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AussieCalc

Car Loan Calculator

Calculate your repayments, total interest, and balloon payment impact for any Australian car or vehicle loan.

When to use

When you're financing a car purchase and want to compare repayments, total interest cost, and the impact of a balloon payment.

Who it's for

Car buyers using a secured auto loan, including those comparing dealer finance against a bank or credit union loan.

What you'll need

Vehicle price or loan amount, deposit, annual interest rate, loan term, and any balloon payment amount.

$

The on-road price of the vehicle including dealer delivery and registration.

$

Cash deposit or trade-in value. A larger deposit reduces your loan amount and total interest.

Net loan amount: $30,000(14% deposit)

%

Car loan rates in Australia typically range from 5% to 15% depending on lender, loan type, and credit profile. Always compare the comparison rate.

Longer terms mean lower repayments but more total interest. Most Australian car loans are 3–5 years.

More frequent payments marginally reduce total interest by reducing your balance faster.

$

Optional additional amount on top of your regular repayment. Shows how much interest and time you can save.

Principal and interest repayments only. Excludes establishment fees, motor vehicle stamp duty, CTP insurance, and comprehensive insurance. General guidance only — not financial advice.

Loan balance over time

How your vehicle loan reduces — hover to inspect each year

Remaining balance
Line chart showing remaining car loan balance decreasing over the loan term
PeriodRemaining balance
Start$30K
Yr 1$25K
Yr 2$19K
Yr 3$13K
Yr 4$7K
Yr 5$0

Balance declines slowly at first as early repayments are mostly interest, then accelerates as more of each payment reduces the principal.

Interest vs principal breakdown

Cumulative interest paid vs principal repaid — hover to inspect each year

Cumulative interestPrincipal repaid
Line chart showing cumulative interest and principal repaid over the car loan term
PeriodCumulative interestPrincipal repaid
Start$0$0
Yr 1$2K$5K
Yr 2$4K$11K
Yr 3$5K$17K
Yr 4$6K$23K
Yr 5$6K$30K

Most of the interest cost is paid in the early years. The two lines cross when you have repaid more principal than you have paid in interest.

Loan term comparison

Monthly repayments at 7.99% p.a. for $30,000 loan, no balloon

TermMonthly repaymentTotal interestTotal repaid
3 years$940/mo$3,838$33,838
5 yearscurrent$608/mo$6,489$36,489
7 years$467/mo$9,265$39,265

Impact of your deposit

How your $5,000 deposit compares to financing the full vehicle price

Monthly repayment saved

$101.36

$608.15 vs $709.51 without deposit

Interest saved

$1,081

$6,489 vs $7,570 without deposit

Loan reduction

$5,000

$30,000 loan vs $35,000 without deposit

What if you borrowed $2,000 less?

Increasing your deposit by $2,000, or negotiating $2,000 off the price, saves:

Lower monthly repayment

$40.54

Down from $608.15 to $567.61

Interest saved

$433

Total interest down to $6,056

Reduced total cost

$2,433

Total repayment down to $34,056

Car finance in Australia

How car loan repayments are calculated

Your repayment is calculated using standard loan amortisation: each payment covers the interest accrued that period plus a slice of the principal. Early payments are mostly interest; later payments are mostly principal. Your deposit directly reduces the loan amount, cutting both your regular repayment and the total interest you pay.

What is a balloon payment?

A balloon payment (also called a residual) is a lump sum deferred to the end of your loan term. It reduces your regular repayments but must be paid in full at maturity, either from savings, by refinancing, or by selling the vehicle. Balloon payments are common in novated leases and dealer finance. The ATO sets maximum residual values for novated leases based on vehicle effective life.

Secured vs unsecured car loans

Most Australian car loans are secured, with the vehicle acting as collateral, which is why lenders offer lower rates than unsecured personal loans. If you default, the lender can repossess the car. Secured car loans are typically 1–3% lower in rate than equivalent unsecured personal loans. Older vehicles (generally 10+ years) may not qualify as collateral for secured loans.

The comparison rate: What it really costs

The headline interest rate tells you what's charged on the balance. The comparison rate includes most fees and charges, expressed as a single annual rate, making it easier to compare products. A loan at 5.99% with high fees can cost more than one at 7.5% with no fees. Always ask your lender for the comparison rate before signing any car finance contract.

The true cost of a longer loan term

A longer loan term lowers your repayments but increases the total interest you pay on a depreciating asset. A $30,000 loan at 7.99% costs approximately $608 per month over 5 years, with total interest of around $6,480. Stretching the same loan to 7 years cuts repayments to $468 per month, but total interest rises to approximately $9,280, nearly $2,800 more. For a car that depreciates 15–20% per year, paying more interest on a longer term means you may still owe close to the car's value years into the loan.

Depreciation and negative equity

New cars lose 15–25% of their value in the first year and up to 50% within three years. If you borrow close to the full price of a $35,000 car with no deposit, the loan balance after 12 months is approximately $29,000, but the car may be worth only $28,000. This 'upside-down' position, (where you owe more than the car is worth), is a problem if you need to sell or if the car is written off and the insurer only pays market value. A deposit of 15–20% and a shorter loan term are the most effective protections against negative equity.

New vs used cars: What changes with finance

Used cars typically attract higher interest rates than new cars, often 1–3% more, because the vehicle depreciates faster and has higher risk as collateral. Lenders may also restrict secured loans to vehicles under 10–12 years old, pushing some used buyers to unsecured personal loans at even higher rates. On the other hand, used cars cost less upfront, so the loan amount is smaller even at a higher rate. A $15,000 used car at 10% over 5 years costs approximately $4,120 in total interest; a $35,000 new car at 7% over 5 years costs approximately $6,580. The total interest on the used car is lower despite the higher rate, simply because the principal is smaller.

Worked examples

Standard 5-year car loan — $30,000 at 7.99%
With a $35,000 vehicle, $5,000 deposit, and 7.99% interest over 5 years, the net loan is $30,000. Monthly repayments are $608, with total interest of $6,489 over 60 payments. This represents about 21.6% of the loan amount paid in interest, a useful benchmark when comparing loan offers. Total repayment is $36,489 for a vehicle that may be worth $17,000–$20,000 at the end of the term.
The cost of stretching to 7 years
Taking the same $30,000 loan at 7.99% over 7 years drops the monthly repayment to $467 — $141 less per month. However, total interest rises to $9,265, approximately $2,780 more than the 5-year loan. Over those extra 24 months, the car continues to depreciate while you pay additional interest. Unless the monthly saving is essential for your cash flow, the 5-year term is the stronger financial choice.
Balloon payment — lower repayments, higher total cost
Adding a $6,000 balloon to the same $30,000 loan at 7.99% over 5 years lowers monthly repayments to $526, $82 less per month. However, total interest increases to $7,588, around $1,100 more than a standard loan. At the end of the term, $6,000 must be paid in full, refinanced, or covered by selling the vehicle. If the car is worth less than the balloon amount, the shortfall comes out of your own pocket.

Common mistakes when financing a car

  • Negotiating on repayment instead of price

    Dealers are trained to move conversations from vehicle price to monthly repayment. A $3,000 price difference on a 5-year loan is only about $56 per month which is easy to overlook. Always negotiate the drive-away price first, then arrange finance separately.

  • Ignoring total interest and focusing only on repayments

    A lower monthly repayment from a longer term or balloon payment does not mean the loan is cheaper, in fact it often means the opposite. Always check the total interest figure before agreeing to any car finance. This calculator shows total interest alongside the repayment amount for this reason.

  • Financing add-ons and dealer accessories

    Dealers often offer to bundle extended warranties, paint protection, window tinting, and floor mats into your loan. These extras attract interest for the life of the loan. A $2,000 add-on at 8% over 5 years costs an additional $430 in interest. If you want accessories, pay for them separately or negotiate them into the vehicle price.

  • Not checking for early repayment fees on a fixed loan

    Fixed-rate car loans often include early termination charges, sometimes called break costs, if you pay the loan off ahead of schedule. These can be several thousand dollars and eliminate any interest saving from paying early. Check the product disclosure statement or loan contract carefully before signing.

  • Rolling negative equity into the next loan

    If your car is worth less than your outstanding loan when you want to upgrade, some dealers will offer to roll the shortfall into your new loan. This means you start your next loan already owing more than the new car is worth, compounding the problem. A deposit on your next vehicle and keeping your current loan term short are the best ways to avoid this cycle.

Frequently asked questions

What is the average car loan interest rate in Australia?
Car loan rates in Australia typically range from around 5% to 15% p.a. depending on your credit profile, whether the loan is new or used vehicle finance, and the lender. New car loans from manufacturers and banks often start from 5–7% for qualified borrowers. Used car loans and personal loans for vehicles are usually 8–15%. Always compare the comparison rate, not just the headline rate.
How much deposit do I need for a car loan in Australia?
There is no minimum deposit required for most Australian car loans; you can borrow 100% of the vehicle price. However, a deposit of 10–20% reduces your loan amount, lowers your repayments, and can improve the interest rate offered. A larger deposit also reduces the risk of being 'upside-down' on your loan (owing more than the car is worth), which happens quickly as new cars depreciate.
Should I use dealer finance or get my own car loan?
Dealer finance is convenient but often more expensive. Dealers earn commission on finance products, which can mean higher rates or more fees. Getting pre-approved through a bank, credit union, or online lender before visiting a dealer gives you a benchmark rate and negotiating power. Manufacturer finance deals (e.g. 0% for 36 months) can be genuinely competitive but may have conditions like a required deposit or balloon payment.
Is it worth getting a balloon payment on a car loan?
A balloon payment lowers your regular repayments, which can make a more expensive car seem affordable. However, you end up paying more total interest over the loan term, and you must have a plan for the balloon at maturity. If you plan to trade in or sell the car before the balloon is due, this can work well. If you're unsure, avoid a balloon; a standard loan with a longer term is more flexible.
Can I pay off a car loan early in Australia?
Most variable-rate car loans allow early repayment without penalty. Fixed-rate car loans often have break fees or early termination charges, sometimes equal to the remaining interest. Check your loan contract or product disclosure statement carefully. Making extra repayments on a variable car loan is one of the fastest ways to reduce the total interest you pay.
Does a car loan affect my home loan borrowing capacity?
Yes. Lenders include your car loan repayment as a committed expense when assessing mortgage serviceability. A $30,000 car loan at 8% over 5 years costs about $608/month, which can reduce your home loan borrowing capacity by $80,000–$120,000 depending on your income and other commitments. Paying off a car loan before applying for a mortgage can significantly improve your borrowing power.
Are weekly or fortnightly repayments cheaper than monthly?
Marginally, yes, but for a car loan the saving is small. More frequent repayments reduce the average outstanding balance between interest charges, so slightly less interest accrues over the term. On a $30,000 loan at 7.99% over 5 years, switching from monthly to fortnightly saves approximately $30–$50 in total interest, a negligible amount. The main benefit is behavioural: if you are paid weekly or fortnightly, aligning your repayment to your pay cycle makes it easier to budget and avoid missed payments.
Should I choose a fixed or variable rate car loan?
Most Australian car loans are fixed rate, meaning your repayment stays the same for the entire term. This gives certainty and makes budgeting straightforward. Variable rate car loans do exist, they may allow unlimited extra repayments and the rate can fall if the lender reduces it, but it can also rise. For most borrowers taking a standard 3–5 year car loan, a fixed rate is simpler and protects against rate increases. If you want the flexibility to pay the loan off early without penalty, check whether your fixed loan includes a break fee before signing.

How this calculator works

Enter the vehicle price, your deposit, the loan term, and the interest rate. The calculator uses the standard loan amortisation formula to work out your monthly repayment. Each payment covers the interest that has accrued since the last payment, with the remainder reducing the loan balance. In the early months, most of each repayment goes towards interest; later repayments pay down more principal.

The key assumption is a fixed interest rate for the full term, which reflects how most Australian car finance products are structured. The estimate does not include loan establishment fees or ongoing account charges, which can add hundreds of dollars to the real cost. Always compare car loans by their comparison rate (which folds in most mandatory fees), rather than the headline rate alone.

Use the loan term options to see the trade-off between repayment size and total interest. A longer term reduces your monthly repayment but increases the total interest paid significantly. Use the extra repayment field if your lender allows it — even a small extra payment each month shortens the loan and reduces total interest.

Methodology

  • Assumptions: Fixed nominal interest rate for the full loan term; equal monthly repayments; repayment due at the end of each month (ordinary annuity).
  • Calculation: Monthly repayment = P × r / (1 − (1 + r)^−n), where P = principal, r = monthly rate, n = term in months; total interest = (repayment × n) − P.
  • Limitations: Does not include establishment fees, ongoing account fees, or early repayment charges. Balloon payments are modelled as a lump sum due at end of term with no break fees.

Sources

Last updated: July 2026

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