Calculator
Auto Loan Calculator
Auto Loan Calculator
Monthly Repayment
$763.21
Loan Analysis
Borrowing $37,200 over 5 years at 8.5% costs $763.21 a month ($176.13 a week), with $8,592.9 of interest over the life of the loan. Compare this against the total drive-away figure of $49,792.9 to see what the finance really adds to the sticker price — and remember this estimate does not include loan establishment fees or insurance.
This estimate uses a simplified fixed-rate amortisation model and a generic stamp duty estimate. Actual car loan repayments vary with the lender's rate, fees, and residual structure, and stamp duty varies by state. Educational only, not lending advice.
Car Finance in Australia: Secured Loans, Hire Purchase and the Rate That Matters
A car loan is the most common way Australians finance a vehicle, ahead of novated leasing and outright purchase for new cars. Lenders offer secured personal loans (where the car itself secures the debt), hire purchase or chattel mortgage arrangements for business buyers, and dealer-arranged finance with promotional rates. Interest rates on secured car loans typically run 3 to 5 percentage points above a mortgage but far below unsecured personal loans, because the vehicle gives the lender collateral to recover. The total cost of car ownership is not the sticker price but the sum of four numbers that this calculator makes explicit: the financed amount (price plus stamp duty, minus deposit and trade), the interest paid over the term, the loan fees, and the depreciation you absorb while driving. A $40,000 car financed over five years at 8.5 per cent can cost more than $9,000 in interest alone, and that is before the vehicle itself loses value. Running the same purchase with a shorter term, a larger deposit, or a competitive credit union quote instead of dealer finance can save thousands — which is why comparing the comparison rate across at least three lenders is the single highest-leverage step in any car purchase.
Behind the Formula: Amortisation With an Optional Balloon
The calculator applies the standard amortising loan formula: Repayment = (P − B) × r / (1 − (1 + r)^−n) + B × (1 + r)^−n, where P is the amount financed, B is the balloon payment (which accrues interest but is repaid as a lump sum at the end), r is the monthly interest rate and n is the number of months. With no balloon set, the formula collapses to the familiar equal-repayment schedule where early payments are mostly interest. Total interest over the term is the sum of all repayments plus the balloon minus the amount actually borrowed. Stamp duty is estimated from the vehicle price as a simple approximation of state rates (roughly 3 per cent of price with a step-up component above $45,000) and can be rolled into the loan — the common practice — or excluded if you pay it upfront. The weekly figure is the monthly repayment divided across 52 weeks, which is how most Australian dealers advertise. Note that real car loans accrue interest daily rather than monthly, so actual figures vary slightly, and this model excludes establishment fees and insurance, which should be added to your decision.
Expert Insights
The Comparison Rate Is the Rate That Matters
Dealer finance often advertises a low headline rate loaded with establishment fees, documentation charges and a higher comparison rate, while credit unions and specialist car lenders quote cleaner numbers. A 0.5 percentage point difference on a $40,000 five-year loan is worth roughly $1,000 of interest. Always ask for the comparison rate under the National Credit Code disclosure, and run that figure — not the headline — through this calculator.
A 20 Per Cent Deposit Changes Your Options
Lenders price risk: a car financed at over 90 per cent of its value carries a higher rate or requires mortgage-backed security, while a 20 per cent deposit usually qualifies for the best-tier rate and avoids the loan being 'upside down' (owing more than the car is worth) for most of the term. If you cannot save a deposit, that is the signal to delay the purchase rather than finance it at the riskiest end of the market.
Used Car Loans Are Priced Differently — Check the Rate Spread
New-car finance is typically 1 to 2 percentage points cheaper than used-car finance, and the age of the vehicle matters: lenders either refuse or charge a premium on cars older than 10 years. When comparing a new car on dealer finance against a used car on a bank loan, run both through this tool with their actual rates. The used car's lower purchase price often survives its higher rate; on a small loan for an older car, a credit union personal loan may be the only realistic source of finance.
Actionable Tips
- 1
Get Pre-Approved Before Visiting the Dealer
Walk into negotiations with a finance pre-approval from your bank or credit union, then let the dealer try to beat it. Dealers make margin on arranging finance and will often match or undercut a pre-approval to win the deal, but only if you can demonstrate a competing offer. Entering without finance approval means you are negotiating the car and the loan simultaneously — and the dealer holds the advantage on both.
- 2
Use a Shorter Term Than Feels Necessary
The gap between a 5-year and a 3-year loan on $30,000 at 9 per cent is roughly $1,000 of interest, but the monthly repayment rises only a few hundred dollars. A shorter term also keeps you ahead of depreciation — you never owe more than the car is worth, which protects you if you need to sell early. If the 3-year repayment is genuinely unaffordable, that is evidence the car is overpriced for your budget.
- 3
Keep Insurance and Fees Out of the Loan Where Possible
Dealers routinely offer to roll comprehensive insurance, extended warranty and gap insurance into the finance — convenient, but you then pay interest on those additions for the entire term. A $3,000 warranty financed over five years at 9 per cent becomes a $3,800 warranty. Pay insurance and fees upfront where you can, and decline gap insurance if your deposit already leaves you with meaningful equity in the vehicle.
Real-World Examples
Jess Beat Dealer Finance With a Pre-Approval
Jess arrived at the dealership with a 7.9 per cent comparison-rate pre-approval from her credit union for $35,000. The dealer's own finance quote started at an attractive-sounding 6.99 per cent headline but carried a $600 establishment fee and $15 monthly charge — a comparison rate of 8.3 per cent once those were included. Armed with the credit union's clean quote, Jess negotiated the dealer down to matching her pre-approval, saving roughly $400 over the life of the loan for the same car and the same term.
Tom Paid Interest on His Warranty
Tom financed a $42,000 SUV and rolled in a $2,800 extended warranty, $1,500 dealer-applied paint protection and $950 of loan fees, taking the balance to $47,250. Over five years at 8.7 per cent, those extras cost him an additional $1,100 in interest — nearly doubling their sticker price. When he later switched insurers and found the paint protection worthless, the financed add-ons had effectively cost him over $6,300 all-in. The rule he now follows: accessories and insurance are paid upfront, never financed.
Priya's Deposit Changed Her Entire Market
Priya wanted a $30,000 car but could only manage a $1,000 deposit. Finance quotes at 95 per cent loan-to-value came back at 11 per cent with mandatory lender protection — repayments she could not justify. Instead she waited eight months, saved a proper 20 per cent deposit, and re-quoted: the rate fell to 8.4 per cent, the monthly repayment landed $60 lower than the high-LVR quote despite the larger deposit, and she entered the loan with immediate equity rather than owing more than the car was worth.
Glossary of Terms
- Secured Car Loan
- A loan where the vehicle itself acts as collateral, giving the lender the right to repossess it if repayments are missed — and typically securing a lower rate than an unsecured personal loan.
- Comparison Rate
- The single percentage that combines interest rate with known fees, required by Australian law to be shown alongside the advertised rate on car and personal loans.
- Balloon Payment
- A lump sum of the loan deferred to the end of the term, which lowers monthly repayments during the loan but must be paid, refinanced or covered by selling the car at maturity.
Frequently Asked Questions
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.