Car and personal loans: rates, calculators and guides

What are you borrowing for?

Average car and personal loan interest rates

Lenders' advertised rates change often and most set your actual rate by your risk, so the most reliable picture of what people pay is the RBA's monthly lending rate data. It averages the rates actually charged on new and existing loans across lenders. Three patterns stand out: variable-rate loans averaged less than fixed-rate loans, loans secured by property were far cheaper than the rest, and credit cards cost roughly double a personal loan.

Use these as a yardstick for a quote, not a promise of what you'll be offered. Your rate depends on your credit history, income, the amount and term, whether the loan is secured and, for a car loan, the car's age.

Car loans vs personal loans

A car loan is a personal loan with a specific purpose and, usually, the car as security. Because the lender can repossess and sell the car if you stop paying, car loans usually cost less than unsecured personal loans. Moneysmart says both usually run for one to seven years. A personal loan is more flexible about what you spend the money on, which is why it's used for renovations, weddings, medical bills and debt consolidation.

If your employer offers salary packaging, there's a third way to pay for a car: a novated lease, where the car and its running costs come out of your pay partly before tax. It's usually well ahead of a loan for an electric car that qualifies for the fringe benefits tax exemption. Our car loans guide covers new versus used cars, dealer finance and balloon payments, and the personal loans guide covers the rest.

Secured vs unsecured

A secured loan is backed by an asset the lender can take and sell if you don't repay; an unsecured loan isn't. Security lowers the rate: in August 2026, new personal fixed-term loans secured by residential property averaged 6.24%, against 9.50% for all new personal fixed-term loans. The cost of a secured loan is the risk to the asset, and if it's sold for less than you owe, you still owe the difference. Read secured vs unsecured loans for which suits what.

Fixed vs variable rates

A fixed rate keeps your repayments the same for the whole loan. A variable rate moves with the lender's rate, so repayments can rise or fall; Moneysmart suggests checking you could still afford the loan if the rate rose by 2 or 3 percentage points. The trade-off is flexibility: variable loans usually let you make extra repayments or pay out early without a fee, while fixed loans may charge one. In August 2026 new variable-rate personal loans averaged 8.32% and fixed-rate loans 10.44%.

Comparison rates: what they include and what they leave out

Any ad that shows an interest rate must also show a comparison rate: a single figure that combines the interest rate with the fees and charges known when the loan is advertised. It exists so you can compare loans with different fee structures. But it has to be worked out on a standard example rather than your loan, and the law sets six:

Car and personal loans usually quote the $30,000 over 5 years or $10,000 over 3 years example, and for those two amounts the ad has to say whether it's for a secured or unsecured loan. Government fees and charges are excluded, and so are fees that may never be charged, such as early repayment and late payment fees. That's why every comparison rate carries a warning that it applies only to the example given.

Why a comparison rate can understate the cost of a small loan

Most fees are flat dollar amounts, so they weigh far more on a small loan. The same rate and fees give very different results depending on the amount and term:

So compare comparison rates on the same example, then price your own amount and term. Our car loan calculator and personal loan calculator show the cost including fees for your loan, worked out the same way.

Fees to check

Moneysmart's warning for car loans applies to any loan: the fees may be more than you think, especially when a dealer or broker is involved as well as the lender. Ask for a written list of every fee before you sign.

At car dealerships, two more things to know. Since 1 November 2018, ASIC's ban on flexible commissions has stopped lenders paying dealers and brokers more for putting you on a higher rate. And add-on insurance, such as gap, loan protection or tyre and rim cover, is optional: salespeople must wait four days after you agree to buy the car before selling it to you.

How lenders assess you

Responsible lending

Every licensed lender has to follow the responsible lending obligations in the National Consumer Credit Protection Act. ASIC summarises them as three steps: make reasonable inquiries about your financial situation and your requirements and objectives, take reasonable steps to verify your financial situation, and assess whether the loan is "not unsuitable" for you. ASIC's Regulatory Guide 209 explains what that means in practice. Expect to show identification, payslips or tax returns, bank statements and details of your debts and regular expenses. It also means no lender can lawfully promise approval before checking.

Credit scores and credit reports

Your credit score is worked out from your credit report and runs from zero to either 1,000 or 1,200, depending on the credit reporting body. Moneysmart names the two main bodies as Experian and Equifax; they can hold different information, so check both. You're entitled to a free copy of your report from each every three months, and also if you've been refused credit in the last 90 days.

Comprehensive credit reporting

Credit reports used to show mostly negatives: defaults, enquiries and court judgments. Under comprehensive credit reporting they also show positive information: the accounts you hold, their limits and whether you paid on time each month. The largest banks have had to supply this data since 1 July 2021, and financial hardship arrangements have been recorded since 1 July 2022. A hardship arrangement doesn't lower your score, and as long as you stick to it you're shown as up to date. Buy now pay later applications and missed payments can now appear on your report too.

Practical upshot: pay everything on time for a few months before applying, keep card balances low, fix any errors on your report (it's free), and don't apply to lots of lenders at once. If your history isn't great, read loans with bad credit before you apply.

If you can't make your repayments

Contact your lender before you miss a payment. Under the National Credit Code you can ask for a hardship variation, by phone or in writing, and the lender has to respond within 21 days (or ask you for more information first). If it refuses, it must give reasons and tell you about the Australian Financial Complaints Authority (AFCA), which handles complaints for free. For independent help, the National Debt Helpline (1800 007 007, 9:30am to 4:30pm on weekdays) offers free, confidential financial counselling. If you're thinking of rolling several debts into one, read debt consolidation first, and if buy now pay later is part of the picture, see buy now pay later.

Buying a car

Everyday borrowing

Debt and credit

Car and personal loan questions