Inflation is currently spiking as a result of a number of economic factors. Prices of many goods and services appear to be on the way up especially the cost of petrol. The floods in Queensland and NSW, with the damage to the agricultural sector and transport links, are also set to hit the back pockets of Australian consumers with rising prices. Creating a buffer against price rises can be challenging without impacting lifestyle. New car buyers can focus on securing cheap car loans to cushion the hit to their budget of rising fuel prices and costs of living in general.
While Australian drivers are used to the usual petrol price cycles, the overall price for fuel is very much driven by global events. The situation in Ukraine has the potential to impact fuel prices. The extent to which this will cause long-term increases to fuel prices is yet to play out.
So while we all grapple with how to maintain lifestyle and business operations ‘as normal’ in this environment, those buying new vehicles can at least look to their choice of finance to keep car expenses to a minimum. We explain what new car buyers should be looking for and doing to ensure they secure the cheapest car loan.
Know the Motor Vehicle Lending Market
If you’ve always just contacted your bank for loans and finance, perhaps it’s time to look further afield. Yes, the major banks are great lenders and Jade Car Loans is accredited with many banks and our consultants include them when sourcing the cheapest quotes for our customers.
But there are many sources for car loans which include the banks, finance companies, dealers and manufacturers and motor vehicle finance brokers like ourselves. While the actual types of loans offered may appear similar, the specifics can vary.
This is especially evident in the interest rate applied to motor vehicle finance by different lenders. Each will set their rates according to individual requirements and factors. Finding the cheapest interest rate and the loan conditions that deliver the most workable outcome can be time-consuming. Using the services of a broker-style lender cuts out the time factor and the confusion of working through the fine print to compare loan quotes.
Interest Rate Factor
The interest rate is the number one factor that determines the total cost of a car loan and in conjunction with the loan term, the loan repayments. The interest rate which is offered to individual applicants depends on a number of factors. For starters, the rate which you will see promoted by lenders is for new vehicles and for applicants that have a good credit rating.
As part of the process of achieving the lowest interest rate car loan offer, applicants can help their cause by addressing the personal side of the loan – their credit profile. Get a free copy of yours and check for any issues that can be rectified to improve the score.
Lenders will also assess the risk factor of individuals. That includes their ability to repay the loan. Consumer loans, loans for cars for private use, are regulated by ASIC and lenders must abide by the rulings set by the body. Individuals can improve their own balance sheet by paying down debts such as credit card balances.
What happens with a rate increase?
Essential to maintaining that cushion against price pressures is to ensure your car loan repayments remain the same over the entire loan term. What’s the point of securing the cheapest interest rate car loan only to have loan repayments go up at some point.
When the RBA increases the cash rate, which is highly expected to happen this year or at least in the next few years, lenders respond by increasing their rates across the loans they offer. It may only be a small incremental increase but it can mean a significant amount to regular outgoings.
To cushion against the possibility of general rate increase, buyers should look for a fixed interest rate car loan. Lenders may offer a fixed or a variable interest rate loan. Variable interest rate loans have the potential for the rate to increase and hence the repayments when the RBA moves on rates.
A fixed rate car loan means the interest rate remains the same over the entire time of the car loan term. Jade Car Loans offers fixed rates on all the loans – personal and business car finances, in our portfolio.
Compare Cheap Car Loans Interest Rates
Comparing interest rates across the motor vehicle lending market will often be what most buyers will be wanting to do as a starting point. We have made that process a little easier by preparing a list of some lenders in the market with the current commercial finance car rates they are offering on personal car loans.
We’ve also made the process of comparing affordability easier by making this list a loan calculator. You simply enter the amount you want for your loan at the top and the function auto-calculates repayment estimates across the listings.
Calculator Highlights Repayment Differences
Using a car loan calculator is a great way to see how the interest rate and the loan term can impact the amount of the monthly car loan repayments. Vary the interest rate and vary the loan term to see how that affects the repayment. This highlights how important achieving the cheapest loan can be to ensuring a level of buffering when costs in other areas rise.
Of course it may take skillful negotiations with lenders to achieve the loan term and interest rate that will deliver the cheapest loan. Another key benefit offered by your Jade Car Loans consultant.
Additional Tips for Business Buyers
Getting more tax deductions can reduce taxable income which eventually, when the annual tax return is submitted, can be a cost saving for business vehicle buyers. Looking for finance options which deliver the most cost-effective benefits to the business can contribute to achieving this objective. For example, utilising the benefits on offer through temporary full expensing. Business Car Chattel Mortgage is best suited for those looking to utilise this tax measure.
While preventing price increases of many goods including fuel is outside the power of most of us, it is within the power of new car buyers to at least offset to a small degree these increases with a cheap car loan. Address the issues, know the market and work with the lenders that can offer the lowest interest rate loans are keys to keeping motoring costs to a minimum.
For a quote on a cheap car loan contact Jade Car Loans on 1300 000 003
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.