Car Loan Australia 2026: Best Rates, Secured vs Unsecured and Novated Lease
Updated April 2026 · 10 min read
Car Finance Options in Australia 2026
The average new car in Australia costs approximately AUD 45,000, making car finance essential for most buyers. Getting the right loan type and rate can save thousands over the life of the loan. Secured loans offer the best rates because the car serves as collateral. Use our car loan calculator (switch to AUD) to compare your options.
Novated Leasing: Save 20 to 40 Percent on Car Costs
A novated lease packages all your car expenses (lease, fuel, insurance, maintenance, tyres, registration) into pre-tax salary deductions. At the 37 percent marginal rate, you effectively get a 37 percent discount on GST-inclusive costs. On a AUD 50,000 car with AUD 10,000 annual running costs, savings can exceed AUD 5,000 per year. Check if your employer offers novated leasing — it is the most tax-effective way to own a car in Australia.
Budget your full car costs with our budget planner and loan payment calculator. Remember to include insurance (AUD 1,000 to 2,000), registration (AUD 300 to 800), fuel, and maintenance when calculating total cost of ownership.
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Frequently Asked Questions
What is the average car loan rate in Australia 2026?
Secured new car loans: 5.5 to 7.5 percent. Secured used car: 6.5 to 9.0 percent. Unsecured car loans: 8.0 to 14.0 percent. Dealer finance: 7.0 to 12.0 percent. Online lenders and credit unions often offer the most competitive secured rates.
Secured vs unsecured car loan: which is better?
Secured loans use the car as collateral and charge 2 to 4 percent lower interest. On a AUD 40,000 loan, secured at 6 percent versus unsecured at 10 percent saves approximately AUD 4,400 over 5 years. Secured is almost always better unless you need flexibility to sell.
What is a novated lease?
A novated lease lets you salary sacrifice your car costs (lease payments, fuel, insurance, maintenance, registration) before tax. This reduces your taxable income and can save 20 to 40 percent on total car costs depending on your tax bracket. Available through your employer.
Should I avoid dealer finance?
Usually yes. Dealers mark up interest rates for commission. Get pre-approved from a bank, credit union, or online lender before visiting the dealer. Use the pre-approval as leverage — dealers sometimes match to close the sale.
What is a balloon payment?
A balloon payment is a lump sum due at the end of the loan term (typically 20 to 40 percent of the car price). It lowers monthly payments but means you owe a large amount at the end. Avoid balloon payments unless you have a clear plan to pay or refinance.