Demand Pushing Used Car Prices. Impact on Used Car Loans

Multiple issues in the global supply chain have seriously impacted the new car market in Australia. With the limited stock of new cars pushing used car prices, Jade Car Loans explains the impact of used car loans and what to watch when buying. Australians have long enjoyed a vast selection of makes and models in the new car and work vehicle market. But with local vehicle manufacturing all but gone, Australians now rely almost solely on imported cars.

This makes the market and stock of new vehicles, subject to the manufacturing and other conditions in the countries of manufacture. Over the past year plus, the pandemic and the shortage of computer chips have seriously impacted the production of new cars globally. Many local dealers are still trying to meet back orders and now shipping issues are emerging as another threat. Some experts are predicting global supply chain issues to continue to impact Australian markets for some goods into 2023.

With buyers unable to secure their choice of new vehicles, they are looking to the used car market. The fall-out - demand is strong and that is pushing up the prices of many used cars. The situation has been highlighted in mainstream media in numerous news stories.

The decision for some will be should you wait until your car of choice is available or should you buy what you can from the second hand market? The decision may be influenced by car finance.

New v Used Debate

While the used v new is a conversation that will long be debated or argued, at pubs, dinner tables and workplace common rooms, the current stock situation brings the reality into stark focus. There is usually a generous supply of used vehicles on the market and many can be late models and in very good condition.

Some say buying used is buying someone else’s problems while others see klms on the clock as the engine being run-in and ready. Current production methods with safety and tech features are arguably built to last a lot longer than some of the clunkers of past eras.

Browsing the online motor vehicle marketplaces provides a general idea of pricing of new and used cars in one place. This site can be a good point of reference and a great starting point for buyers. They can also indicate what new vehicles are available.

There have been reports of some used vehicles priced at only marginally below the price for the latest new model of that vehicle. But if the new version is not currently available???? There are a lot of personal decisions to be made in the space.

Used Car Buying Alerts

With the growth in online selling channels has come a surge in frauds and scams. If buying a used car either via an online platform there are several basic guidelines that buyers should adhere to. Before doing anything, refer to the ACCC ScamWatch site for information on the current scams and frauds that have been detected.

Here are a few basics to consider and they may vary in significance depending on whether you are buying from a private seller or an authorised motor vehicle dealer:

  • Don’t buy without an inspection. It isn’t worth it not to get a full vehicle inspection from a professional auto mechanic or through one of the motoring associations.
  • Don’t part with money before fully checking out the vehicle and the seller's credentials. Ensure the vehicle exists and passes all verifications. Online selling is full of examples of people parting with hard-earned, goods sight unseen, only to find the goods don’t even exist and they’ve done their cash.
  • Check REVS or other official registers to confirm the rego and official owner and ensure that matches the seller.
  • Check the PPSR to ensure the vehicle is not under finance.
  • When taking delivery, ensure the vehicle is as you originally inspected and that accessories and components such as tyres have not been altered since your viewing.
  • Try to assess upcoming maintenance and servicing requirements for that particular vehicle to gauge what repair costs you could be up for shortly. Ask for service books and try to verify their authenticity.
  • Are all parts including any replacements, genuine manufacturer’s parts? Has work been carried out by authorised motor mechanics and repairers?
  • Check the credentials of the seller through whatever channels are available. Authorised and licensed car dealers can be checked through their auto association or consumer affairs/fair trading department in your state.
  • This can be particularly important, especially for relatively late model vehicles. Check what is and is not still covered.
  • Consumer laws do protect buyers. These may vary for private sellers and authorised dealers. Check what protections you are afforded in your state.

When engaging Jade Car Loans as your used car loan provider, our consultants can assist with many of the verifications and checks around the vehicle rego PPSR and seller ID.

Loan Differences

We offer both new car finance and loans for used vehicles, both private and business at our cheap interest rate policy. While loan applications are assessed primarily on the risk assessment of the applicant, lenders will take into account the age and condition of the vehicle when making a loan offer.

  • No deposit finance is available on new vehicles but some lenders may not approve this for used vehicles.
  • The commercial vehicle interest rates advertised by lenders will be for new goods unless otherwise specified.
  • Many used car dealers also offer finance and often promote their finance offers strongly. Often at a ‘$xx per week’ rate. Look closely and compare with our cheap rates.
  • If considering dealer finance, watch for hidden fees or commissions that they may be receiving from their finance provider. Consumers refer to the Comparison Rate and read the contract closely before committing.
  • Quick quotes and fast approvals are available for both, so don’t feel you need to rush to sign up to another finance before speaking with us.

Use our interest rate comparison and finance calculators to compare other offers with what we may be able to achieve for you

Applying for a Used Car Loan

So what can buyers expect when applying for a used car loan? When working with us, a cheaper interest rate for starters. But individual lenders may apply conditions:-

  • A different interest rate from that advertised for new goods, but cheap rates are still achievable.
  • What to watch out for is the difference or discrepancy between the price tag and the value. With used car prices soaring, the price may exceed the book value of the vehicle. Lenders will know the value and may not be willing to include the full purchase price in the loan. They may request the loan amount be reduced by a deposit be paid. Your Jade consultant will be negotiating hard to achieve the best outcome and adhere to the Responsible Lending Guidelines.
  • Keep an eye on the possible end-of-finance differential between value and purchase price when opting for a balloon in business vehicle finance.

Pre-Approved Loans

Buyers don’t want to miss out on these cars in such high demand. So securing your loan before heading out to inspect vehicles can assist. You can be in a position to commit to the sale IF you are totally happy with the offer and the vehicle.

Working with a Licensed Credit Provider such as Jade Car Loans provides used car buyers with access to a vast range of lenders and our commitment to achieving the cheapest used car loan interest rates and conditions possible.

Contact Jade Car Loans on 1300 000 003 for a quote on a used car loan