Car Loan APR Calculator
Calculate Your Car Loan Costs
Enter your loan details to see how different APR rates affect your total payments
Your Results
Monthly Payment: $0.00
Total Interest: $0.00
Total Repayment: $0.00
Fair Rate Range
At your current APR, you'd pay more than the fair rate.
When you see a car loan offer with 12% APR, it’s easy to feel uneasy. Is that rate a deal, or are you being taken for a ride? The answer isn’t simple-it depends on your credit, your down payment, where you live, and what kind of car you’re buying. In Australia in early 2026, 12% APR is on the higher end of the spectrum for most buyers, but not always a red flag.
What does 12% APR actually mean?
APR stands for Annual Percentage Rate. It’s not just the interest rate-it includes fees, insurance, and other charges baked into the loan. So if you borrow $25,000 at 12% APR over five years, you’ll pay about $8,300 in total interest. That’s more than $1,300 a year just in interest, even before you touch the principal. For a $15,000 used car, that’s nearly $5,000 in interest over five years. That’s like paying for a second-hand car just to borrow money for the first one.
Compare that to a 6% APR loan on the same $25,000 car. You’d pay just under $4,200 in interest. That’s a $4,100 difference. That’s enough to cover three years of fuel, insurance, or even a full service package. So yes, the difference between 6% and 12% isn’t just a number-it’s real money.
Is 12% APR normal in Australia right now?
In January 2026, the Reserve Bank of Australia has held the cash rate at 4.35% for the past six months. That’s the baseline banks use to set lending rates. For people with excellent credit-think scores above 750, stable income, and a 20% down payment-new car loans are averaging 5.5% to 7%. Used car loans are a bit higher, around 6.5% to 8.5%, because lenders see them as riskier.
So if you’re being offered 12% APR, you’re paying nearly double what the average well-qualified buyer pays. That doesn’t mean you’re being scammed-it usually means you’re being seen as a higher risk. Maybe your credit score is below 600. Maybe you’ve had a late payment in the last year. Maybe you’re buying from a buy-here-pay-here dealership with no bank backing. Or maybe you’re trying to get a car with no down payment and no trade-in.
Who gets 12% APR car loans?
You’re not alone if you’re being offered this rate. Around 22% of Australians who took out a used car loan in 2025 had credit scores under 620. That’s about one in five buyers. These are often people who’ve had financial setbacks-medical bills, job loss, divorce-and are rebuilding. They’re not bad people. They’re just stuck in a system that charges more for those who’ve had trouble.
Some dealerships target these buyers with ads promising "no credit check" or "approve anyone." But those loans often come with 12% to 18% APR, inflated prices, and hidden fees. A $10,000 car might end up costing $14,500 after add-ons like extended warranties, gap insurance, and document fees. That’s not finance-it’s a trap.
What’s a fair rate for your situation?
Here’s a quick guide based on credit score and down payment in Australia, 2026:
- Excellent credit (750+), 20% down: 5.0% - 6.5% APR
- Good credit (700-749), 10% down: 6.5% - 8.0% APR
- Fair credit (600-699), 5% down: 8.5% - 11.5% APR
- Poor credit (under 600), no down payment: 12% - 18% APR
If you’re at 12% APR, you’re likely in the last group. That doesn’t mean you’re stuck there forever. But it does mean you need to be extra careful.
Why a high APR is more dangerous than you think
High interest doesn’t just cost you more-it makes you more likely to lose the car.
At 12% APR, your monthly payment on a $20,000 car over five years is $445. At 6%, it’s $386. That $59 difference might not seem like much. But if your car breaks down after 18 months, and you need $1,200 in repairs, you’re already stretched thin. You might skip the repair, drive a dangerous car, or miss a payment. One missed payment triggers repossession-and you still owe the bank thousands.
Also, high APR loans often come with negative equity. That means you owe more than the car is worth. If you get into an accident or need to sell, you’re stuck paying the difference. That’s a nightmare scenario.
What to do if you’re stuck with 12% APR
If you already signed for a 12% APR loan, don’t panic. Here’s what actually works:
- Pay extra every month. Even $50 extra cuts your loan term and saves thousands in interest. Use a free online calculator to see how much you save.
- Refinance after six months. If your credit improves-even just 50 points-you can refinance. Many lenders offer 2% to 5% lower rates after you’ve shown you can pay on time.
- Don’t buy more car than you need. A $12,000 reliable used car with a $2,000 down payment is better than a $20,000 car with $0 down. Less loan, less risk.
- Check for credit unions. Credit unions in Australia often offer lower rates than banks, especially for people with lower credit scores. Try Members Equity or ME Bank-they have programs for rebuilding credit.
- Use a co-signer. If a family member has good credit, they can co-sign and help you get a lower rate. Just make sure they understand they’re on the hook if you miss payments.
How to avoid 12% APR next time
If you’re planning to buy a car soon, here’s how to get a better rate:
- Check your credit report. Get it free from Equifax or Illion. Fix errors-like old debts you paid off that still show as unpaid. Even a 30-point jump can drop your rate by 1-2%.
- Save for a bigger down payment. Aim for at least 10%. If you can do 20%, you’ll avoid negative equity and get a better rate.
- Shop around before you pick a car. Don’t let a dealer push you into their finance department. Get pre-approved from a bank, credit union, or online lender first. Then use that offer as leverage.
- Consider a shorter loan term. A three-year loan at 8% is better than a six-year loan at 12%. You pay less interest overall and own the car sooner.
- Avoid add-ons. Extended warranties, rustproofing, and paint protection are profit centers for dealers-not necessities. Say no unless you’re certain you need them.
When 12% APR might be okay
There are rare cases where 12% APR makes sense.
If you need a car for work and your job depends on it, and you have no other options, then 12% APR might be your only way to get wheels. But even then, don’t accept it blindly. Ask for a 30-day trial. Can you pay off half the loan in six months? Can you refinance after that? Some lenders will let you renegotiate if you pay on time for a few months.
Also, if you’re buying a rare or classic car that’s hard to finance, some specialty lenders charge higher rates. But those are exceptions-not the norm.
Bottom line: 12% APR is expensive, but not hopeless
12% APR isn’t a deal. It’s a warning sign. But it’s not the end of the road. Many people have climbed out of high-rate car loans by paying extra, improving their credit, and refinancing. The key is not to let the loan trap you. Don’t buy more car than you can afford. Don’t skip repairs. Don’t ignore your credit report. And don’t assume you’re stuck.
Every dollar you pay extra now saves you three dollars later. And every on-time payment builds your credit-so next time, you’ll get a better rate. That’s the real win.
Is 12% APR high for a car loan in Australia?
Yes, 12% APR is considered high in Australia as of early 2026. Most borrowers with good credit pay between 5.5% and 8.5%. A 12% rate typically means you have a lower credit score, little or no down payment, or are buying from a subprime lender. It’s not impossible to get approved at this rate, but it’s expensive and risky.
Can I refinance a 12% APR car loan?
Yes, you can refinance after six to twelve months of on-time payments. Many lenders will offer you a lower rate-often 4% to 7% lower-if your credit score has improved. Even a 2% drop can save you hundreds per month and thousands over the life of the loan. Check with credit unions and online lenders like Jacaranda Finance or CreditorWatch for refinancing options.
How can I improve my credit to get a lower rate?
Start by checking your credit report for errors. Pay all bills on time, even small ones like phone or utility bills. Reduce your credit card balances to under 30% of your limit. Avoid applying for new credit for six months. These steps can raise your score by 50+ points in 6-12 months, making you eligible for much better rates.
Should I avoid buying a car if I can only get 12% APR?
Not necessarily-but be smart. If you need a car for work or family, go ahead, but choose the cheapest reliable model you can find. Put down as much as you can. Avoid add-ons. Plan to refinance within a year. If you don’t need a car right away, wait six months to save more and improve your credit. You’ll save more in interest than you think.
Are buy-here-pay-here dealerships ever a good idea?
Rarely. These dealerships often charge 15% to 20% APR, inflate the car’s price, and include hidden fees. They also report payments to credit bureaus inconsistently, so even if you pay on time, your credit may not improve. Only consider them as a last resort, and always get an independent mechanic’s inspection before signing anything.