Luxury car loans are much the same as standard car loans, but with higher borrowing limits to reflect the generally higher price tags of luxury vehicles.

When you take out a luxury car loan, the lender will pay for the vehicle on your behalf. You will then be responsible for making regular repayments to the lender, with interest, over a predetermined period of time.

Most brand-new luxury vehicles purchased from a car dealership will be eligible for a car loan, as long as the loan amount falls within the lender’s borrowing range. Whether a lender will approve you for a car loan to buy a luxury vehicle will depend on your personal eligibility and financial situation.

Some of the most popular luxury car brands in Australia include:

• Mercedes Benz
• BMW
• Audi
• Volvo
• Tesla
• Lexus
• Porsche
• Land Rover

If you are looking to buy a used luxury vehicle, there will likely be more lending criteria that must be met, including a limit on the age of the vehicle and an assessment of its condition.

Many car loan providers have upper borrowing limits of $100,000, while some may approve a car loan for up to $250,000 – and sometimes more. It’s important to keep in mind, however, that higher borrow amounts are typically reserved for secured car loan products, and borrowers who meet strict income and credit score requirements.

Before you apply for a car loan, it’s important to consider how much you could comfortably afford to borrow based on your personal financial situation. You might like to use RateCity’s car loan calculator to see how much your repayments could cost in relation to different borrow amounts, and consider how this will fit into your household budget.

It’s also worth considering your credit score before applying for luxury car finance, as this may impact the amount you’re eligible to borrow and the outcome of your application as a whole.

When you buy a luxury vehicle, you may be required to cover the cost of the luxury car tax (LCT). According to the Australian Taxation Office, the LCT is a tax on cars that have a GST-inclusive value above the LCT threshold. The LCT threshold for the 2022-23 financial year is $84,916 for fuel efficient vehicles, and $71,849 for other vehicles.

The LCT is imposed at the rate of 33% on the amount above the threshold and is paid by businesses that sell or import luxury cars – most commonly car dealerships. This means that the car dealership that you purchase your luxury vehicle from will be financially liable for the LCT where applicable.

Dealers will generally pass the expense on to the buyer, often including it in the total sale price of the vehicle.

If you are buying a luxury vehicle that is subject to the LCT, you may be able to include the cost in the total borrow amount for your car loan. Keep in mind, however, that a higher borrow amount on a loan will likely mean paying more in total interest charges. If your budget allows, you could consider covering the cost of the LCT upfront to avoid a higher borrow amount.

There are two main types of car loans to choose from – secured and unsecured. Here’s how they differ:

1. Secured

A secured car loan requires you to use the car you are buying as collateral on the loan. This means that if you fail to repay the loan, the lender can repossess your vehicle in an effort to recoup their losses.

Secured car loans often come with lower interest rates than unsecured car loans, as they are seen as less of a risk to lenders.

It’s worth noting, however, that not all cars will qualify for a secured car loan. If you are buying a second-hand luxury vehicle, for example, the lender may take into account its age and condition before deciding whether to approve a secured loan.

2. Unsecured

An unsecured car loan does not require you to offer up collateral. But, because the lender will therefore be taking on a greater risk, they will typically charge a higher interest rate than they would for a secured loan.

Unsecured car loans may also have stricter lending criteria, such as higher income and credit score requirements.

Comparing car loan interest rates can be a great place to start, but there are a number of other factors to consider when choosing which luxury car finance option is right for you – including the following: 

• Fixed vs variable interest rate – A car loan with a fixed interest rate will have repayments that remain the same throughout the life of the loan, which can make it easier to budget for. On the other hand, a car loan with a variable interest rate may see interest charges fluctuate over time, meaning repayments could increase or decrease throughout your loan term. This could allow you to save money if rates fall, but you also risk paying more if rates are on the rise.
• Comparison rate – A loan product’s comparison rate factors in the interest rate as well as the main fees payable, which can help give you a better idea of the total cost of the loan.
• Fees – A lender may charge a range of different fees, including application fees, establishment fees, extra repayment fees, redraw fees, early exit fees, and other ongoing account keeping fees. Be sure to compare the fees charged by different loan providers to see which products are truly competitive.
• Features – There may be certain car loan features that appeal to you, such as the ability to make unlimited extra repayments and have access to a redraw facility in case you want to withdraw any of the extra money you’ve paid. If so, be sure to check which loan products offer these features, and whether you’ll be charged extra to access them.
• Loan term – The loan term is the amount of time you have to repay the loan. Many lenders offer loan terms between one and seven years, while some have an upper limit of 10 years. Keep in mind that the longer the loan term, the more affordable your repayments may be, but the more you’ll likely pay in total interest charges.

There’s no such thing as a single best car loan, as one borrower’s circumstances and requirements tend to differ from the next. To help you to find some of the best luxury car loans for your needs, RateCity offers a range of handy comparison tools to get you started on your search.

Car loan comparison tables

Our car loan comparison tables allow you to use filters to narrow down your search results to only those products that fit your requirements. You can search by loan amount, loan term, credit score and car type, and then apply as many filters as you like to find the loans that best suit your needs.

Car loan leaderboard

Check out our car loan leaderboard to see the top-rated car loans across a range of different categories. Products are ranked using our Real Time Ratings™ system, based on costs, features and flexibility

Car loan repayment calculator

If you’re wondering how much your repayments could be, consider using our car loan repayment calculator. Simply enter your preferred borrow amount, loan term, interest rate and credit score for an estimate of your weekly, monthly or fortnightly repayments, total interest payable and total cost of the loan.