Short answer: Add up every repayment, any balloon and any fees paid outside the loan, then subtract the amount you actually needed for the car. What's left is the true cost of borrowing. The comparison rate helps you compare loans quickly, but it doesn't include everything.
What goes into the cost
- Interest: set by the rate, the loan amount and the term.
- Establishment or application fee: often added to the loan, so you pay interest on it too.
- Monthly account-keeping fee: small each month, but it adds up over 5 to 7 years.
- Other lender or broker fees: such as a PPSR registration fee or origination fee, if charged.
- Balloon: paid at the end, and you pay interest on it for the whole term.
- Financed add-ons: warranties, insurance and protection products added to the loan.
- Early payout fees: only if you pay the loan out early, but worth knowing upfront.
A worked example
Example only: you borrow $30,000 over 5 years at 9% p.a.
| Loan only | With $400 fee financed and $10 monthly fee | |
|---|---|---|
| Monthly repayment | about $623 | about $631, plus $10 fee |
| Total paid over 5 years | about $37,365 | about $38,463 |
| Cost of borrowing | about $7,365 | about $8,463 |
The fees add about $1,100 to the cost, even though the rate hasn't changed. Add financed extras or a balloon and the gap grows.
The formula, if you want to check a quote
Monthly repayment = P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the annual rate divided by 12, and n is the number of months. Most people use a calculator instead. Moneysmart's loan calculator does the same job.
What the comparison rate does and doesn't show
For consumer loans, advertised rates generally have to come with a comparison rate. It combines the interest rate and standard fees into one figure, based on a set example loan size and term. It's useful for side-by-side comparisons, but it doesn't include things like early payout fees or optional add-ons, and it may not reflect your exact loan amount. Always check the contract for the total amount you'll repay.
Costs outside the loan
Stamp duty, registration, CTP and comprehensive insurance, which lenders usually require, plus servicing, tyres and fuel or charging, are all part of owning the car. Budget for them alongside the repayment.
Quick checklist
- Get the rate, comparison rate, term, balloon and every fee in writing.
- Ask for the total amount payable over the loan.
- Check which add-ons are in the loan and remove any you don't want.
- Compare at least two structures, for example with and without a balloon.
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General information only. This isn't financial advice. Finance the Ride is a referral service and doesn't hold an Australian Credit Licence. Last reviewed September 2026.
