Should you finance a new or used car in 2026? Compare rates, depreciation, total costs, and find out which option saves you more. Expert guide from Brokio, Williams Landing.
The first thing most people compare is the interest rate — and there is a genuine difference between financing a new car and a used one in Australia.
The pattern is clear: newer vehicles attract lower rates because they hold their value better, giving the lender more security. A 2-year-old car still has strong resale value if you default; a 12-year-old car, not so much.
Lenders assess risk based on the vehicle's value as security. A brand-new $45,000 Toyota RAV4 will still be worth $30,000+ in three years. A 10-year-old Holden Commodore purchased for $15,000 might only be worth $8,000 in three years. The lender's exposure is higher with older vehicles, so they charge a premium.
However — and this is important — a lower rate doesn't automatically mean a cheaper deal. Because the purchase price of a new car is significantly higher, the total interest paid is often greater even at a lower rate. Let's break down the real numbers.
With the average car loan rate sitting at 7.48% through brokers and 8.92% market-wide as of April 2026, and Australians borrowing $4.9 billion per quarter on vehicle loans, getting the rate right is more important than ever. The automotive finance market is projected to reach $10.22 billion by 2031, growing at 6.14% annually.
Interest rates get all the attention, but depreciation is where the real money disappears — and it overwhelmingly favours buying used.
The average new car in Australia loses value at a brutal rate:
That means a $45,000 new car could be worth $18,000–$27,000 after just 5 years. You've lost $18,000–$27,000 in value — on top of the interest you've paid on the loan.
A car that's 2–3 years old has already absorbed the steepest depreciation curve. If you buy that same model at $30,000 (already 33% cheaper), its depreciation from that point is much flatter:
Your total depreciation loss: $6,000–$10,000 over 3 years. Compare that to the new car buyer who lost $13,000–$18,000 over the same period.
In the car finance world, the sweet spot is generally 1–3 years old. You get:
This is the advice we give most of our clients at Brokio — unless there's a specific reason to buy new (more on that in Section 4).
Let's compare the total financial picture of buying new versus used, using a popular family SUV as an example.
Option A: Buy New — $47,000
Option B: Buy 2-Year-Old — $34,000
Despite paying a 1% higher interest rate, the used car buyer saves:
That $237 monthly saving adds up to $14,220 over 5 years when you include the lower repayments alone — money that could go toward your mortgage, savings, or your next car upgrade.
New cars also cost more to insure — typically $300–$800 more per year in comprehensive insurance premiums. Over 5 years, that's another $1,500–$4,000 in savings for the used car buyer.
Despite the numbers favouring used cars in most scenarios, there are legitimate reasons to buy new. Here's when it makes financial sense.
The EV market in Australia is still relatively young, and used EV supply is limited. If you want a specific electric or plug-in hybrid model, buying new might be your only option. Additionally, EVs have different depreciation curves — some models (like Tesla) hold value better than traditional cars.
There are also government incentives for new EVs, including stamp duty exemptions in some states and the federal Fringe Benefits Tax exemption for salary-sacrificed EVs.
Some manufacturers offer subsidised finance rates (sometimes 0% or 1.9% p.a.) on new vehicles. When the manufacturer is effectively paying the interest, the numbers can shift in favour of buying new. But read the fine print — these deals often have restrictions on the model, colour, and features.
If you're an ABN holder, there may be tax advantages to purchasing a new vehicle:
For a business owner, a $50,000 new car with instant asset write-off could effectively cost $35,000–$37,500 after tax, changing the equation significantly.
Vehicle safety technology evolves rapidly. The latest models may include features not available in 2–3-year-old used cars:
If these features are important to you (especially if you have young children), the premium for a new car may be justified from a safety perspective.
A new car typically comes with 5–7 years of manufacturer warranty and often includes roadside assistance. While used cars can be inspected and come with statutory warranties, a new car warranty provides maximum peace of mind — particularly for people who aren't mechanically savvy.
For the majority of Australian car buyers, a quality used car is the financially smarter choice. Here's when it's a no-brainer.
As we showed in Section 3, a used car saves you $7,000–$10,000+ in combined interest and depreciation over 5 years, even at a higher interest rate. If your goal is spending the least amount of money on transport, used wins every time.
If you're a first home buyer trying to save a deposit, every dollar matters. Choosing a quality 2–3-year-old car over a new one puts $237+ per month back in your savings — that's $14,000+ over 5 years toward your house deposit. Many of our Brokio clients in Williams Landing and Point Cook have used this exact strategy.
High-kilometre drivers depreciate their cars faster. A new car driven 25,000+ km per year will lose value faster than average, making the depreciation hit even worse. With a used car, you've already let someone else absorb that first big drop.
Some car brands are famously reliable well past 100,000 km — Toyota, Mazda, Hyundai, and Kia in particular. A 3-year-old Toyota Corolla with 40,000 km on the clock has decades of life left. You get a nearly-new car at a significantly reduced price.
Comprehensive insurance is calculated partly on the car's value. A $34,000 used car costs $300–$800 less per year to insure than a $47,000 new one. Over 5 years, that's meaningful savings.
Many manufacturers now offer certified pre-owned (CPO) programs that provide extended warranties, roadside assistance, and multi-point inspections on approved used vehicles. These bridge the gap between new and used car peace of mind — often at a fraction of the new car price.
Whether you're leaning toward new or used, the right finance can make a significant difference to your total cost. At Brokio, we specialise in finding the optimal car loan for your situation.
Whether you're browsing new cars at a dealership or checking used listings on CarsGuide, having pre-approved finance gives you clarity and negotiating power. You know your budget, your rate, and your monthly repayment before you even see the car.
Pre-approval through Brokio takes 24–48 hours and is valid for 3–6 months.
Based on the current market in April 2026:
Every situation is different, and we're not here to push you one way or another. We're here to make sure you understand the full financial picture — then help you get the best loan for whatever you decide.
Book a free consultation with Brokio — we'll compare new and used car loan options across 30+ lenders and find your best rate. No cost, no obligation. Call us or visit our office at 601/87 Overton Road, Williams Landing VIC 3027.
Ready to explore tailored loan options? Contact Brokio today and let us guide you through your mortgage, car loan, personal loan, or investment property loan journey with confidence.
