Variable Rate Car Loans. Maximum Flexibility

A variable rate car loan has an interest rate that can move up or down during the life of your loan, typically in response to changes in the Reserve Bank of Australia's (RBA) cash rate. When the RBA lowers rates, your car loan repayments may decrease. When rates rise, your repayments may go up.

The key advantage of a variable rate car loan is flexibility. Unlike fixed rate loans, variable rate loans typically allow you to make unlimited extra repayments without penalty, and many offer redraw facilities so you can access those extra payments if needed.

At Simple Loans, we compare variable rate car loans from over 50 banks and specialist lenders. Our finance comparison tools help you understand the current rate environment and whether a variable rate is the right choice for your situation.

Variable rate car loans offer several compelling benefits that make them the preferred choice for many Australian borrowers:

• Unlimited extra repayments: Pay off your loan faster without incurring early exit fees or penalties, potentially saving thousands in interest.
• Benefit from rate cuts: When the RBA reduces the cash rate, your repayments typically decrease, putting money back in your pocket.
• No early payout penalties: Pay out your loan at any time without break costs, perfect if you receive a windfall or want to sell the vehicle.
• Redraw facilities: Some variable loans let you access extra repayments you've made, providing a financial buffer for emergencies.
• Lower starting rates: Variable rates often start lower than equivalent fixed rates, meaning you pay less from day one.

These features make variable rate car loans ideal for borrowers who are disciplined with extra repayments, expect interest rates to remain stable or decrease, or want the freedom to pay out their loan early without penalty.

The decision between variable and fixed depends on your financial situation and the current interest rate environment:

• Rates are high and expected to fall: A variable rate lets you benefit as rates decrease, lowering your repayments automatically.
• You plan to make extra repayments: If you regularly have surplus income and want to pay your loan down faster, a variable rate's flexibility is invaluable.
• You might sell or trade the vehicle: Variable loans have no break costs, making it easy to close the loan if you decide to sell.
• You want a financial safety net: The redraw facility on variable loans means your extra repayments are accessible if your circumstances change.

Our specialists monitor the current interest rate landscape and can advise whether variable rates are favourable right now. Get a free, no-obligation assessment to see your personalised variable rate options.