Cheaper car loan interest rates can save vehicle buyers requiring finance on the total interest payable on their loan which impacts the overall cost of the car. Securing a lower rate delivers not just lower monthly repayments but also lowers the total vehicle acquisition cost and delivers other benefits.
With inflation continuing to fall, rate cuts are very much in the frame with the Reserve Bank cutting the cash rate in February with further cuts expected by financial markets this year. Exactly when, how many, and by how many bases points are the unknowns, with RBA Governor Michelle Bullock not providing any future decision indications after the 1 April rate decisions.
While the impact of rate cuts on home mortgages is widely reported and quoted in the media, the effect on other types of finance is not as widely covered. Leaving buyers planning to purchase a vehicle with finance to make their own rate comparison calculations.
When comparing loans, the percentage figure of an interest rate doesn’t always tell the full story. Astute loan-seekers may want to know exactly how much they are really paying on their loan in interest, and how much less their vehicle may cost if they secured better rate finance. We provide tools to assist buyers to estimate their loans and expertise to secure that essential better rate.
Benefits of Cheaper Car Loan Interest Rates
The interest rate does not affect the types of credit products available to finance motor vehicles. All options – Secured Car Loans for private buyers, and Chattel Mortgage, Lease and Hire Purchase, are available for business buyers, at a range of rates.
The rate is the risk assessment of the loan applicant by the lender and the interest charges the cost of borrowing money from that lender. The overall interest payable on a loan is based on the amount borrowed, the repayment term, and the rate. By securing a lower rate, the total interest payable on the loan is reduced. This in turn reduces the total cost of the motor vehicle purchase.
A lower rate can reduce the monthly repayment which may make purchasing a vehicle more achievable for some buyers. A lower rate may contribute to a lender approving a higher loan amount by reducing the overall commitment. This may enable the buyer to purchase a higher priced or better vehicle and reduce the deposit required.
Calculating Savings on Cheaper Car Loan Interest Rates
Buyers requiring finance can calculate estimates on how much they may save with cheaper car loan interest rates using our Motor Vehicle Finance Calculator. This device can deliver estimates not just on repayments but on total interest payable to show the real savings which may be realised.
We’ll demonstrate this with an example with the calculator. Remember, when using the calculator, use the rate we are currently achieving for your preferred finance product. The rate is different for personal and business vehicle finance and business finance products have different rates. Also note the difference between the Advertised and Comparison Rate with personal car loans on our comparison rate. The Comparison Rate is based on a specific example and includes some lender fees and charges.
Here's an example on vehicle finance of $50,000 over 4 years, with a Personal Secured Loan rate of 6.75% pa compared with another lender with an advertised rate of 7.25% pa:
- Monthly payments at the 6.75% are $1192 and total interest is $7193.
- Monthly payments at the 7.25% are $1203 and total interest is $7750.
These figures are base amounts and do not take into account lender fees and charges. But the example shows that the lower interest rate loan delivers a small monthly payment reduction of $11 pm but a more significant $557 less in total interest payable on the loan. The buyer that secures the lower rate is paying an estimated $557 less for their vehicle.
Enter figures based on what you require to finance your vehicle and our current rates with those of other lenders or dealers and carry out your own estimate comparisons with the calculator.
Tips for Securing Cheaper Car Loan Interest Rates & Costs
The rate market varies with decisions by the RBA and other economic indicators. Lenders set their motor vehicle finance rates based on the cash rate and their own individual guidelines. If the RBA announces another rate cut, it may be expected that lenders will reduce their rates to remain competitive.
But rates are individually offered, based on the lender’s assessment of the loan application. There are actions that applicants can take towards achieving a better rate offer. The best rates are offered to those with good credit scores. Look at improving your score by reducing debts and fixing errors with your credit report. Details on how to achieve this are available at Moneysmart. Reducing the amount you need for a loan by making a larger deposit may lower the risk factor and lower your rate offer.
One of the simplest steps loan-seekers can do is to use our brokers to find the lowest motor vehicle finance rate. We cover off on our 80+ lender base to find the best rates in the market, use our leverage with lenders to negotiate the best rate, and deliver the cheapest finance solution to our customers.
Contact Jade Car Loans 1300 000 003 for cheaper car loan interest rates.
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.
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