When seeking motor vehicle finance or any other type of loan, the interest rate is key to achieving the cheapest loan. Buyers focus heavily on the rate and lenders, such as Jade Car Loans, oblige by sharpening their pencils to compete in this highly competitive sector. Over the past 18 months and especially the last 12 months, borrowers have enjoyed the cheapest finance ever. Interest rates across the lending sector have been at historic lows courtesy of the Reserve Bank of Australia (RBA) cuts to the official rate in response to the pandemic.
But how much longer can car buyers expect to be able to access these historically low car loan interest rates? As the saying goes, what goes up must, eventually and in most instances, come down. While we focus continually and permanently on achieving cheaper interest rate car loans, our rates are subject to fluctuations in the official cash rate. In this article, we cover the RBA decision on interest rates made at its November 2021 board meeting and what analysts and experts are predicting for interest rates.
November 2021 RBA Outcome
For many Australians, the first Tuesday in November signifies Melbourne Cup Day. But it was 12 months ago, November 2020, when it became the day for the rate that stopped the nation. While picking the winner of the Cup is tough enough, not many predicted that the RBA would cut the official cash rate on that day. 12 months on and it was not expected that the RBA would lift rates on the first Tuesday of November 2021. And that is what occurred. The cash rate was left on hold at 0.1%.
The slight shift in the RBA’s monetary policy direction made at the meeting was the winding back of its bond buying program.
In comments published to accompany the monthly statement, the RBA Governor Philip Lowe noted:-
- After an interruption from the Delta outbreak, the domestic economy was again and solid gains in GDP were expected in the December quarter.
- Unemployment is expected to post a lowering trend over the coming years with the scenario expecting 4.25% by the end of 2022 and 4% by the end of 2023.
- Inflation at 2.1% remains low. Expectations are for a gradual increase to 2.25% in 2022 and 2.5% in 2023. The surge in inflation experienced in some countries is not expected in Australia.
Mr Lowe stressed that the ‘forward guidance’ by the RBA is based on the state of the economy and not based on the calendar. The focus is on returning to a position of sustainable inflation in the 2-3% range and working towards full employment.
He went on to say that the comments and decisions were not a promise that the official rate would not be changed on a particular date. However, the best expectation of any timing for a change in the rate was provided with each statement. The next meeting of the RBA Board is scheduled for the first Tuesday in December.
Forecasts, Predictions and Impacts
Impacts on the official cash rate are wage growth, inflation and unemployment. Wages growth has been subdued for some time and the RBA has forecast this to continue for some time. But as one analyst pointed out recently, public sector wages in some jurisdictions have been frozen due to the coronavirus pandemic. This may be having a significant effect on subduing wage growth in general.
Many industry sectors especially hospitality and retail are struggling to fill job vacancies. The primary cause of this is seen as the closure of international borders which has stopped international students and backpackers from coming into Australia.
Some businesses are offering extremely enticing packages including lucrative sign-on bonuses to attract quality staff. This labour shortage may have the potential to push wages up as employers compete for the limited numbers available to fill the roles.
The RBA expects wages growth to pick up, gradually, in line with the tightening in the labour market.
While the RBA has for some time and continues to talk about 2024 for an increase in the official cash rate, many economic and financial experts are predicting an earlier increase. Some say even late 2022 if not 2023.
These longer range forecasts tend to be significant for the home lending rather than the motor vehicle lending sector. Home mortgages extend over much longer loan terms than car loans and tend to include options for a fixed and a variable component.
Comparing Car Loan Interest Rates
When comparing business car loan interest rates, firstly note that business and consumer rates are different.
Business vehicle finance interest rates vary across the different types of loans – sole trader car loans and Commercial Hire Purchase being traditionally lower than Vehicle Leasing.
Business vehicle loan interest rates are always higher than business rates. Under consumer law, lenders are required to display both an Advertised Rate and a Comparison Rate.
Advertised interest rates usually refer to new cars unless a used car rate is specifically noted. Jade Car Loans can achieve better interest rates on both new and used vehicles, subject to individual lenders and applications.
To assist those looking to compare rates across the market, we have provided Interest Rate Comparison Calculators.
Achieving the Lowest Vehicle Finance Rate
Fixed interest rate car finance as offered through Jade Car Loans, ensures buyers can have today’s cheapest rate for the complete term of their motor vehicle loan. Getting in now can ensure you are protected from any rate rises over the 5, 6, or 7 years, whatever loan term you choose.
A key element of being offered the cheapest car loan interest rate is the loan application. Lenders will conduct a risk assessment of the applicant based on their guidelines. Ensure your credit profile is in good standing by fixing any errors before applying for a loan as a starting point.
Engaging the services of our expert lending consultants can significantly assist buyers in achieving the cheapest car loan interest rates. We have the buying power, track record, widespread lender accreditations and negotiating skills to deliver better interest rates across our portfolio.
Contact Jade Car Loans at 1300 000 003 to discuss cheap interest rate car finance.
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.