You wouldn’t believe how many times we get asked this during a car pickup. Whether it’s someone upgrading their daily drive or dumping a backyard bomb, folks always want to know: What is the most common way to pay for a car in Australia? So, we’re breaking it down, no dealership jargon or finance mumbo jumbo — just straight talk from the Old Cars Removed crew.
At Old Cars Removed, we’ve hauled away everything from dusty Datsuns to near-new SUVs that got written off after a storm. So we’ve seen firsthand how Aussies fund their four-wheeled dreams — and where they get stung.
Contents
Cash, Credit or Loan?
Buying a car isn’t like grabbing a pie and a Coke at the servo. It’s a big spend, and for most Aussies, that means getting a bit of help. According to the Federal Chamber of Automotive Industries (FCAI), around 9 out of 10 new car purchases involve some form of finance. That might be a car loan, dealership finance, novated lease or personal loan.
Here’s a quick look at how it stacks up:
| Payment Method | Common For | Key Info |
|---|---|---|
| Car Loan | New and used cars | The bank or lender provides funds; you pay it back with interest |
| Dealer Finance | New cars mostly | Often bundled with the car deal, sometimes with hidden fees |
| Lease (e.g. Novated) | Salary-packaged workers | Car lease paid via your pre-tax income |
| Personal Loan | Private purchases | Flexible, but not always the cheapest |
| Cash (savings) | Cheap cars or old utes | No interest, but you need the cash upfront |
| Credit Card | Small second-hand purchases | Only practical for very cheap cars; high interest rates |
Australia’s Top Payment Choice
When it comes down to it, car loans are the go-to choice. Whether you’re picking up a new Mazda or a second-hand Hilux, a secured car loan from a bank or finance company is the route most people take. It gives you the wheels now, and spreads out the cost over a few years.
One bloke from Dandenong told us he financed a $30k Corolla over 5 years and said, “It’s like paying rent on a car, but at least it’s mine at the end.” Fair point.
Quick Tips:
- Look for loans with low interest and no sneaky setup fees.
- Check comparison rates, not just the headline rate.
- A used car might mean slightly higher interest.
- Don’t forget to factor in car insurance, stamp duty, and vehicle registration when budgeting for repayments.
Dealer Finance: Fast But Sometimes Dodgy
Dealerships love pushing their in-house finance – and it’s easy to see why. You’re already there, eyeing off a shiny SUV, and they dangle a low repayment plan. But what looks like a bargain can come with extra fees or rigid terms.
One mate from Footscray said the dealer promised “2.9% finance” but the fine print added up to over 7% once insurances and balloon payments were factored in.
Heads up:
- Always compare against bank loan options.
- Watch for “balloon payments” at the end.
- Ask for a full breakdown of costs in writing, including vehicle expenses and mandatory verification partner checks.
Novated Lease Benefits for Salary Earners
Got a full-time job with salary packaging? A novated lease might be worth a squiz. It lets you lease a car using your pre-tax income, which can lower your taxable income and reduce your overall tax bill.
Just don’t forget: it’s still a lease. You don’t own the car until you buy it out at the end. And you’ll still be up for car insurance, roadside assistance, and maybe even a car subscription service if you want flexibility.
Works Best If:
- Your employer offers novated leasing
- You drive regularly for work or commuting
- You want newer models with warranty coverage
Paying Cash: Still Popular
Look, not everyone’s financing a new Land Cruiser. Plenty of Aussies are picking up cheap second-hand rides with their own hard-earned savings. Especially if you’re buying off Gumtree or Facebook Marketplace – cash is still king.
We once picked up a bogged Commodore from a bloke in Cranbourne who bought it for $600 cash. Didn’t last long, but “it got me to work for a few months,” he reckoned.
Buying from private sellers also means you’ll be sorting your own number plates, vehicle registration, and confirming ownership through verification partners.
And if you’re thinking of letting go of an old vehicle, we offer cash for cars in Ferntree Gully — no mucking around, no hidden fees. Just honest quotes and fast pickups.
Can You Pay for a Car With a Credit Card?
Short answer: You can, but we wouldn’t recommend it unless the car’s cheaper than your fridge. Dealers usually won’t accept large card payments because of the merchant fees. Private sellers might be ok with PayID or bank transfer.
Biggest risk? Interest rates on credit cards can hit 20% or more. That cheap hatchback might cost you double if you don’t pay it off fast.
Also keep in mind, credit cards aren’t ideal for loan term planning or building long-term equity.
Car Payment Stats in Australia
- Over 90% of new car buyers use finance (FCAI)
- $39,000 average car loan in Australia (Finder, 2024)
- 5.99% – 12% typical interest rate range for car loans
- $1.3 billion spent on novated leasing in 2023 (ATO estimate)
- Over 60% of hybrid vehicle and electric vehicle purchases were financed in 2023
Final Take
There’s no one-size-fits-all answer. But here’s how we see it after towing thousands of cars across Melbourne:
- Got cash? Use it for older used cars under $10k.
- Need a newer car? Consider a bank car loan or a novated lease.
- Does the dealer offer finance? Compare it thoroughly before signing.
- Buying privately? Personal loan or cash is usually easiest.
And hey, if you’ve got an old ride to get rid of, give Old Cars Removed a call. Whether you paid cash, lease, loan or won it in a pub raffle, we’ll take it off your hands — and might even throw a few bucks your way.
We’ve made it easy to get cash for cars in Ferntree Gully — no rego, no dramas. Just give us a call, and we’ll handle the lot.
FAQ
Can I get a car loan if I have bad credit?
Yes, but your interest rate will likely be higher. Some lenders specialise in bad credit car loans, but watch out for fees.
Is it better to get a loan from a bank or the dealer?
Banks often offer better interest rates, while dealers might be more convenient. Always compare.
Can I use a personal loan instead of a car loan?
You can, but car loans usually have lower interest because the vehicle is used as security.
Do I need a deposit to get car finance?
Many lenders require a deposit, especially for new or expensive vehicles. Around 10–20% is typical.
Can I pay for a car with PayID or a bank transfer?
Yes, especially in private sales. Always get a receipt and verify bank details before transferring. Use a secure bank account and double-check with verification partners if you’re unsure.