your car loan might cost you each week, fortnight or month, crunch the numbers with our car loan repayments calculator.

How can I get the best interest rate on a car loan?

When it comes to the best car loan interest rate, there are plenty of options for you to choose from as most banks and lenders in Australia will have a car loan option. So, it's a good idea to do some research, shop around and find the right rate for your budget.

Here are Mozo we have a range of great tools that can help you find a car loan to suit you:

  • Car loan comparison page - weigh up a range of car loan options from the big four to smaller banks, credit unions and online lenders.
  • Car loan calculators - find out how much your repayments might be, how much you can afford to borrow and compare car loan products.
  • Car loan guides - get the whole car loan picture with the ins and outs of loan features, how to apply and what to watch out for.

Don't forget there's also a bunch of general interest rate guides, with all you need to know about how they work across all loan products.

Picture of Peter Marshall
Peter Marshall
RG146
Financial Services Specialist

Peter Marshall has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.

FAQs about car loan interest rates

What is the comparison rate?

A car loan comparison rate is designed to give consumers a more accurate idea of how much the loan will cost. Not only does it consider the headline rate, but it also takes into consideration any upfront and ongoing charges you may face over the life of the loan. So remember, when comparing car loan interest rates, always refer to the comparison rate when weighing up your loan options.

Is a fixed or variable interest rate car loan better?

There is no right or wrong when it comes to choosing either a fixed or variable interest rate car loan, it all depends on your financial situation. See above for breakdown of fixed versus variable rates.

What other car loan features are there?

Along with a competitive interest rate, you'll want to find a loan that also comes with flexible repayment features and options. Some of these include free extra repayments, redraws, repayment schedule options (weekly, fortnightly or monthly) and a range of loan terms.

Also remember to keep the fees to a minimum. Avoid forking out too much on charges like application fees, monthly service fees, exit fees or early repayment penalties.

What is risk-based pricing?

Risk-based pricing refers to a tiered interest rate system, whereby a car loan lender offers a customer a particular rate based on their credit score. Ultimately, interest rates are calculated depending on how much risk a potential borrower poses to the lender (whether they are likely to default on their loan or not).

Rather than offering a "one size fits all" standard rate, risk-based car loan lenders advertise a minimum and maximum interest rate. Based on the customer's data, the lender can offer a rate that sits anywhere between those two numbers. For those with a good credit history (that are "low-risk") will be offered a lower rate, while those with a poor credit rating ("high-risk") receive higher rates.

In some cases, risk-based pricing can be determined by the loan term a customer selects. For example, those choosing a 2-year term may get a lower rate than those that choose a 5-year term. However, this mode of pricing is much less common than that based on credit history.

Are car loan rates negotiable?

While car loan lenders may not promote the fact, it is possible to negotiate your car loan rate. Remember, the deal you are offered upfront from a lender may not be the best they can do. So, why not ask?

At the end of the day some lenders would rather take a small decrease in interest payments over losing you as a customer all together.

How can I reduce the amount of interest I pay?

When taking out a car loan, you ultimately want to pay as little in interest as you can. So, here are some ways to avoid forking out too much in interest:

  • Choose a shorter term: Car loans come with a range of different terms, from one year to up to 10 years. Think of it this way, the shorter the term on a loan the less time a lender has to charge you interest. So, if it is within your budget to do so, opt for a shorter loan term.
  • Make extra repayments: The more you can chip away at your loan the better, because ultimately the less there is to charge interest on. Make extra repayments when you can and pay off that loan sooner!
  • Work on your credit score: If you aren't after a loan right away but may need one in the future, an easy way to reduce the interest rate you receive is to repair any damage to your credit score. With a healthy credit history you can take advantage of loans with risk based pricing and you give yourself a greater chance at receiving a low interest car loan.