Positive Borrowing Trends as More Australians Get a Car Loan Despite Market Changes
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CashPal TeamLast updated 2 June 2025
More Australians are getting car loans
Increasing numbers of Australians are opting for a car loan in 2025, even amid volatile market conditions — driven by declining interest rates, a nationwide move toward low-emission vehicles, and highly competitive financing. Traditional lenders and online financiers alike now provide more personalised loan products, and platforms like CashPal let borrowers review alternatives without visiting a bank or broker.
What's driving the increase
Reserve Bank rate reductions have cut the cost of borrowing, shrinking monthly repayments and encouraging more people to finance vehicles rather than saving for years. Consumer confidence has lifted as job levels stabilise and salaries gradually increase — and in places where public transport is scarce, cars are necessities, not luxuries. Online comparison tools have simplified the whole process, including short-term options like car repair loans.
Current car loan rates and terms
Used-car rates run higher due to lender risk, though some lenders now discount for strong credit histories or low-emission vehicles. Redraw features, early-repayment options and tailored packages have also improved.
| Loan type | Average interest rate | Typical term length |
|---|---|---|
| Secured car loan | 6%–10.5% p.a. | 3–7 years |
| Unsecured loan | 9%–13% p.a. | 1–5 years |
The shift toward electric vehicle financing
Sustainability is changing what Australians drive and how they finance it. Banks and non-bank lenders are adjusting their offerings for EVs — Bank Australia has already stopped funding loans for new fossil-fuel vehicles. Incentives such as lower rates, longer terms and government rebates make EVs more affordable, while state-level support like stamp duty exemptions reduces the upfront amount that needs financing. EV loans are increasingly tailored to younger urban drivers aligning transport choices with environmental values, making green finance accessible to first-time buyers and families alike.
Demographic trends in car loan uptake
- Younger borrowers (25–34) — often first vehicles, leaning to used or fuel-efficient models, with flexible repayments or repair loans for second-hand purchases.
- Middle-aged borrowers (35–50) — typically family vehicles like SUVs or hybrids, valuing stability and secured loans with longer terms.
- Older borrowers (50+) — many upgrading to EVs or downsizing, prioritising low-rate secured loans, transparency and service.
Location matters too: metropolitan buyers often pick smaller vehicles or EVs, while regional borrowers lean toward utes and four-wheel drives for lifestyle needs.
Key statistics for 2025
| Metric | Value |
|---|---|
| Average car loan rate (secured) | 6%–10.5% p.a. |
| Average unsecured personal loan rate | 10.14% p.a. |
| Average new vehicle loan repayment | $742/month |
| New dwelling loan commitments (March quarter) | Down 3.5% |
| Bank Australia fossil-fuel car loan phase-out | Starting 2025 |
Tips for securing a car loan in 2025
- 1
Know your credit score
A high credit score can significantly reduce the interest rate you’re offered.
- 2
Compare lenders
Use trusted platforms to review various loan products side by side.
- 3
Be cautious of extended terms
Lower monthly repayments are appealing, but they can mean more interest over the life of the loan.
- 4
Make a deposit if possible
Even a small upfront contribution reduces your loan balance and total interest.
- 5
Check for green incentives
If buying an EV or hybrid, look for discounts or lower rates tied to sustainable choices.
The outlook
The future for Australians seeking a car loan in 2025 is bright — lower rates, better consumer awareness, and more customised products are creating advantageous borrowing terms. Whether you’re a first-time buyer, upgrading to a family car, or switching to an EV, taking time to compare options and understand the terms leads to better financial outcomes.
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- MJ
- KZ