Average car loan interest rate in Australia

Australians borrowed around $4.7 billion to buy vehicles in the June quarter of 2026, close to half of all new fixed-term personal lending by value. That scale is why car loans are priced as their own product rather than as a general personal loan, and why the rates differ.

A car loan is usually secured against the vehicle itself, which is the reason it beats an unsecured personal loan. The live tiles above show the average secured rate, the average unsecured rate and the gap across the lenders we compare. The catch is what security means in practice: default and the lender can repossess and sell the car, and you remain liable for any shortfall.

The age of the car changes what you can get. Most lenders reserve their best secured rates for vehicles under a certain age, with the limit set by each lender and measured either when you buy or at the end of the loan term, because an older car is weaker security. Buying a ten-year-old car often means an unsecured rate even though you are buying a vehicle, which is worth knowing before you negotiate on the car itself.

Dealer finance is the main alternative, and it is not always the cheapest. It is convenient and sometimes carries a genuine promotional rate on new stock, but the finance margin is part of how dealers make money on a sale. Arranging a loan before you walk in gives you a rate to compare against and turns you into a cash buyer, which is usually worth more in the negotiation than any finance offer.

Balloon payments are the structural trap specific to car loans. Deferring a large lump sum to the end keeps monthly repayments low, but interest accrues on that deferred amount for the whole term, so the loan costs more overall. Worse, you can reach the end owing a lump sum on a car now worth less than the balloon, and have to pay it out, refinance it or sell the car to clear it.