The average Australian car loan interest rate on offer through Savvy for someone with a good credit score is 7.12% p.a., as of October 2025. This is based on a five-year, $35,000 loan for a new car and an applicant with full-time employment. For this prime borrowing profile, rates can vary from as little as 5.85% p.a. up to 9.95% p.a. with our lending partners.
For applicants with bad credit, the average interest rate available on a car loan through Savvy is currently 13.74% p.a. This is based on the same parameters as the previous example, with the only difference being credit score. In many cases, bad credit customers may be required to pay 20.00% p.a. to 25.00% p.a. on their car loans. However, if you have a strong profile otherwise, such as being asset-backed with minor non-finance defaults, you might be able to secure a rate closer to 10.00% p.a. with some lenders.
As you can tell, car loan interest rates are determined by a range of factors, such as your income, employment, credit history, the car you’re buying, whether you own a home and much more. This means that the rate you receive may end up being higher or lower than the rates listed above.
Average car loan interest rates for Savvy customers
Interest rates change over time not just because of customer profiles, but also market influences like the Reserve Bank of Australia (RBA) cash rate and inflation. The following table shows how the average rate has evolved over time among Savvy’s approved car loan applicants:
As you can see, the average rate for our customers went down from the start of the financial year until the end, as the national cash rate dropped from 4.35% to 3.85%.
How much interest will I pay on my car loan?
The amount of interest you pay will depend not only on your rate but factors like the size of your loan and length of your term. For example, using a $35,000 car loan to be repaid at 7.43% p.a. over five years, the total interest you’d pay would be $7,010. However, by reducing that interest rate to 7.00% p.a., you’d only pay $6,583 in interest.
The exact formula used to calculate interest on your loan is a bit complicated, but is as follows:
Monthly repayment = Loan amount × ((r (1 + r) n) ÷ ((1 + r) n – 1))
In this equation, r is the annual interest rate divided by 12 and n is the total number of payments made. For example, if you’re calculating interest on a five-year loan repaid monthly, n would be 60. If you don’t want to mess around with hardcore maths, though, you can use our simple repayment calculator:
Car Loan Repayment Calculator
Your estimated repayments
$98.62
| Total interest paid: | Total amount to pay: |
| $1233.43 | $5,143.99 |
Why does my credit score affect my car loan interest rate?
The reason your interest rate is impacted by your credit score is because lenders will use it to assess your trustworthiness as a borrower. A good score indicates a smooth history of repaying other debts and bills, with payments made on time and in full. Because you’re seen as a lower risk, lenders will generally reward you with lower rates.
On the other hand, if you’ve struggled with paying on time or have unpaid defaults on past debts, your credit score will be negatively affected. Lenders may see things like these as red flags and will increase your interest rate to compensate for the increased risk.
What other factors impact my car loan interest rate?
As mentioned, there’s a range of variables specific to your profile that will affect the interest rate you’re offered by your lender. These include:
- Your income and expenses
- Your current job and recent employment history
- Whether you own your home
- Any other assets in your name
- Your liabilities (outstanding debts in your name, such as other loans)
- Your relationship status and whether you have any dependants
- The car you’re buying, its age and its condition
- Whether you pay a deposit towards your car loan purchase
Why apply for a car loan with Savvy?
How to get a better interest rate on your car loan
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Improve your credit score
Make timely payments on your existing debts, reduce existing credit limits and avoid opening new credit accounts to boost your creditworthiness. By monitoring and improving your credit score, you can increase your chances of qualifying for a lower interest rate.
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Put down a deposit
Deposits aren’t required on car loans in many cases, but putting one down reduces the amount you need to borrow, which can result in a lower interest rate.
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Buy a new or near-new car
Newer cars might qualify for slightly lower interest rates due to higher value at the end of your loan term and manufacturer warranty coverage, reducing lender risk.
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Avoid job and major life changes
In the leadup to your car loan applications, having several job changes or multiple adjustments to your living address can negatively impact your chances of approval, especially for a low rate.
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Shop around
Compare interest rates and loan terms from various lenders. Don't settle for the first offer you receive; instead, explore multiple options to find the most competitive rate. When you apply with Savvy, we do the comparisons for you from our panel of trusted lending partners.
Is the lowest interest rate always the best?
No, interest rates don’t always tell the full story when it comes to the cost of your loan. That’s because lenders charge other fees on top of your car loan’s interest. One simple way to find out the total cost of your loan is by checking its comparison rate.
What is a car loan comparison rate?
A car loan comparison rate is a figure that incorporates both your interest rate and the fees added as part of your loan agreement. This includes unconditional charges like establishment and monthly repayment fees, but not conditional fees like late or early payments (as they may not be charged).
When comparing your car loan options, it’s essential to look beyond the advertised interest rate alone. Comparison rates provide a more accurate reflection of the cost of loans and how much you’ll pay for your vehicle overall. Here’s an example of when a lower interest rate would be more expensive on a $50,000, five-year car loan:
| Car loan | Interest rate | Establishment fee | Monthly fees | Comparison rate | Monthly repayment | Total repaid |
|---|---|---|---|---|---|---|
| Loan #1 | 7.50% p.a. | $400 | $10 | 8.26% p.a. | $1,019 | $61,114 |
| Loan #2 | 8.00% p.a. | $0 | $0 | 8.00% p.a. | $1,014 | $60,829 |
| Rates and fees are used for illustrative purposes only. These aren’t necessarily reflective of the rates and fees you may receive on your car loan. | ||||||
When you apply for your car loan with Savvy, your consultant will let you know what your indicative interest and comparison rates are before you proceed with your application.
