New Car Loans

TL;DR — New Car Loans

• New car loans are designed for brand-new, demo and near-new vehicles. Lenders tend to reserve their sharpest rates for them — currently from 5.49% p.a. (comparison rate 5.63% p.a.) compared to the ~9.68% p.a. average across all fixed personal loans (RBA).
• Most new car loans are secured against the vehicle and fixed-rate, so your repayments stay the same for the entire term.
• You choose the term (typically one to seven years), repayment frequency, and whether to add features like a balloon payment or extra repayments.
• The Rebel red flag to watch: dealer "0%" finance can look outstanding on the rate but quietly disappear once it's offset by a higher car price, add-ons or a rigid exit structure.

What Is a New Car Loan?

A new car loan is finance specifically designed for brand-new or near-new vehicles, including:

• Brand-new vehicles bought from an authorised dealer, never registered
• Demo vehicles that have been used as demonstrators but meet the lender's kilometre and age caps
• Near-new vehicles that are typically 0–2 years old with low kilometres, often meeting "new" criteria at the lender's discretion

The car itself usually becomes the security for the loan. The lender registers an interest on the Personal Property Securities Register (PPSR), records the finance against your car's VIN, and releases it once you repay in full.

Because new cars are factory-fresh, carry warranties and come with clear manufacturer pricing, lenders face less uncertainty when valuing them as security. That lower risk translates into sharper rates than most used-car or unsecured personal loan products.

Buying a new car should feel like freedom, not a finance trap. LoanGorilla compares new car loans from 40+ Australian lenders — banks, credit unions and online lenders — so you can see real rates for brand-new, demo and near-new vehicles before you set foot in a showroom.

How New Car Loans Work

1. Apply — Provide your income, living expenses, existing debts, plus the car's make, model, drive-away price and whether it's new, demo or near-new.
2. Assessment — The lender checks your ability to repay and confirms the vehicle meets their "new" criteria (age, kilometres, condition, purchase channel).
3. Approval — If you're approved, funds go to you or directly to the dealer, and the lender registers security over the car via the PPSR.
4. Repayment — You repay weekly, fortnightly or monthly over your chosen term, covering principal plus interest and any standard fees.
5. Security release — Once the full balance (including any balloon payment) is cleared, the lender removes their interest and the car is yours, unencumbered.

Most new car loans are fixed-rate, which means your minimum repayment doesn't move during the term — useful for budgeting. Some lenders offer variable-rate options; for a detailed breakdown of fixed versus variable trade-offs, see fixed vs variable rate car loans.

Representative Example

Illustrative only — not a quote.

Borrow $40,000 over 5 years on a fixed-rate secured new car loan at 5.49% p.a. (comparison rate 5.63% p.a.):

• No balloon: Weekly repayment ≈ $176. Full debt cleared at the end of term.
• 30% balloon ($12,000): Weekly repayment ≈ $123. A $12,000 lump sum is due in year five — paid via savings, trade-in or refinance.

The balloon option saves you roughly $53 per week during the term but leaves a significant final obligation. Use the balloon payment calculator to stress-test both scenarios against your actual budget before you commit.

On-road costs — stamp duty, registration, dealer delivery — can often be rolled into the loan within sensible limits. Convenient, but you'll pay interest on those items too. Where possible, funding on-road costs separately reduces your total interest bill.

Rate Benchmarks in Context

With the RBA cash rate at 4.35% (6 May 2026), the spread between new car loan rates and the cash rate is relatively tight at present:

• New car loans (secured, fixed): from 5.49% p.a. (comparison rate from 5.63% p.a.) — reflects lender confidence in new vehicles as security
• Used car loans: from 5.80% p.a. (comparison rate from 6.23% p.a.) — similar starting point for late-model used vehicles
• Unsecured car loans: from 5.76% p.a. (comparison rate from 5.76% p.a.) — modest premium where no security is taken
• Average fixed personal loan rate (RBA): ~9.68% p.a. — the benchmark to beat

Note: for both new and used car loans if you're buying an EV you may be eligible for a Green Loan. Either way if a lender quotes you an interest rate starting with a 6 on a standard new car loan with a strong application, that's worth challenging with competing offers from LoanGorilla's panel.

New vs Used Car Loans at a Glance

The key difference borrowers underestimate is the depreciation dynamic. A new car can lose 15–20% of its value the moment it's driven off the lot. If you sell or trade in early, you may owe more than the car's worth — which is why matching term length to your realistic ownership horizon matters.

For used car loans, the depreciation risk has largely played out already, often making the total cost of ownership lower even if the interest rate is marginally higher.

Dealer Finance vs Independent Finance

Dealer finance is convenient. It's also designed to be convenient in ways that benefit the dealer more than you.

The Rebel move: get independent pre-approval first, then use that number to pressure-test whatever the dealer puts in front of you. If their "special" still wins after an apples-to-apples comparison, take it. Usually it won't. For a full breakdown, see dealer finance vs car loans.

Secured vs Unsecured — The Short Version

Most new car loans are secured — the car backs the loan, and that's why you get the sharper rate. For the full comparison, see secured car loans. The one-line version: if your car qualifies as security and you plan to keep it, secured is almost always the more cost-efficient structure.

Balloon Payments — One Paragraph

A balloon payment is a lump sum due at the end of the loan term that reduces your regular repayments during the term. On a $40,000 new car loan, a 30% balloon means your monthly repayments cover only $28,000 of the principal — the remaining $12,000 lands as a single payment at the end. Use the balloon payment calculator to model the impact. For deeper guidance on how balloons interact with vehicle depreciation and security requirements, the secured car loans page covers it in full.

Pros and Cons of New Car Loans

When a New Car Loan Makes Sense

How Much Can I Borrow?

Borrowing capacity depends on:

• Your income, employment stability and consistency
• Living expenses and number of dependants
• Existing debts and credit limits in use
• The car's price and whether it clearly qualifies as new
• Your chosen term, repayment frequency and whether you're adding a balloon

Use the borrowing power calculator to see your range, then stress-test it against your real budget — not the best-case scenario.

On-Road Costs and Extras

Many lenders will allow you to include these in your new car loan:

• Stamp duty and registration
• Dealer delivery charges
• Extended warranties (sometimes)
• Certain accessories (within limits relative to the car's value)

Rolling these in is convenient, but remember: you're paying interest on every dollar. Paying some costs upfront — even just stamp duty — tends to reduce your total interest noticeably over a 5-year term.

How LoanGorilla Compares New Car Loans

LoanGorilla shows you what the glossy brochures don't:

• Rates and comparison rates across lenders, so fees can't hide behind a low headline number
• Estimated repayments for your chosen amount, term and balloon structure
• Vehicle eligibility rules — what "new", "demo" and "near-new" means to each lender
• Key fees: application, monthly, annual, early payout and balloon-discharge costs
• Whether the loan is fixed or variable, and what that means for your repayment certainty

We compare car loans from 40+ Australian lenders. If a structure doesn't pass our editorial filter — meaning we wouldn't be comfortable recommending it to a friend in your position — it doesn't make the shortlist.

Use our free calculators to explore your options:

• Car Loan Calculator — see estimated monthly repayments and total cost
• Borrowing Power Calculator — see how much you could borrow
• Balloon Payment Calculator — model balloons vs no balloons
• Early Payout Calculator — estimate savings from paying off early

Shopping for a New Car? Start Comparing Loans Today!

Compare 40+ lenders in seconds and drive away sooner — LoanGorilla surfaces real new car loan options without touching your credit score.

New Car Loans FAQ's