The interest rate you are offered on a car loan is not a single number that applies to everyone. It is the outcome of a set of decisions the lender makes about the loan, the vehicle and you — and most of those decisions are visible before you apply, if you know what to look for.
This page explains what moves a car loan interest rate in Australia, how a headline rate differs from a comparison rate, and what the Reserve Bank’s personal lending rate table does and does not cover. It does not quote our rates or any lender’s rates, because a rate quoted without the loan behind it tells you very little. If you want a figure for your own situation, our car finance hub is the place to start.
What the RBA publishes about personal lending rates
The RBA does not publish a car-loan-specific average interest rate in Table F8. The Reserve Bank of Australia’s monthly Table F8, Personal Lending Rates (compiled from returns lenders make to APRA), reports weighted-average rates for broader categories of personal credit — credit cards, margin lending, finance leases, revolving credit and fixed-term loans. There is no series in that table labelled car loans or motor vehicle loans.
The fixed-term personal loan figures are useful context for the personal-credit market as a whole, because car loans are one kind of fixed-term personal borrowing. They are not an Australian average car-loan interest rate, and they should not be read as one. Under the RBA’s own labels, the most recent figures at the time of writing were:
| RBA Table F8 series (exact label) | July 2026 |
|---|---|
| Personal credit; New loans funded in the month; Fixed-term loans; Total | 9.40% p.a. |
| Personal credit; New loans funded in the month; Fixed-term loans; Fixed-rate | 10.48% p.a. |
| Personal credit; New loans funded in the month; Fixed-term loans; Variable-rate | 8.22% p.a. |
| Personal credit; Outstanding; Fixed-term loans; Total | 8.86% p.a. |
Source: Reserve Bank of Australia, Statistical Table F8 Personal Lending Rates, published 7 September 2026, read 14 September 2026. The RBA notes these rates are indicative only and are likely to be regularly revised. “New loans funded in the month” is the average on loans written that month; “Outstanding” is the average across all such loans still on lenders’ books.
Two cautions. First, these are personal fixed-term loan averages — they blend secured car loans with unsecured personal loans and other fixed-term borrowing, so they are not a benchmark for what any particular car loan should cost. Second, an average is exactly that: the range around it is wide, and where you sit in that range is the subject of the rest of this page.
What sets a car loan interest rate
Lenders price risk. Everything below is a way of describing how likely the loan is to be repaid in full and, if it is not, how much the lender can recover. The weight each factor carries varies between lenders, which is why the same borrower can be offered noticeably different rates for the same car.
1. Secured or unsecured
A secured car loan uses the vehicle as security. If the loan is not repaid, the lender can recover the car. That lowers the lender’s risk, and secured car loans are generally priced lower than unsecured personal loans used to buy a car. The trade-off is that the lender has a say in what you buy and may require comprehensive insurance. Our comparison of secured versus unsecured car loans goes into which situations suit each.
2. The age and type of the vehicle
Because the car is the security, its value over the life of the loan matters. New and near-new vehicles generally attract lower rates than older cars, and many lenders set a maximum vehicle age at the end of the loan term. Some vehicle types — imports, modified vehicles, some commercial bodies — may be priced differently or restricted. A car that is easy to value and easy to sell is a car that is easy to lend against.
3. Your credit file and history
The lender’s view of your repayment history, current commitments, enquiries and any defaults is central to pricing. Many lenders use tiered pricing, where a stronger file sits in a lower rate band. A weaker file does not necessarily mean no loan; it usually means a higher rate, a larger deposit, or both. What lenders actually assess is covered in what lenders look for when approving car finance.
4. Consumer or business purpose
A car loan for personal use is regulated consumer credit. A vehicle financed predominantly for business — on an ABN, as a chattel mortgage or a business car loan — sits outside that regime and is assessed and priced on a different basis, with different documentation and different tax treatment. The two are not interchangeable, and the rate conversation is different for each. See business car loans for the business side.
5. Loan amount, deposit and term
A deposit reduces the amount borrowed relative to the value of the car, which reduces the lender’s exposure. Term affects total cost more than it affects rate: a longer term lowers the repayment but increases the total interest paid, and some lenders price longer terms slightly higher. Our guide to how much deposit you need for a car loan covers the deposit question in more depth.
6. Balloon or residual payments
A balloon is a lump sum left to the end of the loan. It lowers the regular repayment, but the lender is carrying more of the loan for longer, and the final payment has to be refinanced, paid or covered by selling the car. The rate may or may not change; the total interest generally does. The balloon payment calculator shows the effect on repayments and total cost.
7. Fixed or variable
Most Australian car loans are fixed-rate for the full term, which is why the RBA’s fixed-rate personal loan average sits above its variable-rate average: a fixed rate carries the lender’s cost of locking it in. A fixed rate gives you certainty; a variable rate can move with the market and may have different fees for early repayment.
8. Fees, and why the rate alone is not the cost
Establishment fees, monthly account fees and early-exit fees all sit outside the interest rate. That is precisely why the comparison rate exists — it folds most of those fees into a single percentage so two loans can be compared on something closer to total cost. A low interest rate with high fees can cost more than a higher rate with none, and the comparison rate is where that shows.
Interest rate vs comparison rate on a car loan
When you see two percentages advertised for a car loan, the first is the interest rate and the second, usually slightly higher, is the comparison rate. For consumer car loans, the comparison rate is a statutory disclosure calculated for a designated amount and term prescribed by the National Credit Code regulations — the figure that most closely represents the typical loan of that kind, which for car loans is commonly the $30,000 over five years designated pair. It is only directly comparable between loans for that same amount and term. Our explainer on what a comparison rate is walks through the calculation and its limits.
How to read a rate you have been quoted
- Ask which factors set it. A lender or broker should be able to tell you whether the rate reflects the vehicle age, the security, your credit tier, the term or a combination.
- Compare the comparison rate, not just the headline. And check the amount and term it was calculated for.
- Look at total interest, not just the repayment. A lower repayment over a longer term or with a balloon usually means more interest overall. Our repayment calculator shows both.
- Check what changes the rate. A larger deposit, a newer car, or a shorter term may move you into a different band.
- Read the fees. Establishment, monthly and early-exit fees are where a quote can differ most from another with the same rate.
Frequently asked questions
What is a good interest rate for a car loan?
There is no single good rate, because rates are set on the loan, the car and the borrower. A rate is good if it reflects your actual position — a strong credit file, a newer car and a secured structure would be expected to price lower than the reverse. Comparing the comparison rate across quotes for the same amount and term is the most reliable way to judge.
Does the RBA cash rate change car loan rates?
Indirectly. Most car loans are fixed for the full term, so an existing loan does not move when the cash rate moves. New loans are priced off lenders’ funding costs, which the cash rate influences, so changes tend to flow through to new car loan pricing over time rather than immediately.
Why is a used car loan rate higher than a new car loan rate?
Because the security is worth less and harder to value. An older car depreciates from a lower base, may exceed a lender’s maximum age by the end of the term, and is less predictable to sell if the loan fails. Lenders price that uncertainty into the rate.
Is a business car loan rate different from a personal car loan rate?
It can be, because it is assessed under different rules and on different evidence. Business vehicle finance such as a chattel mortgage is priced on the business, the asset and the structure rather than as regulated consumer credit, and it does not carry a comparison rate in the same way.
Can I lower my rate after the loan starts?
Not on a fixed-rate loan without refinancing. Refinancing replaces the loan with a new one, which may attract a different rate if your circumstances or the market have changed, but it can also involve exit fees on the old loan and establishment fees on the new one. Whether it is worth it depends on the numbers, not the rate alone.
Does the interest rate include fees?
No. The interest rate is the cost of borrowing the money. Establishment, monthly and early-repayment fees sit outside it. The comparison rate is the figure designed to bring most of those fees into a single percentage for comparison purposes.
Talk to Alpha390 about your car finance options
Written and reviewed by the Finance Director at Alpha390
This article is general information only and does not constitute credit or financial advice. It does not take into account your objectives, financial situation or needs. Alpha390 Finance operates under Australian Credit Licence 506065 (Five Tees Pty Ltd). Lending is subject to approval, lending criteria, terms, conditions and fees. RBA figures are official published averages for the categories stated, are indicative only and subject to revision, and are not an indication of any rate available from Alpha390 or any lender. Comparison rates are calculated for a particular amount of credit and term and will differ for different amounts and terms.
