Car Finance Calculator — Australia 2026-27
Buying a car? Know your monthly payment before you walk into the dealer.
Estimate Australian car finance repayments with AUD pricing, comparison-rate thinking, deposits, trade-ins, fees, and optional balloon amounts.
Australia Car Finance Notes
Australian car finance quotes often combine a headline rate, upfront fees, monthly account fees, dealer delivery costs, and sometimes a balloon payment.
Use the AUD version to test deposit size, trade-in value, loan term, balloon amount, and the total interest you would pay over the contract.
This page keeps Australian terms such as comparison rate, trade-in, stamp duty, registration, and balloon finance separate from UK PCP and US auto-loan language.
Australian version note: this car finance keeps the calculation anchored to AUD amounts, local product names, Australian tax language, and the way banks, employers, agencies, or advisers usually describe the inputs.
Local cues stay visible where they matter: ATO, PAYG, superannuation, Medicare levy, stamp duty, kilometres, comparison rate, APRA, Centrelink, GST, and Australian-dollar results are not rewritten into overseas vocabulary.
Use the output as an Australian estimate first, then sanity-check it against local quotes, lender criteria, government thresholds, state rules, or professional advice before relying on the number.
Uses P+I amortisation. Comparison rate may differ from your actual loan. Always get pre-approved and compare total cost. Not financial advice.
Select the question that matches where you are right now.
Your result shows the monthly repayment, total interest cost, and comparison rate for your car finance. The amortisation chart (Standard mode) shows how your balance, interest, and principal split each year — early payments are mostly interest.
In early months, most of each repayment is interest — very little reduces the principal. On a $35,000 loan at 8.5%, Month 1 interest is approximately $248; principal reduction is only $470. By Month 60, this reverses: mostly principal with very little interest. The amortisation chart shows this visually.
A longer term (7 years vs 5) reduces monthly repayments but significantly increases total interest. A $35,000 loan at 8.5% over 7 years: $545/month but $11,770 total interest. Over 5 years: $718/month but only $8,080 total interest. The shorter term saves $3,690 — worth it if you can afford the higher payment.
The monthly payment is not the right metric for comparing loans. A dealer offering "$50 less per month" may be extending your term or charging more interest overall. Always compare: total repaid (monthly × months + balloon + fees). Use this calculator to compute total cost for each offer you receive.
The interest rate you pay on car finance can vary by 5–10% depending on where you get your loan. This is worth thousands of dollars on a 5-year loan.
Apply to your bank or a credit union for pre-approval before visiting a dealership. Pre-approval gives you a firm rate in writing, sets your budget, and gives you leverage at the dealer. If the dealer can beat your pre-approved rate, that is a genuine saving. If not, use your pre-approval. Pre-approval does not obligate you to buy.
Your credit score significantly affects the rate you are offered. Scores above 750 typically get the best rates; below 600 may face 2–4% higher rates or be declined by major banks. Check your credit score for free via Equifax, Experian, or Illion before applying. Improve it by paying all bills on time for 6 months before applying for significant finance.
Dealers earn commission from finance companies — typically 1–3% of the loan value as an upfront commission when they sign you up. This creates a structural incentive to maximise your interest rate. Some dealers also mark up the interest rate above the wholesale rate they can offer, keeping the difference as additional profit. The 0% finance offers are usually subsidised by the manufacturer on specific overstocked models — and the price of the car is often inflated to compensate. If a 0% offer exists, compare the price to the same car bought at market rate with your own finance.
A balloon payment (residual value) is popular for business finance but can be a trap for personal buyers. Here is what you need to know.
A balloon defers a portion of the principal to the end of the loan. Monthly repayments are calculated on the remaining principal only. Example: $40,000 loan, 20% balloon ($8,000). You repay only $32,000 over 5 years in monthly payments, then owe $8,000 at Month 60. Options at that point: pay cash, refinance the $8,000, or trade in the car.
Despite lower monthly payments, the total interest on a balloon loan is usually higher. You are paying interest on the balloon amount every month (it is in the loan balance) without reducing it. On a $40,000 loan at 8.5% over 5 years: no balloon costs $8,080 interest; 20% balloon costs approximately $9,040 — $960 more, plus the balloon repayment risk.
If the car's market value at the end of the term is lower than the balloon amount, you owe more than the car is worth. You must either pay the shortfall from savings, roll it into a new loan (increasing total debt), or keep the car and refinance. This is particularly risky for EVs, which are currently depreciating fast, and for high-mileage vehicles that lose value quickly.
Business vehicle finance has significant tax advantages over personal finance — and novated leases offer an additional layer of pre-tax benefit for employees.
The most common business car finance product. The business takes immediate ownership, can claim the GST input tax credit on the purchase price (if registered for GST), deduct interest as a business expense, and claim ATO depreciation on the business-use percentage. The depreciable cost is capped at the car limit ($69,883 for 2026-27) for most vehicles.
From 1 July 2022, eligible EVs under the fuel-efficient vehicle LCT threshold ($91,661 in 2026-27) are fully exempt from Fringe Benefits Tax when provided through a novated lease. This is the most significant car finance tax benefit available to employees in decades. On a $60,000 EV with a $1,200/month lease, an employee on 37% tax saves approximately $5,500/yr — $27,500 over 5 years.
Business vehicle finance involves FBT, GST input tax credits, ATO depreciation, and salary packaging rules that interact in complex ways. The optimal structure depends on your specific tax situation, business turnover, and vehicle use. Always consult a registered tax agent or accountant before committing to business vehicle finance — the after-tax cost can vary by thousands depending on structure.
The repayment formula, comparison rate, and how balloon payments work
Monthly repayment formula
Monthly repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ−1] where P = loan amount, r = monthly rate (annual rate ÷ 12), n = total months. With a balloon payment, the repayment is calculated on the effective principal (total loan minus present value of the balloon).
Balloon payment (residual)
A balloon payment is a lump sum payable at the end of the loan term. It reduces monthly repayments because you are not repaying the full loan during the term — but you must pay the balloon at the end (by refinancing, trading in, or paying cash). Monthly repayments are lower but total interest paid is typically higher.
Comparison rate
The comparison rate annualises the total cost of the loan including fees, making it easier to compare different products. A loan with a 7% headline rate and $500 in fees may have a higher comparison rate than a 7.5% loan with no fees. Always compare comparison rates, not just the headline interest rate.
| $40k loan · 5yr | Rate | Monthly | Total interest |
|---|---|---|---|
| Bank / credit union (good credit) | 7–9% | $792–$830 | $7,520–$9,800 |
| Online lender | 8–13% | $812–$910 | $8,720–$14,600 |
| Dealer finance | 10–16% | $849–$970 | $10,940–$18,200 |
| Personal loan (unsecured) | 10–20% | $849–$1,059 | $10,940–$23,540 |
Comparing secured car loans, personal loans, chattel mortgages, and novated leases
| Finance type | Best for | Typical rate | Tax deductible? |
|---|---|---|---|
| Secured car loan | Personal use — most common | 7–11% | No (personal) |
| Dealer finance | Convenience only — usually costly | 10–16% | No |
| Personal loan (unsecured) | Older cars, classic cars | 10–20% | No |
| Chattel mortgage (business) | Business vehicles — most common | 6–9% | Yes — interest + depreciation |
| Finance lease (business) | Business — flexible end-of-term | 6–10% | Yes — lease payments |
| Novated lease | Employee — salary sacrifice | 6–9% (embedded) | Yes — via salary sacrifice |
Secured vs unsecured car loan
A secured car loan uses the vehicle as security — lower risk for the lender means lower interest rates (typically 7–11%). An unsecured personal loan has no security, so rates are higher (10–20%), but can be used for older vehicles that lenders will not secure. Most new car purchases use secured loans.
Chattel mortgage (business)
The most common business car finance product. The business takes ownership immediately while the lender has a registered security interest (mortgage) over the vehicle. The business can claim: input tax credit (GST) on the purchase price, interest as a deduction, and ATO depreciation on the vehicle cost. Requires ABN and business use.
How novated leasing works, the FBT calculation, and why EVs are especially advantageous
How a novated lease works
A novated lease is a three-way arrangement between you (employee), your employer, and a finance company. Your employer makes the lease payments from your pre-tax salary. This reduces your taxable income — effectively getting the government to contribute to your car costs. Your employer then deducts the amount from your gross salary each pay period.
FBT on novated leases
Fringe Benefits Tax (FBT) is a tax the employer pays on non-cash benefits. For novated leases, the employer is liable for FBT calculated under the statutory method: 20% of the car's original cost price per year. The employee can make post-tax contributions to reduce the FBT liability. This FBT cost significantly reduces the benefit for petrol cars.
EV FBT exemption — the major 2022 change
From 1 July 2022, eligible battery electric, plug-in hybrid (until 1 April 2025), and hydrogen fuel cell vehicles are exempt from FBT when provided through a novated lease. The vehicle must cost below the luxury car tax threshold ($91,661 for fuel-efficient vehicles in 2026-27). This is a massive financial benefit — effectively making the entire lease payment pre-tax for EV buyers.
Example: EV novated lease tax saving
| Annual cost | Without novated lease | With novated lease (EV) |
|---|---|---|
| Gross salary required | $15,000 after-tax | ~$9,750 pre-tax equivalent (35% rate) |
| Tax saving | — | ~$5,250/yr |
| FBT payable | — | $0 (EV exemption) |
| Total saving over 5yr | — | ~$26,250 |
Pre-approval, negotiating with dealers, broker vs direct, and avoiding traps
Get pre-approved before visiting the dealer
The most powerful step: get pre-approved for a car loan from your bank or credit union before setting foot in a dealership. Pre-approval gives you: (1) a firm rate to negotiate against; (2) confidence in your budget; (3) protection from dealer finance pressure. Show the dealer your pre-approved rate — they will often match or beat it to win the finance commission.
Dealer finance — what you need to know
Dealers earn commission from finance companies for signing customers up to their products. This creates an incentive to maximise your interest rate. The dealer may quote an "0% finance offer" — these are typically manufacturer-subsidised rates on specific models, and the car price is often inflated to compensate. Always compare the total cost (car price + interest) not just the rate.
Comparison rate trap
Lenders must display a comparison rate, but it is calculated on a specific amount ($30,000 over 5 years in Australia) — different from your actual loan. Use this calculator to compute the effective comparison rate on your specific loan amount and term, including any fees.
Extra repayments save significant money
Most secured car loans allow extra repayments without penalty. Even $50–$100 extra per month can save hundreds to thousands in interest. Use the Detailed mode to see your exact saving. Check your loan contract for early repayment fees before making extra payments — most standard secured loans have none.
❓ Frequently asked Frequently asked questions
What is the best car finance option in Australia 2025?
For personal use: a secured car loan from a bank or credit union typically offers the lowest rates (7–11% p.a. for good credit). Get pre-approved before visiting a dealer — this gives you negotiating power. Avoid dealer finance unless the manufacturer is subsidising a genuinely low rate. For employees on 30%+ marginal rate buying an EV: a novated lease with the FBT exemption is often the best option by a significant margin.
What is a comparison rate and why does it matter?
The comparison rate combines the interest rate and most fees into a single annualised figure, making it easier to compare loans. A loan with a 7% interest rate and a $500 establishment fee can have a higher comparison rate than an 8% loan with no fees. In Australia, lenders must display the comparison rate calculated on a $30,000 loan over 5 years. Use this calculator to see the comparison rate for your specific loan size and term.
Should I use a balloon payment on my car loan?
A balloon payment (residual) reduces monthly repayments but means you owe a lump sum at the end of the loan term. Total interest paid is typically higher with a balloon because you are repaying the principal more slowly. Balloons are useful for cash-flow management (business use) or if you are confident you will trade in the car before the balloon is due. For personal loans, avoiding a balloon and choosing a shorter term often saves more in interest than the monthly payment reduction is worth.
Can I claim a car loan as a tax deduction in Australia?
For personal vehicles: no — you cannot deduct personal loan interest or repayments. For business vehicles: interest on a chattel mortgage or finance lease is tax-deductible, as is ATO depreciation on the vehicle (business use percentage). If using a novated lease, the salary sacrifice arrangement provides pre-tax treatment. Always consult a registered tax agent before structuring business vehicle finance — the rules around FBT, GST input tax credits, and depreciation caps can be complex.
Where these figures come from
Debt and credit figures on this page come from the Reserve Bank of Australia (consumer and housing rate data), ASIC MoneySmart (consumer guidance under the National Consumer Credit Protection Act), and the Australian Financial Complaints Authority (dispute resolution).
- Consumer credit interest rates — RBA — Indicator Lending Rates (F5).
- Credit card & personal loan guidance — ASIC MoneySmart — Managing debt.
- Financial hardship & dispute resolution — Australian Financial Complaints Authority (AFCA).
- HECS/HELP repayment thresholds — ATO — Study and training support loans.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.