Cheap Car Loans

Compare a range of car loans offers with Savvy to help you find the cheapest available for your profile today!

Written by 
Thomas Perrotta
Thomas Perrotta is the managing editor of Savvy. Throughout his time at the company, Thomas has specialised in personal finance, namely car, personal and small loans, although he has also written on topics ranging from mortgages to business loans to banking and more. Thomas graduated from the University of Adelaide with a Bachelor of Media, majoring in journalism, and has previously had his work published in The Advertiser.
Our authors
, updated on April 16th, 2024       

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Car Loans - Family smiling together while driving in their car, with two parents and young daughter

When it comes to buying a car, it’s important to look for the most affordable deals on the market. This is especially true if you’re taking out finance for the purchase; you should always seek out the cheapest and most suitable car loan for your needs. It can be easy to miss these if you’re doing all the research by yourself, which is where Savvy can help you out.

We’re partnered with over 40 lenders around Australia, enabling us to compare a wide range of options for you and determine the best based on your profile. Your friendly car finance consultant will do the heavy lifting for you, including preparing your application for submission and guiding you through the approval and settlement process. Get started with us today with a free, no-obligation quote!

How can I find the cheapest car loan interest rate on the market?

The cheapest car loan rates available to you will depend on a range of factors specific to your profile, your lender and even your car. Here are some of the variables and things you can do that help decide the cost and affordability of a car loan:

  • Improve your credit score: your credit score will play a major role in determining your interest rate. The better your score, the lower your rate is likely to be.
  • Have stable employment and income: by showing that your job is stable and you earn a consistent income which is enough to cover your repayments, your lender will feel more confident about approving your application.
  • Show a history of repaying similar debts: if you’ve had a car loan in the past, showing your lender you were able to repay it without trouble will help you score a better rate.
  • Be asset-backed: applicants who own assets like property are also more likely to receive better interest rates than those who don’t.
  • Buy new or near-new: although not as significant a difference as the above, buying a new car rather than an older used one can also help cut down on your rate.
  • Compare your options: sometimes, it’s as simple as taking the time to compare. This is the easiest way to find the best rate, which you can do through Savvy today.

Interest rates can make a big difference to the cost of a car loan. The below table demonstrates how different rates can impact loans of different sizes:

Loan size 7.00% p.a. 8.00% p.a. 9.00% p.a. 10.00% p.a.
$30,000
$594
$608
$623
$637
$40,000
$792
$811
$830
$850
$50,000
$990
$1,014
$1,038
$1,062
$60,000
$1,188
$1,217
$1,246
$1,275
$70,000
$1,386
$1,419
$1,453
$1,487

Source: Car Finance with Instant Approval Online – Savvy. Repayments are calculated based on a five-year term and monthly instalments.

Why are fees important to consider when looking for the cheapest car loan?

Of course, it isn’t just interest that you’ll need to think about, but fees as well. These are also charged by lenders as a part of almost all car loans. The costs you’ll need to factor in are:

  • Establishment fee: this is a one-off fee which is built into your loan amount. These can cost up to $600 in some cases (and occasionally more), but many lenders may only charge between $150 and $250.
  • Monthly account fee: this is a fee charged each month throughout your loan term. In many cases, these are between $5 and $15, but some may charge up to $20 or more.

Some lenders may waive one of both of these, which should be considered when comparing your car loan options.

The best way to find out the cost of your loan’s fees is to check its comparison rate. This figure includes both interest and non-conditional fees, giving you a more accurate understanding of how much you’ll pay for your loan. The following table shows how the cheapest rates aren’t always the cheapest loans:

Loan A Loan B
Interest rate
7.50% p.a.
8.50% p.a.
Establishment fee
$600
$0
Monthly fee
$15
$10
Comparison rate
9.41% p.a.
9.19% p.a.
Total cost
$37,690
$37,530

Calculations based on a $30,000 car loan repaid monthly with a five-year term.

These rates don’t include conditional fees such as early or late payment costs, as they aren’t always enforced on car loans.

How can I pay off my car loan faster to help me get a cheaper deal?

In almost all cases, paying off your car loan at a faster rate will help you get a cheaper deal. There are several ways you can do this, so it’s worth considering the following:

Selecting a shorter term

Because interest is calculated on an ongoing basis on your outstanding loan debt, selecting a shorter loan term will mean your balance will drop at a faster rate, reducing your interest as a result. However, it’s important to note that shorter terms will also result in higher repayments. The following table shows the impact of different loan terms on interest and repayments:

Loan term Repayments Total interest Total saving
Five years
$602
$6,069
N/A
Four years
$726
$4,818
$1,251
Three years
$934
$3,595
$2,474
Two years
$1,350
$2,400
$3,669

Source: How to Pay Off Your Car Loan Faster – Savvy. Calculations based on a $30,000 car loan repaid monthly with a 7.50% p.a. interest rate.

Making additional repayments

Some lenders will allow you to make extra repayments on top of the minimum required instalments. This can help you pay off your loan faster, reducing total interest in the process. Here’s how it works:

Loan term Extra payment Total payments Total interest Total saving Total loan term
Five years
$0
$602
$6,069
N/A
Five years
Five years
$100
$702
$5,019
$1,050
Four years, two months
Five years
$250
$852
$3,994
$2,075
Three years, four months

Source: How to Pay Off Your Car Loan Faster – Savvy. Calculations based on a $30,000 car loan repaid monthly with a 7.50% p.a. interest rate.

It’s worth noting that not all lenders will allow you to do this for free, with many charging early break fees. Check your lender’s terms to determine whether you’ll have to pay a fee and if these outweigh the benefits of making additional payments.

Refinancing your car loan

You may also be able to refinance your car loan to one with a shorter term to help you pay it off sooner. You can see this in the table below:

Loan term Balance after two years Interest after two years Refinanced term New repayments Total interest Total saving
Five years
$19,326
$3,753
N/A
$602
$6,069
N/A
Five years
$19,326
$3,753
Four years
$870
$5,299
$770
Five years
$19,326
$3,753
Three years
$1,677
$4,547
$1,522

Source: How to Pay Off Your Car Loan Faster – Savvy. Calculations based on a $30,000 car loan repaid monthly with a 7.50% p.a. interest rate.

This can also be done to obtain a better rate and/or lower fees. Refinancing your car loan may also incur early break fees, so make sure the saving is greater than the cost of any charges that may apply.

Will a balloon payment help me save on an affordable car loan?

Balloon payments, also known as residual payments or values, are a lump sum attached to the end of your loan term to be paid at its conclusion. Some lenders offer the option to add one of these to your loan, but not all. The main benefit of a balloon payment is that it helps reduce your repayments month-to-month, giving you a cheaper ongoing instalment.

However, balloons don’t help you save overall. Because you’re paying down your loan debt to the value of your balloon, rather than $0, your balance will fall at a slower rate, meaning interest will stay higher for longer. You’ll also have to be able to pay the lump sum in full at the end of your loan. The following table demonstrates how balloons impact the cost of car finance:

Balloon payment Repayments Total interest Total saving
$6,000
$519
$7,105
N/A
$3,000
$560
$6,587
$519
$1,500
$581
$6,328
$777
$0
$602
$6,069
$1,037

Source: How to Pay Off Your Car Loan Faster – Savvy. Calculations based on a $30,000 car loan repaid monthly over five years with a 7.50% p.a. interest rate.

Will a larger deposit help me save on my car loan?

Yes – putting forward as large a deposit as you can comfortably manage will help you secure a cheaper, more affordable loan deal. This is because you’re reducing the size of your loan and therefore the amount of interest you can be charged. The following table shows how paying a deposit can help you save significantly on your car loan:

Deposit Loan amount Repayments Total interest Total saving
$0
$30,000
$602
$6,069
N/A
$1,500
$28,500
$572
$5,765
$304
$3,000
$27,000
$542
$5,462
$607
$6,000
$24,000
$481
$4,855
$1,214

Calculations based on a car loan repaid monthly over five years with a 7.50% p.a. interest rate.

Should I consider dealership finance when searching for the cheapest car loan?

When comparing your loan options, you may come across finance deals from car dealerships that appear to be incredibly cheap. These may be offered with rates as low as 1% p.a. or 0% p.a. However, it’s important to understand the true cost of any car loan before you sign on the dotted line, and it’s no different for dealerships. Here are some of the factors to consider:

  • Inflated purchase price: one way that you may end up paying more for your car loan deal is with an increase purchase price of your vehicle.
  • High fees: always check the comparison rate on your car loan, as the interest rate may not tell the full story.
  • Introductory period: in some cases, the rock-bottom interest will only apply for a short time, before reverting to a higher rate thereafter.
  • Balloon payment: some dealers will require a significant balloon payment to be made at the end of your loan, which can increase any interest charged and may not be comfortable to manage for all borrowers.

Are fixed or variable rates cheaper on car loans?

Whether a fixed or variable interest rate is the cheapest option for you will depend on several key factors. These include:

  • Market conditions: the movement of interest rates throughout your term will determine which option is best for you. If rates are expected to rise, opting for a fixed rate could help you save, while you could benefit from a variable rate in a market where rates are falling.
  • Lender decision-making: how your lender sets their rates will also depend on market movement. You’re more likely to pay more for a variable rate if they’re set to fall and a fixed rate if they’re set to rise.
  • Flexibility: variable rates are generally more flexible when it comes to things such as early repayments and redraw facilities, so if you’re looking to take advantage of these, a variable rate may help you save. However, many fixed rate loans also offer additional repayment flexibility.

You can discuss your options with a Savvy consultant today to help you determine which is best for your situation at the time you apply.

Calculate the cost of your car loan

With Savvy, it’s never been easier to work out how much your car loan will cost you each month and overall. Simply fill out your loan amount, term, interest rate and deposit and you’ll be able to see what you’ll be paying each week, fortnight or month.

Your estimated repayments

$98.62

Total interest paid: $1233.43
Total amount to pay: $5,143.99

Why so many Australians find cheap car loans with Savvy

Frequently asked questions about cheap car loans

Will I still be able to get a cheap car loan if I’m buying used?

Yes – just because your car is used doesn’t mean you won’t be able to score an affordable car loan deal. As mentioned previously, newer cars may receive slightly better rates, but the lower purchase price of used cars means you could end up saving more overall.

Can I still get a cheap car loan if I’m buying for my business?

Yes – you can apply for an affordable chattel mortgage right here with Savvy. Although commercial rates aren’t the same as consumer rates, we can still help you find the most affordable deal for your business.

Are cheap car loans still available to bad credit borrowers?

A bad credit score in car loan terms means that you’ll be charged a steeper interest rate on your loan, with the likely addition of fees also. However, we can connect you to specialist lenders who work with customers who’ve had troubles with credit in the past to help you get approved for the car loan you need.

Does paying fortnightly instead of monthly reduce the cost of my car loan?

Yes – by opting for fortnightly repayments instead of monthly, you can save a small amount of money on your loan. For example, on a $30,000, five-year loan at 7.50% p.a., the total loan cost when paid fortnightly is approximately $50 cheaper than with monthly payments.

What are the other costs I have to account for when buying a car?

Aside from interest and fees, there are several costs that you’ll need to be aware of when buying your car. Stamp duty, vehicle registration and comprehensive car insurance are three of the big ones, which you can arrange to be included in your loan amount. You’ll also need to think about other basic costs such as general maintenance and petrol, which will be ongoing throughout your time using the car.

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