Car finance in Australia falls into a handful of core types: secured car loans, unsecured car loans, dealership finance, novated leases, chattel mortgages for business vehicles, and personal loans. Noma compares options across a panel of around 25 lenders, so you see the total cost of the finance before you sign, not just the weekly repayment. The right type depends on whether you are buying privately or from a dealer, whether the car is for personal or business use, and how you want your repayments structured. For a broader overview, see best car finance options in Australia.
A secured car loan uses the car itself as security for the debt. If you stop making repayments, the lender can repossess the vehicle to recover its money. Because the lender's risk is lower, secured loans usually carry a lower interest rate than unsecured finance. ASIC's Moneysmart explains that a secured loan generally comes with a lower rate for this reason. It is the most common way Australians finance a car through Noma's car finance service, whether new or used, bought privately or through a dealer. For the practical steps, see our guide on how to get a car loan in Australia.
An unsecured car loan is not tied to the vehicle. The lender assesses you on your income and credit history alone, so approval can take a little longer, and the rate is usually higher. Moneysmart notes that if you do not repay an unsecured loan, the lender can still take action to recover the money. This option suits someone buying an older car that would not qualify as security, or someone who wants the freedom to sell the vehicle without dealing with a lender's security interest.
Dealership finance is arranged on the spot when you buy the car, often through the dealer's in-house lender or a panel it works with. It is convenient, because the loan and the purchase happen in the same conversation. One thing worth understanding is who gets paid along the way. ASIC's Moneysmart points out that finance arranged at a dealership can carry fees to several parties. These may include a dealership or introducer fee, a broker fee, and the lender's own charges. That does not make dealer finance a bad choice, but it is a good reason to ask who is involved, and to compare the total cost of a dealer's offer against other options before you sign, rather than only looking at the weekly repayment.
A novated lease is a three-way agreement between you, your employer and a finance company. Your employer deducts the lease payments and running costs from your pre-tax salary, which can lower your taxable income. It suits employees whose workplace offers salary packaging, and it usually bundles in registration, insurance and servicing. If you are considering an EV, see our guide on novated leasing an electric car. It is not the right structure for someone who is self-employed, or whose employer does not support novated leasing.
A chattel mortgage is the standard way a business finances a car or piece of equipment it will use to earn income. The business owns the vehicle from day one, and the lender takes a mortgage over it as security. There may be GST and depreciation benefits, depending on your business structure and how the vehicle is used. Because the tax treatment depends on your circumstances, confirm it with your accountant or a registered tax adviser, and check the current rules with the ATO.
A personal loan is a general-purpose loan that happens to be used to buy a car. It is usually unsecured, and carries a higher rate than a dedicated secured car loan, since the lender is not securing the debt against the vehicle. It can suit someone buying from a private seller for a small amount, where the paperwork of a secured loan is not worth it.
A balloon payment is a lump sum left owing at the end of the loan term. Structuring a loan with a balloon lowers your regular repayments, because you are not paying off the full value of the car during the term. When the term ends, you refinance the balloon, pay it out, or trade the car in. Because you carry a higher balance for longer, the total cost of the loan is generally higher than a loan with no balloon, so weigh that before you choose it.
A guaranteed future value, or GFV, is a related but separate product, often offered at dealerships, and it is worth understanding properly, because the key detail is easy to miss. A GFV sets a guaranteed minimum value for the car at the end of the term. It is sometimes described as a "buyback", which can make it sound like the debt simply disappears at the end. It does not. There is still a lump sum residual owing, just like a balloon. The difference is that with a GFV you usually have the option to hand the car back to satisfy that residual, rather than only paying it out or refinancing. Having worked at dealerships, I have seen how often this part gets glossed over at the point of sale. So the takeaway is simple: with a balloon or a GFV, there is a lump sum to deal with at the end, and it is worth knowing exactly how much it is, and what your options are, before you sign.
Car finance is the umbrella term for any way of borrowing to buy a car. A car loan usually refers to a secured or unsecured loan specifically, while novated leases and chattel mortgages are other forms of car finance with different structures.
A secured car loan is usually cheaper because the vehicle backs the debt, which lowers the lender's risk. An unsecured loan can still make sense if the car does not qualify as security, but expect a higher rate.
Yes. A GFV, sometimes called a buyback, still leaves a lump sum residual owing at the end of the term, just like a balloon payment. The difference is that a GFV usually gives you the option to hand the car back to cover that amount, as well as paying it out or trading in. Either way, make sure you know the residual figure before you sign.
It depends on your income, your employer's salary packaging policy, and how much you drive. A novated lease can lower your taxable income, but the running costs are bundled in whether you use them or not, so it does not suit everyone.
There can be GST and depreciation benefits, depending on your business structure and how the vehicle is used. This is general information only. Speak with a registered tax adviser about how the rules apply to you.
Not always. Many lenders offer no deposit finance, though a deposit can lower your repayments and the total interest you pay. How much you need depends on the lender and your financial situation.
Compare the total cost of the loan across several lenders, not just the weekly repayment or the advertised rate. Comparing a panel of lenders can show you that total cost side by side.
If you are not sure which type suits your situation, that is normal, and it is exactly the kind of thing a broker can talk through with you. Noma compares options across the panel and explains the total cost in plain English, with no pressure. When you are ready, you can start an application online, or get in touch to talk it through first.
Any interest rate, repayment amount or dollar figure in this guide is illustrative only, based on the assumptions stated at the time of writing, and is not a quote or an offer. Your own rate and repayments will depend on your circumstances and the lender.
Written by Ashley Van Rosmalen, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
This is general information only and does not take into account your personal financial situation. It is not financial, credit or tax advice. Before choosing a type of car finance, consider speaking with a licensed finance professional or, for tax questions, a registered tax adviser. Information is current as at the date below, and rules and rates can change, so check the linked sources for the latest.
Last updated: August 2026.
Sources last checked August 2026.
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships, and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Consider whether it is appropriate for you and seek advice from a licensed professional before making a decision. Tax outcomes for novated leases and chattel mortgages depend on your circumstances, so speak with a licensed tax adviser or accountant. Any figures used are illustrative only.
