The Victorian Government is being urged to change the way drivers can pay their car registration, amid concerns people are taking out emergency loans to cover the costs.

A report by the Financial and Consumer Rights Council has found car registrations have significantly increased in recent years and thousands of Victorians were struggling to pay the fee in one lump sum.

The council's executive officer, Peter Gartlan, said the Government should allow motorists to pay in instalments like in other states.

"For example, in South Australia you are able to pay every three months or every month in fact, so we just think that what we're asking for from the Government is really no different to what other states are currently providing," he said.

Mr Gartlan said there had been a 124 per cent increase in people taking out no interest loans in the past 12 months.

"We hear stories where people are using pay-day lenders, which have exorbitant interest rates, people using credit cards, and thousands of people that are actually unable to pay their car registration fees and therefore incurring fines," he said.

"When you're looking for work, or wanting to get from point A to point B, the car is vital.

"$770 in metropolitan Melbourne is a significant cost for any person, but in particular those people that are young or that are not earning a large wage are the ones that find it most difficult to pay in one lump sum.

"What we are simply asking for is the opportunity to pay that over the course of a year."