automotive finance

Car Loan Repayments in Australia

For many Australians, buying a car is an extensive financial choice. Whether you’re purchasing a new or used vehicle, car loans are a popular way to finance this purchase. Understanding how car loan repayments work is crucial to managing your finances effectively.

This guide will take you through everything you need to know about car loan repayments in Australia, including the factors that affect your repayments, how to calculate them, and tips for managing your loan.

Factors Affecting Car Loan Repayments

Car Loan Repayments
#Car Loan Repayments

Loan Amount

The principal amount you borrow to buy your car will directly impact your monthly repayments. The higher the loan amount, the Higher your repayments will be.

Interest Rate

Car loan interest rates differ widely depending on the lender, credit score, and loan term. Higher interest rates mean higher repayments.

Loan Term

Your loan repayment depends on its length. A longer loan term may result in higher interest payments but lower monthly payments.


Some lenders may charge establishment fees, monthly fees, and early repayment fees, which can affect your loan’s total cost and monthly repayments.

Balloon Payments

Some car loans have a balloon payment, a one-time payment due at the end of the loan term. Balloon payments can reduce your regular repayments but increase the total amount paid over the life of the loan.

Calculating Car Loan Repayments

Calculating your car loan repayments can be done using a car loan calculator or manually with the following formula:



  • EMI = Equated Monthly Installment
  • P = Loan amount (principal)
  • r = Monthly interest rate (annual rate divided by 12)
  • n = Loan term in months

Example Calculation:

Let’s say you take out a car loan of $30,000 with an annual interest rate of 5% for a term of 5 years (60 months):

𝑟=5%12=0.004167 𝐸𝑀𝐼=30000×0.004167×(1+0.004167)60(1+0.004167)60−1

Tips for Managing Your Car Loan Repayments

Budget Wisely

Ensure your car loan repayments fit comfortably within your monthly budget. Consider other ongoing expenses like insurance, fuel, and maintenance.

Make Extra Repayments

Making additional repayments can reduce the total interest paid over the life of the loan and help you pay off your car sooner.

Compare Lenders

Look around and compare different companies’ fees, interest rates, and loan terms to get the best deal for your budget.

Understand the Terms and Conditions

Read and understand the terms and conditions of your car loan, including any fees, charges, and conditions associated with early repayment or defaults.

Consider Insurance

Comprehensive car insurance is often required when taking out a car loan. Factor this cost into your budget.


Get in touch with us if you have any further questions. Our team of experts is here to assist you.

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    automotive finance
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