Best car finance options in Australia: compare your choices

Key points

• There’s no universal “best” car finance — the right choice depends on your personal needs, financial situation, and whether you want to own the car outright or prefer lower ongoing costs.
• There are lots of finance options available for your next car purchase, from loans to leases and they all offer different features
• Use third-party review sites to compare lenders and finance products. Look for independently rated options, such as the RACV Green Car Loan, which won Electric Car Loan of the Year in the 2025 WeMoney Awards.
• Always read the fine print and consider total costs, including interest, fees, and vehicle price, before committing to any finance option.
• Use RACV Car Match to compare cars, running costs, and expert reviews.
• Explore flexible car loans and Get My Rate for tailored finance options.

Compare car loans: finance vs lease vs dealer finance

If you’re looking to compare car loans, it helps to understand the key differences between the main car finance options available in Australia.

Most car buyers choose between three options:

• a traditional car loan through a bank or lender like RACV Finance
• dealer‑arranged car finance, or
• a car lease (often a novated lease arranged through an employer).

Each option has its own advantages, costs and considerations. The right choice depends on your personal circumstances, how you’ll use the vehicle, and what fits your budget.

Car loans: pros, cons and who they suit

A traditional car loan involves arranging finance directly with a bank or lender and agreeing upfront on your loan term and interest rate. This makes it easier to understand exactly how much you’ll repay over time.

Using a car loan calculator can help you compare different interest rates and loan terms and see how they affect your total repayments.

Pros

• Clear, predictable repayments
• You own the car outright once the loan is paid off
• Flexible loan terms depending on the lender

Cons

• Can be more expensive than leasing in some cases
• Some loans limit early repayments or charge fees.

An unsecured car loan, which doesn’t use the vehicle as security, may be available, but typically attracts a higher interest rate.

Dealer‑arranged car finance: pros and cons

Dealer finance works much like a standard car loan, but the dealership arranges the finance on your behalf. This can be convenient if you want everything organised in one place. However, it may limit your ability to negotiate on the price of the car.

Pros

• Quick and convenient
• Finance arranged at the dealership.

Cons

• Hidden or higher fees may apply
• Promotional finance usually limits price negotiation
• Less flexible than sourcing your own finance.

It’s important to compare the total repayment amounts, rather than focusing solely on what may look like an attractive promotional interest rate.

Car lease and novated lease: pros and cons

A car lease can offer lower regular repayments than a traditional car loan. In particular, a novated lease allows eligible employees to bundle car‑related costs, such as fuel, insurance and maintenance, into a single payment.

Leases may also offer tax benefits, including potential GST savings and fringe benefit tax (FBT) exemptions for eligible electric vehicles. 

Pros

• Running costs included in one payment
• Potential tax savings

Cons

• You don’t automatically own the car
• A large balloon payment may apply if you want to keep the vehicle at the end of the lease.
• Novated leases are linked to your employer, so changing or leaving your employer can make things more complicated.

Car loan interest rates and fees comparison

This is where taking the time to look at the details and the fine print of any loan terms can save you thousands of dollars. Just looking for the lowest car loan rates on offer doesn't always mean the best deal.

Banks and lenders will often have very competitive fixed interest rates and should offer the most stable terms over the course of your loan.

Dealer finance can sometimes include promotional interest rate offers, which are often used as part of the sales process. While this may be convenient, it can also limit your ability to negotiate on the vehicle’s price. It’s important to look beyond the headline rate and compare total repayment amounts, as fees and charges may be built into the loan and affect the overall cost.

Leasing works a little differently to a traditional loan, as the interest cost is typically built into the overall repayment rather than shown as a separate rate. Repayments are often presented as a single figure that can include running costs such as registration and insurance, which can make it harder to see how the finance component is structured.

If you’re able to access a novated lease through your employer, this arrangement can be more beneficial in some cases - particularly where government incentives apply, such as for eligible electric vehicles. As with any finance option, it can be worth speaking with an accountant or financial adviser to understand how a lease fits your circumstances.

How to choose the best car finance

The right finance option depends on your circumstances, so it’s important to weigh up what suits your needs and budget.

If your employer is happy for you to lease through the company and pay pre-tax, then you may consider that your best option with a new car. The interest rate on a loan within the lease is not always transparent as it's presented as a total repayment including running costs such as registration and insurance.

However, if you're looking for something to own long-term and regardless of your employment, then taking out a loan with a reputable lender is likely the better choice.

Third-party sites are also a great way of finding out how professionals and customers rate the value and service offered by lenders. The RACV Green Car Loan was awarded in the 2025 WeMoney Awards as Winner for Electric Car Loan of the Year. RACV was also a finalist for Personal Loans (Best for Flexibility).

The bottom line when choosing the right finance is to consider your specific scenario and then check the details, fees and other fine print in any loan or lease before making a decision. Access third party sites to see how other drivers have rated their experience and consider a finance product which is independently rated and reviewed.

RACV Car Loans and Car Match tools

RACV Finance offers car loans for both new and used cars, offering a wide array of options and benefits.

The online car loan calculator allows you to quickly and easily understand potential affordability depending on the loan amount, interest rate, and length of the loan.

All RACV loans come with a 21-day Loan Satisfaction Guarantee. There's also reduced rates if you're looking at a Green Car Loan to buy an electric cars, and unique terms for used vehicles and caravans. 

Once you've got an understanding on how much money you can borrow, RACV's Car Match online research tool can help you choose the best car for your budget. It enables you to look at every make and model variant on sale in Australia (including new and used cars) and get an immediate estimate on how much you should expect to pay, including on-road costs, and then what your estimated car loan repayment may be.

You can even shortlist cars to compare their running costs, features and safety directly.

^{R.A.C.V. Finance Limited ABN 82 004 292 291 Australian Credit Licence No. 391488. RACV Finance is subject to RACV lending criteria. Conditions, fees and charges apply.}

^{Advice given in this article is general in nature and is not intended to influence readers’ decisions about financial products. You should always seek your own professional advice that takes into account your own personal circumstances before making financial decisions.}