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12 months
12 months
60 months
rate 9.95%
rate 29.95%
Repayments from $103 per week
Repayments from $445 per month

How Do Car Loans Work?

Financing is when a borrower takes out a loan, which is a type of debt, to pay for something that costs more than what they can pay for at one time, like a car. When a borrower asks for a loan, once approved, the lender will give the borrower a certain amount of money with a promise of repayment from the borrower. With a car loan, the borrower pays this loan back in certain installments.

A loan is given to the borrower with an interest rate. This is extra money that the borrower will be paying to the lender as payment for providing the borrower with the money for the car. For example, if the car costs $19,000, the borrower could eventually pay $22,000 by the end of the transaction. This is how lenders make money.

How Car Loan Interest Rates are Calculated

How car loan interest rates are calculated can be a very important thing to know when you are looking for a car loan. However, it is actually a difficult thing to understand, the following factors are taken into consideration:

Credit history.

The biggest factor in the calculation of used car loan rates is the borrower's credit history. The credit history is then transformed into a credit score that tells lenders how likely you are to pay back the loan.

Types of interest rates.

The two types of interest rates used are the simple interest rate and the compound interest rate. The simple interest rate is calculated using only the amount of principle owed, while a compound rate uses both the amount owed and the interest rate owed. So with a compound rate you are paying interest on the interest.

Debt-to-income ratio.

Debt-to-income ratio is how much of the consumer or borrower's gross monthly income goes towards paying other debts like housing and food.

So in order to calculate the interest rate you will pay on a car, you will need to know the type of credit history you have, the amount of the loan, the amount of the down payment if any, and the debt to income ratio.


*Fixed interest rates for vehicle and personal loans range from 9.95% p.a. to a maximum of 29.95% p.a. on a minimum 12 month to a maximum 60-month loan term. The actual interest rate charged to you will depend on your circumstances, the type of lending required, the security provided, and is determined by the lender. 

 Fees apply, including an establishment fee of up to $450 and an introducer fee of up to $995. Also, lenders may charge a PPSR fee of between $0 and $14. For example: On a loan of $5,000 over 12 months at 10.95% p.a. with Establishment and Introducer fees totalling $495 and a PPSR Fee of $7.39, the total amount to repay is $5,835.93 which is 12 monthly payments of $486.34. Those amounts don’t include ongoing fees, such as Service Fees, charged by the lender. You can find full fee information in the loan contract. We recommend that you check the fees before accepting the loan offer.

Approval is subject to meeting lending criteria, and affordability test applies. Our lender will independently assess whether you are eligible for a loan.

One hour application decision subject to affordability test, the applicant meeting the lending criteria and supplying all the required information to process the loan application.

Same day payout subject to the applicant meeting the above conditions and completing loan documentation by 12pm.