You’ve found the car. Now comes the part most buyers rush: the finance. A dealer offer on the desk feels fast and easy, and at first glance it often sounds like a great deal. That is exactly why it can cost you. In June 2026 the Australian Securities and Investments Commission (ASIC) reviewed the car loan market and found real people paying real money in fees they did not see coming. This guide breaks down the key findings, using Australia’s corporate regulator’s findings. Giving you all the items to check off the list, so you can walk in prepared, knowing the true cost before you sign anything.
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ASIC published its review of the car loan market, “Lifting the bonnet”, after reviewing data from more than 350,000 loans across eight car finance providers (ASIC media release 26-132MR, 25 June 2026). It found the total cost of a car loan can vary widely, and that fees, add-ons in the finance, the structure of the loan, and the lender you use all shape what you end up paying.
It found the total cost of a car loan can vary widely, and that fees, add-ons in the finance, the structure of the loan, as well as the lender used all shape what you end up paying. One of the clearest findings was that the same borrower could walk away with a very different deal depending on who they dealt with and where.
Most loans carried establishment fees, usually two and in some cases a third. lender establishment fees ranged anywhere from $299 to over $900, according to ASIC. In the worst case ASIC found, one loan included three seperate fees from the lender and dealer, and one customer paid over $9,000 in fees on a $49,162 car loan. That included over $7,800 to the lender and $1,320 to the introducer, which worked out to roughly around 18% of the loan amount.
Not at all. The lesson from the review is not that all car loans are full of fee’s and expensive. It is that structure and comparison matter. A loan with high fees, a short term, or a large balloon on a car that loses value quickly can leave you paying far more than you needed to. Knowing what to look at before you sign is what puts you back in control, and that is exactly what the rest of this guide walks you through.
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Dealer finance is convenient because you sort the car and the loan in one place, often the same day. That convenience is where the cost can hide. Dealers usually work with only one to three finance partners, and the government’s Moneysmart service recommends you “compare loans before visiting a car dealer” so you know the going rate before you are in the room. There is another catch that catches a lot of buyers out. If you make enquiries directly with several lenders yourself, every application can leave a mark on your credit file, and too many in a short window can lower your score and shrink your options.
A dealer can also add a margin on top of the lender’s rate, which means you are offered a rate that doesn’t represent the best deal you could qualify for. It is also common for dealerships to include add-ons and bundled extras in the loan, which add-up and can make a real difference to what you pay each week and over the life of the loan. The royal commission in 2018 also found it was common practice for these extra’s to not be disclosed up front, and instead appear at the time to sign the contract. This behaviour has been strictly banned since the commission concluded, however dealerships still use the excitement and urgency of the car sitting in front of you as a way to take the attention away from these things.
Although a headline rate of 3.0% can look unbeatable, once you factor in the specific requirements to qualify for such an offer, like a short term, balloon payment, higher fees, deposit requirements, and penalties for early payout and extra repayments, the picture changes. The advertised rate gets you in the door, but it is the full cost of the loan, including fees, repayments, term and flexibility, that is the real way to judge whether it is fair.
A broker works differently. Our team can assess your situation accurately and compare options from more than 50 lenders and hundreds of products without impacting your credit score or locking you into anything. We present the options to you, explaining all the fee’s, as well as the various different ways your loan can be structured to ensure you get the best value possible. You see real rates and options tailored to your profile and needs, not a headline number designed to get you in the door. And all though brokers can also offer insurance products that you can include in the finance or pay directly, like warranty and comprehensive insurance, these are discussed up front including all the costs and details, so you have all the information to make the best decision possible.
It is worth understanding the difference in duty, too. As a licensed credit provider, we are bound by responsible lending obligations to make sure a loan genuinely suits you, and a broker’s role is to compare the market and put your interests first. A dealer finance desk is selling you the finance in front of them, irrespective of your profile and needs. That difference is why it’s so important to compare before you commit to anything.
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The fastest way to gauge the real value of a car loan is to look past the big advertised number and find the comparison rate. The comparison rate includes the interest rate plus most fees, so it shows the true cost of the loan. Lenders are legally required to display and provide this rate. If the comparison rate sits well above the advertised rate, fees are inflating the deal, and dealer finance often shows the widest gap. People are normally shocked to here that a 1 or 2 percent difference in rate typically makes minimal difference when it comes to repayments and cost, vs fee’s added on top of what you borrow.
For example:
The finance office is where the extras appear: extended warranty, gap insurance, paint protection, tyre-and-rim cover, loan protection insurance. These are often bundled into the loan, so you pay interest on them for the full term. This does not mean every add-on or insurance is poor value. Some of these products can be genuinely useful. The point is to be alert to what is being added to your purchase and your finance, and to make sure you fully understand each one, what it costs, and the real value it provides before you agree to it.
A longer term or a large balloon payment (a lump sum owed at the end) makes monthly repayments look smaller while pushing up what you pay overall. For example, with a balloon payment you keep paying interest on that residual amount for the life of the loan. In comparison, when there is no balloon, your interest is reducing on the total amount with every payment you make. Which means towards the end of the loan term the interest you pay is normally minimal as it is being calculated off a very small remaining balance.
In comparison a ballon might mean you have over 30% of the vehicles purchase price still remaining as you near the end of the term and contributing towards interest costs. In addition to this, If you cannot cover the balloon when it is due out of your own pocket, you have to either refinance or sell the car. The trap a lot of people fall into is the additional costs of refinancing a balloon. Due to the vehicles age and lower value from depreciating, the interest rate is typically higher than what a new car qualifies for. Before you sign, make sure you can see the whole cost: the rate, the comparison rate, the term, any balloon, all fees, and the total you will repay by the end. ASIC previously found
Another key consideration missed by a lot of people is the impact extra payments make on the total cost of your loan. With a standard car loan, interest is charged on the balance you still owe, not on the original amount. Each month, interest is calculated on the remaining balance, and whatever’s left of your fixed repayment after covering that interest goes toward reducing the principal.
Because the balance shrinks over time, the interest portion of each payment falls and the principal portion rises. Even though the repayment amount stays exactly the same. This is called amortisation, and it’s why in the early portion o your loan term the amount owing seems to decrease slowly.
When you make extra repayments you increase the amount of the principal you are paying off and lower this overall amount, which then means the interest that is calculated and that you repay is smaller. One of the biggest savings you can have on a car loan is paying out the entire amount early. You can only pay interest on a loan while it is open.
This means if we use the same example, $30,000 over a 5 year term at 6.76%, and you stay in the loan for the full term, you pay back roughly $5,300 of interest. If we take the same loan, and you pay it out 12 months early, you only pay roughly $4,251 of interest. And if you paid it out roughly two years early, you will pay roughly $3,159 of interest. That’s a saving of over $2,000. So if you have a loan that is 1% lower in interest but has penalties for early payout, you can end up paying substantially more in interest and fee’s when compared to if you could pay the loan out early.
Not sure where to start with your repayments and structure? Our car loan repayment calculator gives you a quick sense of what different terms and amounts look like, so that you can see these things in action, and the impact they have on your car loan.
Yes. A past default or a patchy credit file does not automatically shut the door. What matters most when looking at bad credit car loans is the story behind the file: what happened, what you have done since, and the strengths in your situation, like steady work or consistent rent since the past problems. The right lender weighs all of that into consideration, not just a number from your past based on previous mistakes.
This is where comparing the market really counts. When your credit history is less than perfect, it is easy to be placed into a product you simply qualify for, rather than the product that is actually right for you. A dealer or a single lender can only offer what is on their shelf. Because we compare across more than 50 lenders, we can look for a lender that understands your circumstances and prices the loan on your full picture, not just the blemish. We even have access to lenders who specialise in helping customers with bad credit car loans. The worst move is accepting the first on-the-spot offer out of the fear it’s your only option. Because It rarely is.
For a full walk-through and understanding of this process, read our guide on getting a car loan with bad credit.
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Absolutely not. lending is based off risk, the higher the risk a lender determines someone has of potentially missing payments, generally the higher the rates. A weaker credit file can affect the rates available to you, but it does not mean you are stuck with the most expensive loan on the market. Two people with similar files and past problems can end up with very different deals depending on which lender their application is put to, and how their application is presented. A lender that understands your circumstances, paired with an application that puts your strengths forward, can make a real difference to the rate, the fee’s and the structure you are offered.
For example, some mainstream lenders can accept varying degrees of bad credit, and if something is right on the borderline of being within a lenders profile, the right application can walk this line and secure you a much lower cost loan. Not all bad credit car loans are created equal either. Some lenders rely more on the type of vehicle being purchased, which means if you are buying a newer car this helps to keep the rate lower. Others specialise in particularly challenging credit mistakes and issues, and can genuinely offer approvals when no other lenders can.
To get the ball rolling on your bqd credit car loan options, you can head to our Bad Credit Car Loans page.
A common misconception amongst most people is you have the same loan for the full term. This is not true. As part of our service to our customers, we stay in touch throughout the life of your loan to ensure you are always on the best deal. This includes refinancing to get you to a lower rate. When you first apply with bad credit, it might mean your lender options are restricted to specialist bad credit lenders.
However, after 12 months of making on time repayments, your application to a lender will look much stronger, and the other reasons that were restricting your options may have changed. For example, recent missed payments or lots of credit enquiries. These things combined will typically mean your credit score will have increased, which also means you will qualify for a lower rate and better deal. Which allows you to get the car you need today, knowing your rate will continue to improve as your credit profile grows and improves.
That is the value of getting the comparison and the application right, and working with someone that stays in touch to ensure you are always taken care of. The goal is not just approval, it is an approval on terms that genuinely work for you, not just today, but for the life of the loan.
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Before you sign any documents or decide on your finance options, run the offer through this quick check. If you can’t tick off some of these points, it is worth getting a second option before you commit.
Ask yourself: Do I actually understand the total cost of this loan? Have I compared it against anything else? Would I still sign this if the excitement of the new car was gone and I had a week to think it over? If the answer to any of those is no, you are not ready to sign yet, and that is completely fine.
You don’t have to work this out alone, and you certainly don’t have to take the first offer put in front of you. When you compare with us, you get access to more than 50 lenders and hundreds of products, with your options assessed and laid out clearly before anything is submitted. Rather than being handed a product of the shelf, you get a loan matched to your actual needs, access to deals that aren’t always available on the open market, and a team in your corner working to secure better terms on your behalf.
At Fox Finance Group, we compare car loans across our panel and show you the real cost of each option over the full term: rate, comparison rate, fees, term, any balloon, and the structure that actually fits your situation. We have helped Australians fund what matters most for 20 years, with $1 billion-plus in processed applications and over 1,100 five-star Google reviews. You can read what our customers say about our team any time.
If you are ready to see your real car loan options, you can get started online now, or reach out to our friendly team on 1300 665 906. A quick chat costs nothing and there’s no obligation to proceed.
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 Rowdie Lang |
Rowdie has been a part of our Team since 2020. He has witnessed firsthand the ongoing evolution of the finance industry as technology continues to change the way customers' access financial services. He has a passion for helping people and relishes the opportunity to work alongside our teams every day as they help our customers financial dreams come true.
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Reviewed by: Nathan Drew ✅ Fact checked 📅 Last updated: Jul 10, 2026 |
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A car loan is a type of finance that allows you to borrow money from a lender to purchase a new or used vehicle, then repay it over time with interest. The car often acts as security for the loan, which can help you access lower rates. Car loans can be tailored with different terms, repayment options, and loan amounts to suit your budget.
