When buying a vehicle, one of the biggest decisions you’ll make is whether to buy new or used. While price is often the first consideration, the type of finance available, interest rates, loan terms and long-term value all play a major role in determining what option is best for you. Understanding new vs used car finance can help you make a smarter decision and potentially save thousands over the life of the loan.
👉 Comparing new vs used car finance? Get pre-approved now and know your budget before you buy.
What is the difference between new and used car finance?
New vs used car finance refers to the different lending options, rates and terms available depending on whether the vehicle is brand new or previously owned. Lenders assess new and used vehicles differently, which directly affects borrowing costs and flexibility.
Financing a new car
New car finance often comes with the most attractive lending options.
Benefits of new car finance include:
- Lower interest rates compared to used vehicles
- Longer loan terms, often improving cash flow
- Full manufacturer warranty
- Access to lender incentives and promotional rates
Many lenders offer very competitive fixed interest rates on new vehicles, and in some cases, additional discounts for certain makes, models or fuel-efficient vehicles.
Electric vehicles and incentives
Electric vehicles (EVs) are becoming a popular choice for both personal and business buyers. When comparing new vs used car finance, EVs can offer additional benefits.
Depending on eligibility, buyers may access:
- Government incentives or rebates
- Reduced running and maintenance costs
- Discounted lender interest rates for electric vehicles
- Longer loan terms on approved EV models
Incentives and lender offers change over time, so organising finance early may allow you to lock in a competitive fixed interest rate while current offers are available.
👉 Thinking electric? Ask us about EV incentives and discounted lender rates.
Financing a used car
Used car finance can still be a great option, particularly if budget is a priority.
Advantages of used car finance include:
- Lower purchase price
- Slower depreciation compared to new vehicles
- A wide range of vehicle choices
Things to consider:
- Interest rates are often higher than new car finance
- Loan terms may be shorter, depending on vehicle age
- Older vehicles may have lender restrictions
The age, condition and value of the vehicle all influence lender options, making expert guidance important.
👉 Found a used car you love? Get a competitive finance quote before you commit.
Fixed interest rates and timing
Most car loans are offered with fixed interest rates, giving certainty and predictable repayments over the life of the loan.
Because lender rates and policies can change, arranging finance early can help you:
- Lock in a competitive fixed interest rate
- Secure approval before policy changes
- Avoid rushed decisions at the dealership
Pre-approval puts you in control when comparing new vs used car finance options.
Business car finance options
If the vehicle is used for business purposes, finance may be structured under business lending rather than personal lending.
Business car finance options can include:
- Standard business vehicle loans
- Low doc car finance for ABN holders
- No doc options, depending on ABN history and lender criteria
Business finance may also provide potential tax benefits such as depreciation and interest deductions. Always check with your accountant to ensure the structure suits your situation.
👉 ABN holder? Talk to us about low doc or no doc business car finance options.
New vs used car finance – which is right for you?
The best option depends on your individual circumstances, including:
- Budget and cash flow
- Whether the vehicle is for personal or business use
- Vehicle type, including electric or hybrid
- How long you plan to keep the vehicle
There’s no one-size-fits-all answer — but the right finance structure can make a significant difference.
Why use a broker?
Comparing new vs used car finance across multiple lenders can be time-consuming and confusing. Using a broker like AAA Finance gives you:
- Access to a wide panel of lenders
- Competitive fixed interest rates
- Guidance on electric vehicle incentives and lender discounts
- Support with low doc and no doc business finance options
- A smoother, faster approval process
Whether you’re buying new, used, or considering an electric vehicle, we’ll help you secure finance that fits your needs.
