The car itself is not the only thing that changes when you go from a new vehicle to a used one - the loan behind it often changes too. Rate, maximum term and even which lenders will consider the loan can all shift once a vehicle's age comes into the picture.
Why used car loans are often priced differently
A vehicle is the security behind a car loan, and a used car is generally viewed as higher risk security than a new one - it has already gone through its steepest depreciation, and it has a shorter remaining useful life. Lenders often reflect this in a higher rate for used vehicles, though the exact gap varies considerably by lender and by how old the car actually is.
Age limits and loan terms
Many lenders cap how old a vehicle can be by the end of the loan term - commonly somewhere between 10 and 12 years. This means an older used car may only qualify for a shorter loan term than a new vehicle would, which increases the regular repayment even before any rate difference is factored in.
Dealer purchase vs. private sale
Some lenders treat a private sale differently to a dealer purchase, particularly around how the vehicle's condition, value and history are verified. A handful of finance products are only available for dealer purchases, so it is worth checking this before settling on a particular car.
What to actually compare
A used car loan with a higher rate but a shorter term can still end up costing less overall than stretching a new car loan over a longer period - or the reverse can be true. The comparison rate is the figure that folds in most fees alongside the interest rate, giving a more complete picture than the advertised rate alone. See our guide to APR vs. interest rate vs. comparison rate for how each of those figures is actually calculated.
If a deposit is part of the plan either way, our guide on how much deposit you need for a car loan covers how that changes the numbers too.
The takeaway
Going used does not just change the purchase price - it can change the rate, the maximum loan term and which lenders are even willing to consider the loan. The right way to compare a new and used option is on the total cost over the likely term, not on the sticker price or the headline rate alone.
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Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs.
Last reviewed: 15 September 2026. This article was prepared using information available from the Australian Securities and Investments Commission and Moneysmart. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.
Frequently asked questions.
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A used vehicle is generally seen as higher risk security than a new one - it depreciates faster in percentage terms early on, and its remaining useful life is shorter. Lenders often price this into the rate, though the gap varies by lender and by how old the vehicle is.
Many lenders set a maximum vehicle age at the end of the loan term - for example, the car cannot be older than 10-12 years when the loan finishes. This can shorten the maximum loan term available on an older vehicle compared with a new one.
It can. Some lenders treat a private sale differently to a dealer purchase, particularly around how the vehicle's condition and value are verified, and some finance products are only available through dealer purchases.
Not necessarily - the term and the rate are priced somewhat separately, though a shorter term reduces the lender's risk exposure over time, which can factor into approval and pricing. The bigger driver of total cost is usually the vehicle's age and the loan amount relative to its value.
The comparison rate, since it folds in most fees alongside the interest rate and gives a more accurate picture of the total cost. See our guide to APR vs. interest rate vs. comparison rate for how each figure is calculated.
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