New Car vs Used Car Loans: How Do Lenders Treat Them Differently?
Published on 29 Jun 2026
by Andy Iriks
Key takeaways
- New car loans differ from used car loans in interest rates, LVR limits and vehicle age restrictions.
- New car loans often have rates 1 to 3% lower than used, because lenders see less risk.
- Lenders offer higher LVRs on new cars, up to 100%, versus 80 to 90% on used.
- Used car loans are restricted by vehicle age, with many lenders capping the car at around 12 years old at loan end.
People often pick a car first and think about finance second, but the new-versus-used decision changes the loan in ways worth knowing before you commit. Andy has been arranging vehicle finance since 2000, and he can show you how the numbers compare so you choose with eyes open, not just on the sticker price.
The Core Difference
New car loans differ from used car loans in interest rates, LVR limits and vehicle age restrictions. The underlying reason is risk. A new car is a known quantity with a predictable value, a used car is less certain, so lenders price and structure the two differently.
Interest Rates
New car loans offer interest rates 1 to 3% lower than used car loans, due to lower default risk. A new car holds reliable value as security, so the lender is more comfortable. On a used car, especially an older one, the rate steps up to reflect the extra uncertainty.
How Much You Can Borrow
Lenders provide higher LVRs for new vehicles, up to 100%, versus 80 to 90% for used. In plain terms, you can often finance the whole price of a new car, while a used car may need a deposit. That can matter a lot if cash is tight.
| Factor | New car loan | Used car loan |
|---|---|---|
| Interest rate | Generally lower | 1 to 3% higher |
| Maximum LVR | Up to 100% | Around 80 to 90% |
| Vehicle age limit | Not an issue | Often capped near 12 years at loan end |
| Depreciation in year one | Steep, 20 to 30% | Already absorbed by first owner |
Vehicle Age Restrictions
Used car loans are restricted by vehicle age, with most lenders capping at around 12 years at loan end. So if a car is 8 years old and you want a 5-year loan, some lenders will baulk because it would be 13 at the finish. This is the kind of snag a broker spots before it becomes a problem.
The Depreciation Angle
Here is the flip side of the lower new-car rate: vehicle depreciation affects new cars more severely, with 20 to 30% value loss in the first year. A used car has already taken that hit. And warranty coverage provides lender security for new vehicles, reducing approval risk. So the cheapest finance is not always the cheapest car to own, it pays to look at the whole picture.
How Andy Helps
Andy compares new and used finance across more than 30 lenders, flags age limits before they trip you up, and helps you weigh the lower new-car rate against the value a good used car can offer. Once you’ve picked a direction, check what documents you need for a car loan application so you’re ready to move fast. See the motor vehicle finance page, plus new car loans and used car loans, then get in touch.
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