In 2026, the average secured car loan in Australia sits around 7.5–9.5% p.a. That sounds modest — but on a $40,000 car over five years, the interest bill lands at roughly $8,000–$11,000 before fees.
The comparison rate is what to watch. Lenders are required to publish it alongside the headline rate; it folds in most fees and charges into a single annual figure. A car loan advertised at 5.99% often carries a comparison rate of 7.2% once you include the $500 establishment fee and $15 monthly account fee.
Balloon payments (also called residuals) reduce monthly repayments by deferring a lump sum to the end of term. They suit buyers who plan to trade in before the balloon is due, but if you keep the car you must refinance or pay the balloon in cash.
A novated lease is arranged through your employer: the ATO lets you pay some lease costs from pre-tax salary, which can save 15–37¢ in every dollar depending on your marginal rate. From 1 April 2025, EVs under the Luxury Car Tax threshold remain FBT-exempt — the savings on an EV novated lease can be substantial.