Secured or unsecured
Why does security matter?
A loan secured against the vehicle carries less risk for the lender and is generally priced accordingly. Unsecured personal loans cost more.
CALCULATOR
What will the car cost you each month?
Shorter terms, higher rates and a depreciating asset — the arithmetic works differently from a mortgage.
RUN THE NUMBERS
Estimate the repayment on a car or personal loan
Shorter terms and higher rates make fees matter more here than on a mortgage, and a balloon changes the picture entirely. Both are included.
Net of anything still owing on the vehicle traded in.
Longer terms lower the repayment and cost more, and can leave you owing more than the car is worth.
Balloon and fees
A lump sum still owing when the term ends. It lowers the repayment and raises the total cost.
Small monthly fees add up over a five year term — the equivalent rate below includes them.
Estimated repayment
$809.14
per month
- Amount financed
- $40,000
- Total interest
- $8,549
- Total repaid
- $48,949
- Equivalent rate with fees
- 8.33%
- Amount financed$40,000
- Interest$8,549
- Fees$400
What this calculation assumes
- The rate you enter is assumed fixed for the term, which is how most car and personal loans are written.
- A balloon is treated as a lump sum owing at the end of the term. When it falls due it has to be paid, refinanced or covered by selling the vehicle — and the vehicle may be worth less than the balloon by then.
- Dealer finance is often quoted at a flat rate rather than an effective one. The equivalent rate shown here includes the fees you enter and is the figure to compare against.
- Insurance, warranty and add-on products sold with the finance are not included, and they are frequently financed at the same rate as the car.
- A secured loan against the vehicle usually prices better than an unsecured personal loan. This calculation does not distinguish between them.
WHAT IT TELLS YOU
Car and personal loan repayments are calculated the same way, over a much shorter term
The same amortisation maths applies, but terms are typically three to seven years rather than thirty, so repayments are higher and total interest is lower than a mortgage on the same amount.
The main structural difference is the balloon or residual payment. Including one lowers your regular repayment by leaving a lump sum owing at the end — which you then have to pay, refinance or sell to cover.
Whether the loan is secured also matters. A loan secured against the vehicle is generally priced well below an unsecured personal loan.
WHAT MOVES THE NUMBER
What changes the number
The term
How long should you borrow for?
Longer terms reduce the repayment and increase total interest — and on a depreciating asset, risk leaving you owing more than the vehicle is worth.
Balloon payment
What does a balloon do?
It lowers your monthly repayment by deferring part of the principal to the end. You pay more interest overall and face a lump sum when the term finishes.
READING THE RESULT
An estimate is a starting point, not an answer
What the calculation covers
- Regular repayments over the term — at the rate and amount you enter.
- The effect of a balloon payment — on both repayment and total cost.
- Comparison between terms — so the trade-off is visible.
What a lender does differently
- Rates vary with the asset — age, type and resale value all affect pricing.
- Business structures differ — a chattel mortgage is assessed differently from a consumer loan.
- Establishment fees apply — and are not always included in the estimate.
- Dealer offers have conditions — subsidised rates often come with other requirements.
COMMON QUESTIONS
Questions about this calculation
Is a balloon payment a good idea?
It lowers your repayment now, which can help cash flow, but you pay more interest overall and face a lump sum at the end.
It suits people who intend to trade the vehicle in at that point, and suits far less anyone who will need to find the money in cash.
Should I borrow over a longer term for a lower repayment?
Be cautious. Vehicles depreciate faster than a long loan amortises, so you can spend part of the term owing more than the car is worth.
Matching the term to how long you will keep the vehicle is the more sensible approach.
Is dealer finance competitive?
Sometimes, particularly during a subsidised manufacturer campaign. Often it is priced for convenience rather than value.
Compare before you sit down at the dealership — an alternative offer in hand also strengthens your negotiating position.
Can I pay a car loan out early?
Usually yes, though some fixed-rate consumer loans include early termination fees.
Check the contract before you commit, particularly if you expect to trade the vehicle before the term ends.
OTHER CALCULATORS
Other numbers worth running
GET IN TOUCH
Want the estimate checked against real lender policy?
Would rather talk it through?
(02) 9659 1694Important information
This page explains a calculation. Any figures you produce from it are estimates based on the assumptions described, not a quote, an offer of credit, or an indication that finance will be approved.
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.