What Car Loan Rates Actually Look Like in Australia Right Now
Let's start with the market. The average car loan rate in Australia is sitting at around 8.92% p.a. across all borrower types, according to current market data. For prime borrowers with good credit, rates average closer to 7.65% p.a. as of June 2026 — and that figure has been climbing since December 2025, rising 0.50 percentage points in just six months off the back of RBA rate movements earlier this year.
Meanwhile, the lowest rates available from lenders right now start at around 5.66% p.a. for secured car loans — a number you will almost certainly never see on a dealer's finance desk. Why? Because dealer-arranged finance typically involves a rate markup that flows back to the dealership as commission. The car is the loss leader. The loan is where they make the real money.
Green car loans (for EVs and plug-in hybrids) are the one exception — rates there start from as low as 5.54% p.a. If you're buying an EV, getting a specialist green loan from a bank or lender rather than the dealership is especially worth exploring.
The Dealership Finance Trap: Why Convenience Costs You
Here is something CommBank itself acknowledges on its own website: dealer finance "may involve higher fees and less transparency around rates and fees." That's not a fringe opinion — that's a Big Four bank telling you to be careful. Yet dealer-integrated financing still accounts for around 56.71% of all car loan originations in Australia. More than half of Australians who finance a car do it through the dealership. That is exactly what dealers want.
The finance manager at a dealership is not a neutral adviser. They are a salesperson with a different product. Their job is to place your loan with a lender who pays the dealership the highest commission — which often means a higher rate for you. Recent research found that 47% of Australians who regretted their car loan said their main mistake was relying on the salesperson at the dealership to guide them on finance. Almost half. One coin flip away from being the person who gets burned.
And fewer than one in three Australians — just 30% — say they feel confident comparing and selecting a car loan without professional help. That lack of confidence is a gap dealers exploit every single day.
The Real Cost of a Higher Rate: Run the Numbers
This is where it gets real. Say you're borrowing $46,000 — roughly the average new car loan in Australia right now. At a bank rate of 7.65% p.a. over five years, your total interest bill comes to approximately $10,000. Now imagine the dealer quotes you 10.99% p.a. — entirely possible on a dealer-arranged loan once markups are applied. That same loan now costs you around $14,700 in interest. That's nearly $5,000 extra that goes to no one but the lender and the dealership, for the exact same car, driven off the exact same lot.
On a $34,000 loan — the national average — the difference between 7.00% p.a. and 9.95% p.a. over five years is more than $3,000 in total interest. That's a holiday. That's six months of groceries. That's money that should stay in your pocket.
What the ATO Just Changed — And Why It Matters for Business Buyers
If you're buying a vehicle for business use, there's a significant tax update you need to know about right now. On 12 May 2026, the federal government announced it will permanently make the $20,000 instant asset write-off for small businesses — removing the annual Budget-night anxiety that has plagued small business owners for years. From 1 July 2026, businesses with aggregated annual turnover under $10 million can immediately deduct eligible assets costing under $20,000, with no expiry date.
But here's the catch most people miss: for passenger vehicles, the ATO car cost limit applies. For 2025–26, that limit is $69,674. This means that if you buy a $75,000 passenger car for your business, your depreciation claim is still capped at $69,674 — and the instant asset write-off itself only applies to assets under $20,000. Since almost no passenger car costs under $20,000 new, the practical write-off benefit for standard cars flows through the small business pool (depreciated at 15% in year one, then 30% thereafter), not as an immediate deduction. Commercial vehicles over one tonne — think tradies' utes and vans — are not subject to the car limit, which is a meaningful difference if you're in the market for a work vehicle.
The key rule the ATO enforces hard: the vehicle must be physically in use or installed ready for use before the end of the financial year. Paying a deposit and waiting for delivery does not count. If your new ute is still on a ship on 30 June, you miss the window. Always speak to a financial adviser or accountant before making business vehicle purchases for tax purposes.
How to Actually Beat the System in 2026
- Get pre-approved before you walk into a dealership. When you arrive with finance already sorted, the dealer's finance offer becomes irrelevant — or a bargaining chip you can use to push for a better price on the car itself.
- Always compare the comparison rate, not the headline rate. A loan advertised at 5.99% p.a. with a $600 establishment fee and $15 monthly fees can carry a real comparison rate of 7.2% p.a. The comparison rate is the number that matters.
- Know your credit score before you apply. Almost 50% of car loan applicants in Australia have excellent credit scores — meaning they qualify for the sharpest rates. If you're in that group, make sure your lender knows it.
- Consider green loan rates if you're buying an EV or PHEV. Around 40% of lenders offer discounted rates for electric vehicles, starting as low as 5.54% p.a. — well below the market average.
- Shorter loan terms save you real money. On a $30,000 loan at 7.5% p.a., choosing a three-year term over five years saves around $2,500 in interest. The weekly repayments are higher, but the total cost is significantly lower.
Where Milam Fits Into This Picture
Standard car loans — whether from a dealer or a bank — share one uncomfortable truth: when the loan ends, you get nothing back. You've paid interest for five years, the car has depreciated, and you walk away with an asset worth a fraction of what you paid. That's the deal the entire industry is built on.
Milam is built differently. You get lower weekly payments than a standard loan, and an equity payout when you return the car at the end of your term — instead of handing the keys back with nothing to show for it. It's the kind of structure the finance industry never built, because the finance industry profits from you getting nothing back. We think Australians deserve better than that.
If you're in the market for a car right now — whether you're comparing dealer rates, bank loans, or looking for something genuinely different — take the time to understand exactly what you're signing. The numbers are all there. Most people just don't ask to see them.
This article is general information only and does not constitute financial advice. Please speak to a financial adviser before making any finance or tax decisions.
The average Australian car loan rate is 8.92% p.a. — but dealer markups can push your real rate even higher. Getting pre-approved with a bank or lender before visiting a dealership is one of the most effective ways to protect yourself.