October 5, 2026
Compare car finance options in Australia: secured car loans, chattel mortgages for business, novated leases and the EV FBT exemption, plus balloon payments.
Dealer finance is quick, but it is rarely the cheapest option. Before you sign anything in a showroom, it helps to understand the main types of car finance in Australia and which one suits how you will use the car.
Work out repayments with our car loan calculator.
The most common option for personal use. The car is security for the loan, which usually means a lower rate than an unsecured personal loan. Terms are typically one to seven years, and lenders often prefer newer cars, although many will finance used cars too.
Best for: people buying a car mainly for personal use.
A chattel mortgage is the business equivalent of a secured car loan. Your business owns the car from day one, with the lender holding a mortgage over it. If your business is registered for GST, you may be able to claim the GST on the purchase price upfront in your next BAS, plus deductions for interest and depreciation for the business-use portion.
Best for: sole traders and companies buying a vehicle used mostly for business.
A novated lease is an agreement between you, your employer and a finance company. Your employer pays the lease and running costs from your salary, partly before tax. This reduces your taxable income.
Electric vehicles under the luxury car tax threshold for fuel-efficient vehicles can be exempt from fringe benefits tax under the Electric Car Discount, which can make a novated EV lease particularly cost-effective. Plug-in hybrids are no longer eligible for new arrangements entered into from 1 April 2025.
Best for: employees whose employer offers salary packaging, especially for EVs.
Convenient, but compare it carefully. Low advertised rates may come with a higher car price, fees or a large balloon. Always ask for the comparison rate and total cost.
A balloon (or residual) is a lump sum you pay at the end of the loan. It lowers your regular repayments but means you pay more interest overall and owe a large amount at the end. You can pay it, refinance it or trade in the car. A balloon of 20% to 30% is common for business vehicles.
Many lenders offer their best rates on new or near-new cars. Older vehicles, private sales and high-kilometre cars can attract higher rates or shorter terms. Getting pre-approval before you shop lets you negotiate like a cash buyer, including on private sales.
A car loan reduces how much you can borrow for a home. If you are planning to buy property soon, talk to us before you finance a car so we can map out the order that works best.
We compare car lenders for new, used, business and novated options. See car finance with Propple or book a free call.
This article is general information only and does not take into account your objectives, financial situation or needs. Government schemes, tax rules and lender policies change, so check current details before acting. Propple Pty Ltd is an Australian Credit Representative (537767) of AFSL 384704.
