Australian Car Loan Calculator

Car loan interest is calculated on the outstanding loan balance using the standard amortisation formula. Each repayment first covers the interest accrued on the current balance, with the remainder reducing the principal. Early in the loan, most of each repayment is interest because the balance is high; by the final year, almost all of each repayment is principal. For a AUD 30,000 loan at 7.5% p.a. over 5 years, the estimated monthly repayment is about AUD 601.

Common car loan fees in Australia include an establishment fee (one-off, included in the comparison rate), a monthly account-keeping fee, an early-repayment fee (on some fixed-rate loans), a late-payment fee, and a balloon refinance fee where applicable. Fees can add hundreds to thousands of dollars to the total cost; the loan contract sets out the full fee list.

A balloon payment (or residual) is a lump sum due at the end of the loan term. Deferring part of the principal lowers the regular repayments but increases total interest, because the outstanding balance stays higher for longer. For example, a AUD 30,000 loan at 7.5% over 5 years with no balloon costs about AUD 6,068 in interest; with a AUD 6,000 balloon (20%) it costs about AUD 7,105. Per ASIC MoneySmart, the balloon must be paid at maturity — in cash, by refinancing, or by selling the vehicle.

Not necessarily. Promotional 0% finance typically applies to a specific make, model, and variant, and the drive-away price may be higher than with separate pre-approved finance. The interest saving can be offset by a smaller discount on the vehicle price. The relevant comparison is the total drive-away cost of the vehicle plus total loan cost — not the advertised loan rate alone.

The term is a major driver of total interest. Using a AUD 30,000 loan at 7.5% p.a.: a 3-year term costs about AUD 3,595 in interest (monthly ~AUD 933); a 5-year term about AUD 6,068 (monthly ~AUD 601); a 7-year term about AUD 8,650 (monthly ~AUD 460). The 7-year loan reduces the monthly repayment by ~AUD 473 versus 3 years but costs about AUD 5,000 more in total interest.

On variable-rate car loans, most lenders allow unlimited extra repayments at no cost — these reduce the principal directly and save interest. On fixed-rate loans, extra repayments may be capped or attract an early-repayment fee. Per ASIC MoneySmart, even small regular extra repayments can shorten the term and reduce total interest. The Product Disclosure Statement sets out the specific extra-repayment rules for a given loan.

More frequent repayments (weekly or fortnightly) slightly reduce total interest, because the principal is paid down more often. The difference is modest on a car loan — on a AUD 30,000 loan at 7.5% over 5 years, switching from monthly to fortnightly saves roughly AUD 50 over the full term. Aligning the repayment frequency with the pay cycle can reduce the risk of missed repayments.

A missed repayment usually triggers a late-payment fee, and the missed interest is added to the outstanding balance. Persistent missed repayments can be reported to the credit reporting agencies (Equifax and Experian) and affect the credit score. Under the National Consumer Credit Protection Act, a borrower experiencing financial hardship can request a hardship variation, and the lender must consider the request.

Refinancing replaces an existing loan with a new one, which can lower repayments or total interest. The saving must outweigh the costs: exit fees on the existing loan, establishment fees on the new loan, and PPSR discharge/re-registration fees. Per ASIC MoneySmart, comparing the remaining cost of the existing loan against the total cost of the new loan shows whether refinancing reduces the overall cost.

For private use, car loan interest is not tax deductible. Per the ATO, if the vehicle is used to earn assessable income (for example work travel or rideshare driving), the business-use proportion of loan interest may be deductible. There are two ATO methods: the logbook method (actual business-use %) and the cents-per-kilometre method (88c/km for 2025–26, capped at 5,000 km). Business owners may also use a chattel mortgage or finance lease with different treatment.

A chattel mortgage is a business finance product where the business takes ownership of the vehicle immediately and the lender holds a mortgage over it until repayment. Per the ATO, chattel mortgages can allow a business to claim the GST on the purchase (up to the car limit), claim interest as a business deduction, and claim depreciation (subject to the car limit of AUD 69,674 for 2025–26). Unlike a consumer car loan, it is a commercial product not regulated under the National Consumer Credit Protection Act.

A novated lease is a three-way arrangement between an employee, employer, and finance company, where repayments come from the employee's pre-tax salary. The tax outcome depends on the marginal rate and the Fringe Benefits Tax (FBT) position. Per the ATO, eligible battery-electric vehicles can be FBT-exempt if below the fuel-efficient LCT threshold (AUD 91,661 for 2026–27; the 2025–26 threshold was AUD 91,387). Plug-in hybrids lost the FBT exemption from 1 April 2025 unless a binding commitment existed earlier. A salary packaging provider can calculate a specific position.

Possibly, for a business (not an individual employee) using the vehicle for income-producing purposes. Under the ATO's instant asset write-off, eligible small businesses (aggregated turnover under AUD 10 million) may immediately deduct the business-use portion of an asset costing under AUD 20,000, currently extended to 30 June 2026. Passenger vehicles remain capped at the car limit of AUD 69,674 for depreciation, which is separate from the LCT thresholds. Thresholds change each year — the ATO is the source of current figures.

A larger deposit reduces the net loan amount, which lowers both the regular repayment and the total interest paid. It also reduces the risk of negative equity — owing more than the car is worth, which is common in the first 1–2 years due to depreciation. The deposit and any trade-in reduce the loan principal from day one.

Pre-approval indicates how much can be borrowed and at what rate before visiting a dealership, which helps set a firm budget and provides a comparison point against dealer finance. A pre-approval generally involves a credit check, and multiple hard credit enquiries in a short period can lower a credit score, so the timing of applications is relevant.

New vehicles generally attract lower car loan rates (newer collateral) and may be eligible for promotional rates, but depreciate fastest in the early years. A used vehicle avoids the steepest early depreciation, though the loan rate may be higher. The total cost depends on how long the vehicle is held.

The RBA cash rate (4.35% p.a., effective 6 May 2026) is the overnight interbank rate that sets the base cost of funds for lenders. When the RBA raises rates, variable-rate car loans tend to rise; when it cuts rates, they tend to fall. Fixed-rate car loans are unaffected during the fixed term, though rates at refinancing reflect the prevailing cash rate. RBA decisions are announced after each board meeting on the RBA website.