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CAR LOANS

Car loans for households and business owners

A car loan is one of the few debts where the structure is simple and the pricing is not. We compare across a panel of more than forty lenders and explain what the term, the balloon and the security actually do to the total cost.

Compare car loans1300 015 267
A household weighing up what a car repayment does to the monthly budget

  • Use

    Personal or business

  • Security

    Secured or unsecured

  • Lender panel

    40+

  • Balloon

    Optional, and explained

Is this you?

If any of these are true, we can help.

Talk it through
  • A buyer who has been quoted a repayment at the dealership and wants to know if it is competitive
  • A sole trader whose car is used for both work and family and who is unsure which structure applies
  • Someone buying privately from a listing and unsure how the money actually changes hands
  • A buyer refinancing an existing car loan that has become uncomfortable
  • A household consolidating a car loan alongside other debts into something they can manage

How it works

Three moves, in plain words.

  1. 01

    Identification

    Driver licence and a second form of identification. For a business deal, the ABN and the entity details as well.

  2. 02

    Income evidence

    Payslips for employees. For self-employed applicants, financials or tax returns on a full doc file, or ABN and GST registration on a low doc file.

  3. 03

    Bank statements

    Usually the most recent few months. Lenders read conduct here, not just balances, so overdrawn accounts and dishonours matter.

Get a second read on the numbers

Compare car loans1300 015 267

Secured, unsecured, and why it matters

A secured car loan is registered against the vehicle. If the loan is not paid, the lender has a claim over the car. That security is why a secured loan generally prices below an unsecured one and why lenders will look at longer terms on it.

An unsecured loan has no such claim. It is used where the vehicle is too old, too modified or too unusual for a lender to want it as security, and where the buyer would rather not have a registered interest on the car at all. It costs more, and the term is usually shorter.

Secured car loan

  • The lender registers an interest over the vehicle itself
  • Generally prices below an unsecured loan of the same size
  • Longer terms are usually on the table
  • The car has to satisfy the lender on age, condition and type
  • Selling before the end means requesting a payout figure so the interest can be released

Unsecured personal loan

  • Nothing is registered against the car
  • Costs more, because the lender has nothing to fall back on
  • Terms are usually shorter, so the repayment is higher
  • The practical answer where the vehicle is too old, modified or unusual to secure
  • The car can be sold without the lender in the transaction, and the debt stays with you

The detail

Private use or business use

Lenders ask what the vehicle is predominantly for, and the answer changes the contract. A loan for a car used mainly for personal purposes is a regulated consumer credit contract, with the responsible lending obligations and disclosure that go with it. A vehicle used predominantly for business purposes is generally financed under a commercial contract, most often a chattel mortgage.

That is not a box to tick creatively. Declare the real position. If the split is genuinely mixed, tell us and we will work out which structure the lender will accept, and your accountant can tell you what it means at tax time.

  • Predominantly private: consumer car loan, regulated, secured or unsecured
  • Predominantly business: commercial contract, usually a chattel mortgage or lease
  • Genuinely mixed: the lender decides on the declared predominant purpose, not on a percentage you nominate at the counter

Term, balloon and the total cost

Two loans with the same amount can produce very different total costs depending on the term and whether there is a balloon. Longer terms and larger balloons lower the monthly figure. Both increase what the loan costs across its life, and a balloon leaves an amount owing at the end.

Direction of effect only. Every figure depends on the loan, the lender and your file.
LeverEffect on monthly repaymentEffect on total interest paidEffect at end of term
Shorter termHigherLowerOwned outright sooner
Longer termLowerHigherLonger exposure to a depreciating asset
Adding a balloonLowerHigherA lump sum falls due
Larger depositLowerLowerLess risk of owing more than the car is worth

The trap worth naming is negative equity. Cars depreciate faster than a long loan with a balloon pays down. Stretch the term far enough and there is a period where the payout figure sits above the resale value, which matters the moment you want to change cars or the car is written off.

The payout figure against what the car is worth

This is the gap the monthly figure hides. For most of a seven-year term the loan owes more than the car is worth, and that difference is what you have to find if you sell early or the car is written off. It closes only near the end.

Modelled on $35,000 financed in full over seven years with a balloon, against a typical depreciation curve. Illustrative projection only. Not a quote and not an offer of credit.

View as a table
MonthAmount owingLikely resale value
0$35,000$35,000
12$32,000$28,000
24$28,800$23,500
36$25,400$20,000
48$21,800$17,000
60$18,000$14,500
72$14,000$12,500
84$10,000$11,000

Where you buy changes the file

Lenders treat the three purchase channels differently, mostly because verification is different in each one.

ChannelWhat the lender verifiesTypical friction
Licensed dealerDealer licence, tax invoice, vehicle detailsLowest. Funds are paid to a known trading entity.
Private salePPSR search, seller identity and bank details, sometimes an inspectionModerate. Verification adds days, and a seller in a hurry can be a problem.
AuctionAuction house invoice, clearance timing, condition of the lotHigher. Settlement deadlines are tight and some lenders will not fund auction purchases at all.
The point where money and keys change hands in a private sale
In a private sale the financier pays the seller directly rather than paying you. Getting the seller’s identity and bank details verified early is usually what keeps settlement day from slipping.

What we will ask you for

  1. 01

    Identification

    Driver licence and a second form of identification. For a business deal, the ABN and the entity details as well.

  2. 02

    Income evidence

    Payslips for employees. For self-employed applicants, financials or tax returns on a full doc file, or ABN and GST registration on a low doc file.

  3. 03

    Bank statements

    Usually the most recent few months. Lenders read conduct here, not just balances, so overdrawn accounts and dishonours matter.

  4. 04

    The vehicle details

    A tax invoice from a dealer, or the listing, registration details and seller information on a private sale.

  5. 05

    Existing commitments

    Every current loan, card limit and buy-now-pay-later account. Limits count against you whether or not you use them.

  6. 06

    Insurance

    Comprehensive cover must be in place at settlement, with the financier noted where the lender requires it.

Bank conduct
How the transaction account behaves, not what it holds. Dishonours, overdrawn periods and the shape of the account at month end all read as conduct.
Limit, not balance
A credit card is assessed on what could be drawn tomorrow rather than what is owing today. An unused limit still counts against serviceability.
Payout figure
The amount required to settle a loan in full on a given date, including any early termination costs under the contract.
Negative equity
The gap when the payout figure is higher than the car is worth. Long terms and large balloons are the usual way in.
Pre-approval
A conditional indication of the amount a lender will consider. It expires, and it is still subject to the specific vehicle being acceptable.

Send what you have and we will tell you what is missing. Half a file assessed properly beats a complete file lodged with the wrong lender.

Dealer finance compared with a broker

Dealer finance is convenient, and convenience has a price. The finance desk usually works with a small number of financiers and is quoting a monthly repayment rather than the total commitment. There is nothing improper about that. It is simply a narrower comparison than the one you are entitled to.

  • Ask for the total amount payable over the term, not just the monthly figure
  • Ask whether there is a balloon, and what it is
  • Ask what fees are financed into the amount rather than paid up front
  • Ask what happens if you pay the loan out early

What the amount financed is actually made of

The repayment is calculated on $38,000, not on the $32,000 windscreen price. Everything folded into the loan carries interest for the whole term, so ask which of these could be paid separately before they are financed for seven years.

Illustrative projection only. Not a quote and not an offer of credit.

View as a table
ComponentAmountShare
The car itself$32,00084%
On-road costs and delivery$2,4006%
Fees financed into the loan$1,1003%
Add-ons sold at the desk$2,5007%
Total$38,000100%

If you want a second read on a quote you have already been given, send it through. We will tell you plainly whether it is competitive, including when the answer is that it is and you should take it.

Run the numbers

See it with your own figures.

Indicative only. Change anything — the defaults are starting points, not quotes.

The loan

The amount you are borrowing, after any deposit and before fees.

A starting assumption for you to change, not a rate we are quoting and not a lender product. What you are offered depends on the security, the lender and a full credit assessment.

Principal and interest across the whole term, with no interest-only period.

Worked out on the real period rate and the real number of repayments, so a fortnightly figure is not simply half a monthly one.

Paying it down faster

Optional. Leave it at zero to see the plain schedule. Anything above zero shortens the term and cuts the interest.

Monthly repayment

$4,108.44

$650,000 over 30 years at 6.50%, principal and interest.

Number of repayments
360 monthly repayments
Total repaid
$1,479,039
Total interest
$829,039
Interest as a share of the amount borrowed
127.5%

Where the money goes

Amount borrowed$650,000
Interest over the full term$829,039

A repayment figure is the easy part. Whether a lender will lend it, on what security and at what cost, is the part we handle. Bring the number you have landed on and we will tell you what is realistic.

Talk it through with a broker
Assumptions
  • The interest rate is a figure you typed. It is not a current rate, a comparison rate, or a lender product we are offering.
  • The rate is assumed to stay the same for the whole term. Variable rates move, and a single change resets every figure on this page.
  • Repayments are principal and interest, equal in size, made on time, with no interest-only period, no repayment holiday and no redraw.
  • Weekly and fortnightly figures are calculated on the true period rate — the annual rate divided by 12 — and on 360 repayments. They are not a monthly figure divided down.
  • Interest is calculated per repayment period. A lender accruing daily and charging monthly will land on a slightly different number.
  • Extra repayments are assumed to start with the first repayment and continue every period, and to reduce the balance immediately with no fee and no break cost.
  • No fees are included: no establishment, valuation, legal, settlement, discharge or ongoing fees, no lender's mortgage insurance and no broker fee.

Open the full calculator

Dave Pham, Head Broker at WeL'nd

“Tell me the number. I have almost certainly seen worse.”

Dave Pham · Head Broker

Talk to Dave1300 015 267

FAQ

Questions people actually ask

If yours is not here, ask it. We would rather answer the awkward one early than have you find out later.

1300 015 267
Can I get pre-approval before I start looking at cars?
Usually yes, and it is worth doing. A pre-approval tells you the amount you are working with and takes the pressure off at the point of sale. It is conditional, it has an expiry, and it is still subject to the specific vehicle being acceptable to the lender. It is not a guarantee of final approval.
How much deposit do I need for a car loan?
Many lenders will consider financing the full purchase price, particularly for a strong applicant buying from a dealer. A deposit is still worth having, because it lowers the amount financed, reduces total interest and cuts the risk of owing more than the car is worth partway through the term.
Can I finance a car older than ten years?
Sometimes, and the term is usually shorter. Most lenders assess age at the end of the term rather than at settlement, so a ten-year-old car on a five-year term is being assessed as a fifteen-year-old car. Where secured lending is not available, an unsecured personal loan is often the remaining route.
What happens if I want to sell the car before the loan ends?
You request a payout figure from the financier and the loan is settled from the sale proceeds. If the car sells for more than the payout, the difference is yours. If it sells for less, you cover the shortfall. This is exactly why the negative equity question is worth thinking about before you choose a long term with a large balloon.
Is a car loan or a personal loan better?
A secured car loan is usually the cheaper option when the vehicle qualifies as security, because the lender is taking less risk. A personal loan makes sense when the car is too old or too unusual to secure, when you would rather not have a registered interest on the vehicle, or when the amount is small.
Will my existing credit card limits reduce what I can borrow?
Yes. Lenders assess the limit on a card, not the balance, because you could draw the full limit tomorrow. Closing or reducing a card you no longer use is one of the quickest ways to improve serviceability, and it is worth doing before an application rather than after a decline.
Can I refinance a car loan I already have?
Often. It is worth looking at when your circumstances have improved, when the current loan carries a balloon you would rather restructure, or when the repayment has become uncomfortable. Check the payout figure and any early termination costs on the existing contract first, because those can change whether the move is worthwhile.
Should I roll a car loan into my home loan?
It can lower the repayment considerably, and it can also stretch a five-year debt across twenty-five years, which costs far more in total interest. It sometimes makes sense as part of a wider consolidation where the alternative is falling behind. It is a decision to make deliberately, with the full-term numbers in front of you.

Credentials

  • Credit Representative 554029
  • ABN 20 672 801 651
  • FBAA member
  • AFCA external dispute resolution

Related

Other ways we can help

Reading

Worth understanding first

All of car & asset finance

Where we work

Get a second read on the numbers

Send us the car, the price and any quote you have already been given. We will come back with what the panel can do and what the loan costs across the full term, not just per month.

Or call us

1300 015 267

Monday – Friday, 09:00 to 17:30

Dave Pham, Head Broker at WeL'nd

“Tell me the number. I have almost certainly seen worse.”

Dave Pham · Head Broker

Talk to Dave1300 015 267

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