It’s no secret that new cars are getting more expensive, and it’s looking as though the prices will continue to climb, particularly for petrol and diesel-powered cars.
Given Australia’s New Vehicle Efficiency Standard (NVES) – which fines OEMs for exceeding specific CO2 limits – is now in effect, various brands said they could pass on these penalties to consumers by way of increased retail prices.
But it’s not all bad news. While most drivers would love to own a brand-new car, realistically, the vast majority of Australian motorists turn to the used car market when they need a vehicle.
According to the latest June Automotive Insights Report, which gathers used car sales data from private sellers and dealerships, 212,136 second-hand cars found new homes in June 2025, influenced by end-of-financial-year deals.
The 200,000-strong used cars sold represented a 10.1 per cent increase in comparison to the May 2025 data, with the Ford Ranger, Toyota HiLux, and Toyota Corolla continuing their dominance over the used car market.
Despite costing less than their new counterparts, used cars aren’t exempt from inflation and other economic factors that can lead to inflated prices in the second-hand market.
With this in mind, is it worth financing a second-hand car? Drive reached out to experts to find out.
Disclaimer: This article does not constitute legal or financial advice and is intended to serve as a general guide only.
Can I finance a used car?
Yes, you can finance a used car. Generally speaking, experts advised that if you need a car for daily essentials like work, but don’t want to spend a bulk of your savings, then it’s worth considering finance options.
A spokesperson for CommBank Australia told Drive, “When thinking about funding a vehicle purchase, financing can offer benefits that help Australians make the most of their investment”.
“It can, for instance, help to preserve your cash if you need it for other priorities and provide an opportunity to build or improve your credit history, assuming you make repayments on time.”
Sally Tindall, the Data Insights Director at Canstar – a finance comparison website – said while paying for a second-hand car “can often be ideal because it won’t cost you extra in interest and fees”, the strategy won’t suit everyone.
“For some, waiting and saving up for a car won’t be practical because they need a car to get them to essential activities such as work or study.
“For others, it will be about freeing up their finances to use that money elsewhere, or a matter of smoothing out the expense to help with cashflow,” she explained.
Tindall said buying a used car with a loan can offer buyers flexibility in choices, which “means you can get your car near immediately or get a more expensive car than what you’d be forced to buy by relying on your savings alone”.
“If either of these is a key reason for taking out the loan, think carefully about how much debt you can afford to repay and whether the interest and fees you’ll pay over the life of your car loan are a good use of your hard-earned cash.
“It’s one thing to take out a loan because you need to get from A to B each day for work, but another one altogether if you want to do so in a second-hand Ferrari,” she told Drive.
What should I look out for when financing a used car?
When it comes to the world of car financing, experts recommend doing your due diligence and never rushing the process.
Despite how tempting it can be to finance any car you would want, experts are warning younger drivers, in particular, to understand what they’re signing up for.
Rebecca Pike, a money expert at Finder – an Australian finance comparison organisation – told Drive, “For young drivers, financing a second-hand car can seem like a good solution, but there are definitely considerations and consequences to think about”.
Generally speaking, the first point of concern for any driver looking to finance a used car is the interest rate.
As Pike explained, “car loan interest rates are often personalised and so as a young driver you might find you’re lumped with higher interest rates”.
“That could be down to the lender thinking you’re a riskier driver, or it could be because of the job you’re currently holding or your fresh credit file,” Pike told Drive.
It’s worth noting that interest rates can vary depending on what loan you opt for.
A CommBank Australia spokesperson said, “Secured car loans can provide a lower interest rate than unsecured lending”, given that secured loans use the car they are purchasing as collateral in the event they can’t pay off their debt.
Additionally, Pike said buyers need to consider that some loans come with a balloon payment, where a consumer might need to pay a large lump sum at the end of their loan, in addition to their monthly bill.
“If you don’t have the savings now to put towards a car, you may still need to build up some significant savings to repay the balloon payment at the end of the loan term,” she told Drive.
A used car’s loan term can also factor into your total monthly costs. Tindall from Canstar explained, “A short loan term will mean your monthly repayments are significantly higher, but you’re likely to pay less interest in the long run”.
“A longer loan term can make your car loan look extremely attractive on paper, because your monthly repayments are likely to be a lot lower, but the longer you take to pay your debt off in full, the more expensive the car will be overall.
“The last thing you want is for your second-hand car to be dead and buried before you’ve even finished paying it off. At the end of the day, time is money, and the longer you have your loan for, the more you’ll ultimately pay,” she told Drive.
Ethan Cardinal graduated with a Journalism degree in 2020 from La Trobe University and has been working in the fashion industry as a freelance writer prior to joining Drive in 2023. Ethan greatly enjoys investigating and reporting on the cross sections between automotive, lifestyle and culture. Ethan relishes the opportunity to explore how deep cars are intertwined within different industries and how they could affect both casual readers and car enthusiasts.
