The second Tuesday in November is marked in the diary for most Australians for the race that stops the nation – the Melbourne Cup. But the second Tuesday in November and other months also marks the scheduled meeting of the Board of the Reserve Bank of Australia (RBA). The second Tuesday of November 2020 was more significant than in many years as there were no crowds at Flemington to cheer Twilight Payment to the post, the world looked on at the US Presidential Election and in somewhat of a surprise move, the RBA cut the official cash rate. Arguably, the rate that stops the nation!
Most people with loans and investments keep a close eye on interest rates. But as a major motor vehicle sector lender, Jade Car Loans analyses every interest rate fluctuation from a professional and expert perspective. We know what most people want to know is how does a cut in the official cash rate affect my loan? We break this latest rate cut down as generally and simply as possible for you.
What’s the official cash rate?
The official cash rate is not the interest rate charged on finances such as business car loans. It is the rate that banks pay for loans between each other. It is described in basis points which is .01%. On 3 November 2020 the RBA cut the rate from 0.25% to 0.1%
Why did the RBA cut rates?
The rate cut was one of a number of measures taken to support the Australian economy to recover from the coronavirus pandemic. A reduction in interest rates theoretically encourages business to borrow and invest which in turn should create jobs. When the rate cuts are passed onto consumer, primarily through home mortgages, they have more much to spend which in turn stimulates the economy.
What is ‘pass on the cuts’?
When the RBA announces a reduction in the official cash rate it is then up to individual banks and lenders to ‘pass on’ that reduction to their customers. The banks and other lenders individually assess how much of that rate cut, in this case .15% they will apply to their customers’ loans. Sometimes the banks pass on the full rate cut, sometimes a portion and sometimes they do not pass on any of the cut. The decision is theirs entirely and will depend on their individual circumstances at the time.
Did all lenders pass on the rate cut?
It was announced in the days after the RBA cut that the major banks passed on the rate cut to some of their customers. Primarily this was to a selection of home loan mortgage holders and some business loans.
Will I be better off as a result of a rate cut?
For current holders of a Secured Car Loan (personal) or business vehicle finance contracts such as leasing, Chattel Mortgage and CHP, your loan will not change if it has been arranged at a fixed interest rate. Jade Car Loans arranges car finance at fixed & cheapest rates achievable at the time, so customers have certainty with their finance over the loan term.
Do I get a reduction in my car loan interest rate and repayments?
This type of rate cut does not apply to motor vehicle finance.
Should I refinance with the lower interest rate?
You are welcome to discuss refinancing your loan at any time with a Jade Car Loans consultant. Refinancing involves establishing a new loan for the outstanding portion of your existing loan contract. Break fees apply in most cases and these should be weighed up against gain with any reduced repayments. We can give you a quote on refinancing for both personal and business vehicle finance.
The take-outs from the November interest rate cuts can be summarised as follows:-
- For holders of existing Jade Car Loans, both personal and business, at fixed interest rates, there will be no change to your repayments.
- For car loan applications currently being quote or processed by Jade, your consultant will be sourcing the cheapest rate available – as always!
- New car loan and motor vehicle finance will be sourced at the cheapest rate available by your Jade consultant.
- If the banks and lenders that we are accredited with reduce their motor vehicle interest rates, we will be adjusting our advertised rate accordingly.
- Interest earned on savings accounts is usually reduced by banks in line with their reduction in interest rates on loans.
Securing Cheap Interest Rate Motor Vehicle Finance
Jade Car Loans has a commitment to always sourcing better interest rates and the cheapest interest rate for your requirements. With our accreditation across a large number of banks and non-bank lenders, we provide our customers with a distinct advantage in being able to survey a large part of the motor vehicle lending market through the one contact.
Just contact Jade and we will do the hard work in sourcing the cheapest rate the market is offering that meets your car loan application profile.
For a cheap interest rate car loan deal, contact Jade Car Loans 1300 000 003
DISCLAIMER: THE INFORMATION, OPINIONS, DATA, POLICIES, PRODUCT SPECIFICATIONS AND OTHER CONTENT CONTAINED AND EXPRESSED IN THIS ARTICLE HAS BEEN OBTAINED THROUGH RECOGNISED REPUTABLE SOURCES, PRIMARILY IN THE PUBLIC DOMAIN. LIABILITY IS NOT ACCEPTED FOR ANY ERRORS OR MISINTERPRETATION OF SAID CONTENT. THIS CONTENT IS NOT INTENDED OR PROVIDED AS THE SOLE SOURCE OF INFORMATION OR AS SPECIFIC FINANCIAL ADVICE IN REGARD TO MAKING DECISIONS BY INDIVIDUALS OR BUSINESSES. THOSE THAT CONSIDER THAT THEY NEED PROFESSIONAL ADVICE SHOULD REFER TO A FINANCIAL ADVISOR.