Car loan rates tend to follow movements in the cash rate, but the relationship is not one‑to‑one. Lenders blend funding costs from deposits and wholesale markets, price for credit risk and respond to competitive pressures. The mix of fixed vs variable and secured vs unsecured products also affects what you see advertised at any moment. Reading these signals helps you decide when to lock in and what term to select.
Cash rate and pass‑through
When the cash rate changes, banks reassess pricing across portfolios. Pass‑through to car loans can lag weeks or months and may be uneven. Promotional offers can temporarily defy the trend as institutions chase growth in specific segments.
Funding costs
Retail deposit competition can lift funding costs even without cash rate changes. Wholesale spreads move with market volatility. Lenders also manage capital and provision buffers; if risk rises, pricing tightens.
Competition and product mix
Non‑bank lenders, dealer finance and banks constantly rebalance between price and volume. Secured variable loans may sharpen while fixed terms widen, or vice versa. Watch comparison rates to see the all‑in picture.
Practical takeaways
- Get pre‑approval when you start shopping; it protects against sudden rises.
- Compare fixed and variable; the cheaper headline may not be cheaper in total cost.
- Use our calculator to test sensitivity: +/‑ 1% on rate over your term.
Bottom line
Market direction matters, but your personal profile and product structure matter more. If you can qualify today for a competitive comparison rate and the car fits your budget, timing the absolute bottom is less important than ensuring total cost and flexibility are right for you.