Car finance · Australia wide
Car loans, explained properly.
Most people spend weeks choosing a car and about ten minutes choosing the loan, even though the loan is where the money quietly goes. This page covers what actually drives the cost of car finance — security, term, balloons and where you arrange it — so you can walk into a dealership already knowing what a good deal looks like.
Start here
Secured or unsecured: what the difference really is.
Nearly every car loan in Australia falls into one of two shapes, and the difference isn't a marketing distinction. It changes what the lender can do if the loan goes bad, and that is what pricing is built on.
A secured car loan registers the vehicle as security for the debt. The car is listed on the Personal Property Securities Register, so the interest is visible to anyone who checks it. You own and drive the car normally, but if repayments stop, the lender has a legal path to repossess and sell it to recover what it's owed.
An unsecured car loan takes no interest in the vehicle. If you default, the lender is left chasing the debt personally — through collections, credit reporting and ultimately the courts — with nothing it can simply come and take.
That single difference in recovery is the mechanism behind everything else. A lender with a recoverable asset behind the loan is exposed to less loss, and lending that carries less risk is normally priced better than lending that carries more. It also explains why a secured lender cares so much about the car itself — its age, its kilometres, its condition — because that vehicle is the fallback.
| Secured | Unsecured | |
|---|---|---|
| What backs the loan | The car, registered on the PPSR as security. | Nothing but your promise to repay. |
| Effect on pricing | Normally cheaper, because the lender's downside is smaller. | Normally dearer, because the lender carries the whole risk. |
| How much the car matters | A lot. Age, kilometres and condition all shape what can be funded. | Far less. The vehicle is largely beside the point. |
| Where it tends to suit | Newer and later-model cars bought from a dealer or a private seller. | Older cars, project or modified vehicles, and purchases a secured lender won't take. |
| If you fall behind | The lender can move to repossess and sell the vehicle. | The debt is pursued against you; the car isn't automatically at stake. |
If the car you actually want is fifteen years old, imported, heavily modified or bought from a mate for cash, a secured lender may simply not fund it. An unsecured loan usually costs more, and that extra cost is the price of the lender having no asset to fall back on. Knowing that trade-off in advance beats discovering it at the finance desk.
The assessment
What lenders generally look at.
Whether you can afford it
Your income and how reliable it is, how long you've been in the role, and what's already going out — rent or mortgage, other loans, card limits, dependants. The question is whether this repayment fits alongside your life, not just whether it fits on paper.
How you've handled credit
Your credit file and your recent banking conduct. Missed payments, dishonours and a burst of applications in a short window all get noticed. A thin file isn't the same as a poor one, and lenders read the two differently.
The car and your contribution
On a secured loan the vehicle is part of the assessment — its age, kilometres and whether it's a dealer or private sale. A deposit or trade-in shrinks the loan and reduces what the lender has at risk, which widens your options more than most people expect.
We haven't published a minimum income, a deposit percentage, a credit score cut-off or a rate, and we won't. Those settings differ between the lenders on our panel and they change without notice, so any figure here would be a guess presented as a fact. Working out which lender fits your circumstances is the actual job, and it costs nothing to ask.
The under-discussed lever
The term does more than the rate.
Almost every conversation about car finance is a conversation about the interest rate. Meanwhile the loan term — how many years you take to pay it off — is quietly doing at least as much work, and it's the lever most likely to be moved without you thinking hard about it.
The arithmetic is not complicated. Stretch the same amount over more years and each repayment gets smaller, because you're paying down the balance more slowly. But you also hold the debt for longer, so interest accrues over more months, and the total you hand over by the end goes up. A repayment that suddenly looks comfortable is often just a longer term wearing a disguise.
The reason this matters more for a car than for a house is depreciation. A car loses value from the day you buy it, and it does most of that losing early. A long term pays the loan down slowly at exactly the point the car's value is falling fastest — which is how people end up in negative equity, owing more than the car would sell for. That bites the moment you need to change vehicles, or it's written off, or you simply want out. Selling doesn't clear the debt, and the shortfall is yours.
A fair way to choose
Pick the shortest term whose repayment you can genuinely live with, including in a bad month — not the longest term the lender will allow. If the only way the numbers work is the longest available term, that's useful information about the car, not about the loan. A cheaper car on a shorter term is very often the better outcome.
Where you arrange it
Dealer finance, brokers, and why comparing is your leverage.
Dealer finance is the default for a lot of buyers, and we're not going to pretend it's a trap. It's convenient, it's arranged by someone who does it every day, and it is sometimes genuinely competitive — manufacturer-backed campaigns on new cars in particular can be sharp, and occasionally sharper than anything else available.
What's worth understanding is the setting. Dealer finance is offered at the exact moment you have decided you want the car. You've driven it, you've pictured it in your driveway, and you'd like to take it home. That's a poor moment to be assessing a credit contract, and everybody in the building knows it.
The useful reframe is this: the finance is a separate product from the car. They arrive at the same desk in the same conversation, but they are two transactions. You can negotiate the drive-away price and then arrange the loan somewhere else entirely. Plenty of buyers do exactly that — settle the car, then fund it independently.
Which leads to the only real leverage a borrower has: something to compare against. An offer with no alternative beside it can't be evaluated. The same offer sitting next to two others is immediately either good or not — and knowing what you can borrow before you walk into a showroom sometimes prompts the dealer to sharpen their own offer, which is a perfectly good outcome too.
The finance conversation is usually also where extended warranties, paint and fabric protection, gap cover and tyre-and-rim policies appear. Some have value for some people. All of them can be added into the loan, where they quietly attract interest for the whole term. Ask what each one costs on its own, and never decide on any of it in the same five minutes you're signing.
Where a broker earns its keep is the comparison itself. We hold a panel of more than 60 lenders and check your situation against their policies before anything is lodged, so your credit file isn't used as a testing ground. If dealer finance turns out to be the better offer on the day, we'd rather tell you that than talk you out of it.
Common questions
Car finance, answered.
Should I sort out finance before I choose the car?
Generally yes. Knowing your realistic borrowing position first turns car shopping into a decision about the car rather than a negotiation about repayments. It also removes the pressure of arranging credit while a salesperson waits. It doesn't lock you in — you can still take dealer finance if it turns out to be the better offer.
Is a secured loan always the cheaper option?
Usually, though not universally, and it depends on the vehicle and your profile. Security gives the lender something to recover, which lowers its exposure, and lower exposure is normally priced better. The catch is that secured lenders have views about what they'll take as security, so an older or unusual car can put a secured loan out of reach regardless of how strong you look on paper.
What term should I choose?
The shortest one you can comfortably service, allowing for a month where things are tight. Longer terms lower the repayment and raise the total cost, and because a car depreciates while you're paying it off, a long term increases the chance of owing more than the vehicle is worth. If the repayment only works at the maximum term, the honest read is usually that the car is too expensive.
Should I take a balloon payment?
Only with a clear plan for the final day. A balloon lowers your repayments by pushing part of the principal to the end, and interest keeps accruing on it in the meantime, so nothing is actually saved. When the lump sum falls due you'll need to pay it, refinance it or sell the car — and if the car is worth less than the balloon by then, you're covering the gap yourself. It can suit people who genuinely change vehicles on a cycle. It suits impulse far less well.
Can I finance a car bought privately?
Often, yes, and it's common. Private sales involve a few extra steps: confirming there's no existing finance registered against the vehicle, verifying the seller, and paying the money in a way the lender is comfortable with. Not every lender funds private purchases, so it's worth checking before you shake hands. Our private sale car loan page covers the process in more detail.
Does asking a broker affect my credit score?
No. We assess your position against lender policy before anything is formally submitted, so no credit enquiry is recorded while we work out where you fit. That matters more than people realise — applying to several lenders directly and collecting declines leaves a trail of enquiries that makes the next application harder.
What paperwork should I have ready?
Photo identification, recent payslips and bank statements, and details of what you already owe. If you're self-employed, your tax returns and financials, or a discussion about low doc options if those aren't current. If you've found the car, the listing, invoice or registration details. You don't need all of it to start a conversation, only to finish one.
Can I pay the loan out early?
Usually, but the terms vary and this is worth asking about before you sign rather than after. Some contracts allow extra repayments freely; others apply an early termination or break cost. If there's a reasonable chance you'll clear the loan ahead of schedule — a bonus, a sale, a change of circumstances — tell us at the start, because it should influence which lender we take you to.
Let's talk
Know your position before you go looking.
Tell us what you earn, what you owe and roughly what you want to spend. We'll come back with what's realistic, what the term and structure should look like, and where the offers sit — with no cost, no obligation and no credit enquiry while we work it out.
The Finance Team is the trading name of Online Showroom Pty Ltd and holds Australian Credit Licence 551493. We are a credit broker, not a lender. Nothing here is an offer of credit or a recommendation to borrow, any repayment or cost figures we discuss are estimates for illustration only, and every application is subject to assessment and approval by the lender.
Prefer to get started now?
The online application takes a few minutes and gives a broker enough to check your position properly. Nothing is lodged with a lender until you say so.
Apply nowOr use the call back form at the top of this page and we'll come to you.