While home buyers naturally seem obsessed with interest rates in regard to their mortgages, car buyers probably pay less attention. Well now is the time to listen up and start paying more attention to interest rates on car loans.
The interest rate is the fundamental basis for a car loan. It sets the overall cost of the loan, the monthly repayments and as such, the affordability of the car within your budget. That’s why our consultants work so hard to secure the cheapest interest rate possible.
Australia currently has historic low interests and at the July Board meeting, the Reserve Bank of Australia (RBA) once again held the rate at the .25% with no plans to go lower.
What does the RBA rate decision mean to car loan interest rates?
Sadly no, .25% is the not the current rate for car finance. Jade Car Loans prides itself on the best interest rates but even we can’t achieve that rate.
The RBA sets what is known as the official interest rate. This is the rate that lenders can borrow money, as in source their own funds and lenders lend to lenders. It’s essentially the industry rate.
The official rate will vary based on a range of factors including effects of the global economy, monetary policy and general conditions in the Australian economy as we’ve seen in response to the coronavirus.
Good news – lower interest rates mean that lenders can source funds at a cheaper rate which in turn means they can lend at cheaper rates. The large number of banks and lenders that we are accredited with can source their money cheaper and therefore offer our customers better car loans.
So the RBA’s decisions does have a bearing on car loans, especially if or when interest rates start to increase. When will that happen? Industry experts are tipping ‘not for some time’. So the bottom line is – now is the best time in a long time to get a low interest rate car loan.
What about 0% interest rate car loans?
If you’ve been browsing the new car market you may have seen ads for 0% or 1% interest rate car loans. These are usually confined to new car dealerships and if you are tempted, you should be doing the deep, deep dive into exactly what you are signing up for.
Across the lending sector, these types of loans are seen as a marketing strategy – a bit of sales tactic – to attract car buyers to the new car market. Due to the coronavirus crisis, new car sales, like many other sectors, have taken a hit and many dealers and manufacturers are especially keen to move stock.
The 0% interest rate car loans are available through that dealer’s finance company connection.
The issues to look for are:-
- An increase in the purchase price of the car. The car may be priced higher than usual or normal to make up for the 0% interest to be charged on the loan. Tip: check various sources for what that car should be priced at or look at comparative models from other manufacturers.
- Extra loan fees and charges. All car loans will include various fees and charges which vary from lender to lender. We don’t advertise specific charges because we deal with so many lenders and we won’t know what your specific charges will be until we source you the best deal. But you can easily see what some banks charge as they usually display them on their website. Tip: ask for an itemised quote which lists all fees and charges for both the car and the loan.
- Promotional or introductory time offer. The fine print may reveal that the 0% interest rate is only for an initial period of the loan term, say 6-12 months, then a higher rate kicks in. This higher rate may far exceed the current rate that we can achieve for you.
- Ask the dealer how much the car is if you don’t take their finance offer and source a car loan quote from Jade Car Loans.
To avoid being caught, seek other quotes for both the car and your car loan so you can calculate the total cost of the loan and compare offers equally.
In Your Best Interests
Jade Car Loans will always source you the best interest rates on car finance and the best car loan to suit your circumstances and your requirements. Our accreditation with many banks and lenders give us direct industry-only access to the best deals and you can be assured that we are always working in your best interests. Our interest is to source you a car loan, not sell you a car.
For more information on interest rates, how they are derived and how they may affect your car loan, please refer to our web pages and other educational articles.
To discuss a car loan at genuine cheap interest rates, speak with a Jade Car Loans consultant 1300 000 003
DISCLAIMER: THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. INFORMATION ON INDIVIDUAL VEHICLE SPECS IS SOURCED FROM THE MANUFACTURER WEBSITE. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.