Inflation Rate Up to 3.8%: What It Means for Car and Asset Finance

Recent data from the Australian Bureau of Statistics (ABS) shows Australia's inflation rate climbed to 3.8 per cent in the year to October 2025 - up from 3.6 per cent in September.

This is the first full release under the new monthly inflation reporting system, replacing the older quarterly CPI-only model.

The jump is broad-based. The largest contributor was housing costs, which rose 5.9 per cent including increases in electricity, rent, and new dwelling costs. Food, recreation, and services also contributed to the overall inflation result.

For consumers and borrowers, inflation rising well above the 2–3 per cent target range heightens pressure on living costs, household budgets, and importantly, loan repayments. Inflation and interest rates tend to move in tandem, which brings real consequences for asset finance and vehicle loans.

What This Means for Vehicle Loans and Asset Finance Customers

Borrowing costs are likely to increase
As inflation climbs, lenders often factor in higher costs of capital and increased economic risk, which can result in higher loan interest rates. That means the same loan taken today could cost more in the future.

Fixed-rate finance becomes more attractive
Locking in a fixed rate can protect borrowers from future interest-rate increases. For car loans or equipment financing through Motorlend, this can make a significant difference over the loan term.

Variable-rate loans and repayments become less predictable
With high inflation, variable interest rates (or rate-linked loans) become more vulnerable. Borrowers should stress-test repayment scenarios under possible rate rises, especially when household costs like electricity, rent, and groceries are already under pressure.

Household cost-of-living impacts loan affordability
Because inflation is affecting everyday expenses, loan repayments are only part of a household’s financial obligations. Higher bills combined with rising loan costs can squeeze disposable income, making careful budgeting and realistic affordability assessments essential.

What Motorlend Recommends to Borrowers Right Now

• Explore fixed-rate car and asset finance options to lock in predictable repayments.
• Run affordability stress-tests - model repayments assuming interest rates could rise further, and factor in higher living costs.
• Work through a broker (like Motorlend) to access a variety of lenders and loan structures.
• Plan for total cost of ownership, including fuel, maintenance, higher household bills, and other inflation-driven expenses.

How This Update Reflects Motorlend’s Value Proposition

At Motorlend, our mission is to make the finance process smooth and transparent, helping clients secure the most suitable vehicle or asset financing.

In a period of rising inflation and likely interest-rate volatility, our guidance becomes even more valuable. We help clients:

• Compare fixed vs variable finance structures
• Forecast repayments under different economic scenarios
• Avoid overextending themselves when cost-of-living pressures are rising

This inflation update underlines why dealing with a broker matters, especially now.

Need Help Navigating Inflation and Car Finance?

If you’re concerned about rising interest rates, inflation, or how to structure your car or asset finance, our team at Motorlend is here to help. We can guide you to the right loan, structure repayments to suit your budget, and ensure you make a confident, informed decision.

Contact us today to speak with a broker and explore your options.

‍