February is traditionally the unofficial start of the business year following the summer holiday season. In some states, February 2021 will have an even greater 'return to work' impact as many return not only from holidays but also from working from home through most of 2020. For both individuals and businesses looking to plan car purchases, we bring you an update on the latest news that affects the motor vehicle lending market.
Interest Rates
We’ll start with the key issue that most car buyers focus on – interest rates. Interest rates are currently still at the historic low levels that they reached in 2020. At the monthly board meeting in February, the RBA board kept interest rates on hold at the existing levels. In his address to the National Press Club in the first week of the month, RBA Governor Dr Philip Lowe reiterated comments he has made in the past, that the board had ‘no appetite to take interest rates interest rates into negative territory’.
For those planning a car purchase and finance now or shortly, that will certainly be good news. Based on the current interest rate environment, Jade Car Loans continues to offer extremely low rates across our motor vehicle finance portfolio. This applies to both personal Secured Car Loans and our business car finance products – Chattel Mortgage, Leasing, CHP and Novated Car Leasing with Salary Sacrificing.
At Jade, we arrange all these car loan products at a fixed interest rate. So if you take on car finance now, you’re low rate will be locked in and not change over the next 4 or 5 years, the term of your loan.
While talking finance products, with wage growth slow but interest rates low, both employees and employers may like to consider a Novated Car Lease with Salary Sacrifice as a means of delivering a benefit to a staff member without actually increasing wages. Head to our dedicated webpage for details of how this finance product works to benefit both employer and employee or give us a call and one of our consultants will explain the workings to you.
Changes to Lender Deferral Arrangements
As the full impact of the COVID-19 pandemic began to be realised early in 2020, the Federal Government provided support to the banking sector to enable banks and lenders to assist borrowers with loan deferrals. Many banks and lenders have provided support to their customers through deferring repayments on many loan types under varying arrangements.
We have been advised by at least some of our lenders that due to the roll-back of the government support measures, as of 31 March 2021, these loan deferral arrangements will be changing. If you have a loan deferral arrangement in place with your lender, then it would be wise to contact the lender and discuss plans moving forward.
In general, it appears that banks in particular will no longer be offering new loan repayment deferral arrangements. As of 31 January, banks started working with their customers who requested financial hardship support. In place of the previous loan deferral arrangements, lenders are tending towards establishing a more long-term and sustainable solution for their customers.
All this comes as JobKeeper is due to conclude at the end of March 2021. For those businesses that have been receiving this support and have existing motor vehicle finance commitments, it will no doubt be a time for planning to ensure you can meet existing loans or start discussions with your lender.
Motor Vehicle Lending
Regarding motor vehicle lending specifically, at Jade Car Loans we are continuing with our existing loan portfolio and with our extensive lending panel of banks and non-bank lenders the outlook is positive. Many vehicle manufacturers are already announcing new model releases for 2021 which is always a good sign. Eligible businesses can also consider the Instant Asset Write-Off as a measure that is in place until June 2022 along with the temporary full expensing. Both measures may include business vehicles as eligible assets for depreciation.
However as mentioned in an earlier article, the ATO is scrutinising vehicle registrations across all states and territories to match against their tax records to check compliance. Both businesses and individuals should be alert and if in doubt of your taxation and regulatory obligations regarding your new commercial car finance, consult with an accountant, tax agent or financial advisor.
Securing Motor Vehicle Finance
Jade continues to embrace digital technology to further simplify and streamline our car finance service. We’ve recently added our lender interest rate comparison tool to our business car repayment calculator to assist customers in doing much of the ‘behind the scenes’ and pre-purchase planning in their own time.
With some exciting new models set to hit our shores and with interest rates low, 2021 could be the year to consider upgrading your private car or your business fleet. Our team is staying across the car scene and the lending environment and will be bringing you further information each week.
Why not upgrade your vehicle now? Talk to Jade Car Loans 1300 000 003 about your requirements.
DISCLAIMER: THE INFORMATION PRESENTED IN THIS ARTICLE IS NOT INTENDED AS THE SOLE BASIS FOR INDIVIDUALS TO MAKE FINANCIAL DECISIONS. THOSE THAT REQUIRE ADVICE OR GUIDANCE IN REGARD TO THEIR FINANCIAL DECISIONS SHOULD CONSULT WITH AN ACCOUNTANT OR FINANCIAL ADVISOR. THE INFORMATION AS DETAILED IS BASED ON DATA, SPECS AND REFERENCES AS SOURCED FROM A RANGE OF SOURCES AND LIABILITY IS NOT ACCEPTED FOR MISINTERPRETATIONS, MISREPRESENTATIONS OR ANY ERRORS IN THE CONTENT. THIS ARTICLE IS FOR GENERAL INFORMATIVE PURPOSES ONLY.
