Lyla Lindsey
Australia is a nation of motoring enthusiasts, with nearly as many cars as people. In 2024, there were 1,220,607 new cars sold, with Toyota being the most popular brand, followed by Mazda and Ford. The demand for car loans has increased, with 2.5 to 2.7 million Australians currently having a car loan, totalling $1.55 billion in new loans in July 2024. This is an increase from 2023, when the total value of new car loans was over $1.14 billion. Gen Z is the most likely to have a car loan, with 26% of people in this age group paying off their vehicles in instalments, compared to 5% of those aged 18-24.
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What You'll Learn
Vehicle financing by age group
Vehicle financing is a popular option in Australia, with billions of dollars in car loans borrowed each year. While the exact number of people financing vehicles in Australia is unknown, estimates range from 2.5 million to 2.7 million people, or 12% to 14% of the population. This is a recovery from the serious decrease in car loan applications in 2020.
When it comes to vehicle financing by age group, there are some notable differences. Gen Z and Millennials are the most likely to have car loans, with 26% and 23% of these age groups, respectively, currently paying off their vehicles in instalments. This indicates that a significant portion of younger individuals are opting for vehicle financing.
On the other hand, Baby Boomers are the least likely to have car loans. Gen X has the lowest likelihood of having a car loan at only 7%, but they carry the most debt on average, which may be due to the price of the vehicles they are purchasing or the type of car loans they have.
Marital status also plays a role in vehicle financing. The average loan size varies depending on marital status and the number of dependents. Singles borrow less on average than those in married or de facto relationships. The average loan size also increases with each additional dependent, with the highest average loan sizes going to those with three dependents.
Overall, those aged 30 and 35 have the greatest borrowing activity, and data suggests that those aged 25 to 50 are the most likely to be financing a car purchase compared to other age groups.
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Vehicle financing by vehicle cost
In Australia, the most popular car manufacturers are Toyota, Ford, and Mazda. The most sought-after vehicle type is the SUV, which outsells other car types by almost three times.
According to 2021 research by Finder, around 14% of Australians have a car loan, which equates to around 2.7 million people. This figure has also been supported by other sources. This number has increased from 2020, which saw a serious decrease in car loan applications. Additionally, 19% of respondents have previously taken out a car loan to purchase a vehicle.
Gen Z is the most likely to have a car loan, with over a quarter of people in this age group (26%) currently paying off their vehicle in instalments. This is followed by 23% of millennials. Baby Boomers were the least likely to have a car loan.
In terms of vehicle cost, the cheapest car loans in Australia are generally available for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). Around 40% of lenders offer discounted interest rates for EVs. Lenders typically offer the lowest interest rates on brand new cars or demo models. Some lenders have tiered interest rates for used car loans that increase based on the car's age.
Interest rates for car loans can vary depending on the borrower's credit score and the type of vehicle being financed. For borrowers with good credit scores, interest rates below 8% per annum are generally recommended for new cars, especially EVs. Car loan interest rates may also depend on the lender's assessment of the borrower's ability to repay the loan.
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Car loan statistics
Car loans make up a significant portion of vehicle ownership costs in Australia, with Finder research showing that around 2.7 million Australians (approximately 12% to 14% of the population) have a car loan. This equates to billions of dollars in value, with the latest data from July 2024 showing the total value of new car loans at $1.55 billion, a notable increase from the previous year.
The demand for car loans has been increasing, with a 4.9% rise in personal loans for vehicles according to the Australian Bureau of Statistics (ABS). This is a recovery from the serious decrease in car loan applications during 2020, likely influenced by the pandemic.
There is a variation in car loan statistics across different demographics. Gen Z is the most likely generation to have a car loan, with over a quarter (26%) paying off their vehicles in instalments, closely followed by 23% of millennials. Baby Boomers, on the other hand, are the least likely to have car loans. In terms of location, Western Australia has the highest percentage of residents with car loans (19%), followed by New South Wales (17%) and Tasmania (14%). South Australians are the least reliant on car finance, with only 9% having car loans.
The Federal Chamber of Automotive Industries (FCAI) publishes detailed statistics on the Australian car industry, including sales data. In 2023, the FCAI reported 1,118,236 new car sales from January to November, with Toyota as the top-selling brand. This follows the trend from previous years, with Toyota being the most popular brand in 2022 as well, outselling the second most popular brand, Mazda, by more than double. Light commercial vehicles and passenger vehicles also held a significant market share in 2023, at 22% and 17% respectively.
The average annual cost of running a vehicle in Australia can be substantial, with fuel costs being a significant factor. Additionally, insurance costs have been rising, with Adelaide experiencing the highest increase of $348 since the last quarter.
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Vehicle sales data
According to the FCAI, Toyota is Australia's most popular car brand, with more than double the sales of the second most popular brand, Mazda. In 2023, Toyota sold 21,002 vehicles, followed by Mazda with 8707, and Ford with 8165. Light commercial vehicles remain popular, with a 22% market share in 2023, while passenger vehicles accounted for 17% of the market.
ABS data from July 2024 shows that the total value of new car loans was $1.55 billion, an increase from July 2023's $1.32 billion. The latest data from April 2023 puts the figure at $1.14 billion. A survey of over 11,000 respondents by Finder revealed that approximately 12% of Australians currently have car loans, equivalent to 2.5 million people. This is an increase from 2021, when 14% of Australians, or 2.7 million people, had car loans.
In 2021, close to 50% of consumers in Australia who purchased a vehicle priced between $30,001 and $50,000 AUD used financing. The usage of finance increased with the price of the vehicle purchased. The same year, around 44% of those who financed their vehicle were 25 to 39 years old, while about 5% were 18 to 24 years old. Gen Z is the most likely generation to have a car loan, with 26% paying off their vehicle in instalments, followed by 23% of millennials.
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Vehicle running costs
Owning a car in Australia can cost you anywhere from $12,000 to $26,000 a year, according to RACQ's Vehicle Operating Cost Report 2024. This includes the costs of fuel, insurance, registration, licensing, maintenance, and loan repayments.
Fuel costs have been rising across Australia, with the exception of Adelaide, where they have decreased. The type of car you own will also affect your fuel costs. For example, SUVs burn 25% more fuel per kilometre than medium-sized cars. Diesel vehicles are also more impacted by rising fuel prices. To save money on fuel, you can drive less, shop around for cheaper fuel, or use smartphone apps to find the cheapest petrol in your area.
Insurance costs have also been increasing, with Adelaide raising insurance expenses by $348 since the last quarter. The type of car you own will also affect your insurance costs. Larger, more expensive cars such as SUVs will have higher insurance costs than smaller cars. To save money on insurance, you can compare insurance providers to find the most suitable and affordable policy for your circumstances.
Registration, CTP, and licensing costs have remained relatively stable. However, you can save money by paying for your registration annually instead of semi-annually.
Maintenance and servicing costs can also add up, with some services being more expensive than others. To save money, you can try getting your car serviced at a local mechanic instead of an official dealership, or you can put off getting a service, but this may end up costing you more in the long run.
Car loan repayments make up a significant portion of vehicle ownership costs. The average weekly car loan repayment in September 2023 was $188.87 in capital cities and $188.84 in regional cities. To save money on your car loan, you can consider refinancing to secure a lower interest rate or better terms.
Other ways to save on car running costs include washing your car yourself, avoiding paid parking, and using public transportation or car-sharing services if you don't use your car often.
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Frequently asked questions
According to 2024 data, 2.5 million to 2.7 million Australians have a car loan. This equates to around 12% to 14% of the population.
In 2021, around 44% of respondents who financed their vehicles were 25 to 39 years old. Comparatively, around 5% of respondents were 18 to 24 years old. Gen Z is the most likely to have a car loan, with 26% of people in this age group paying off their vehicles in instalments.
Western Australia has the most people financing their vehicles, with 19% of residents having a car loan.
In 2024, there were 1,220,607 new cars sold. This is slightly more than the 1,118,236 new cars sold from January to November 2023. In 2022, 1,081,429 new vehicles were sold, and 1,049,831 in 2021.
SUVs are the most sought-after vehicle type in Australia, outselling other car types by almost three times. Light commercial vehicles are also popular, with a 22% market share in 2023.
