When replacing vehicles there are often two camps – those that will always buy new and those that will always buy a used vehicle. There are positives in both these decisions. But in recent years, with the supply of new vehicles restricted due to supply issues with the pandemic and computer chips shortage, many diehard new car buyers have or are considering changing camps. If considering the purchase of a second-hand motor vehicle there are issues to take into account re used car finance options and other matters.
Pricing and Value
One of, if not the most important issues which has been widely reported is the soaring demand for used cars during the past two years of the pandemic and microprocessor shortage. New car stocks are thin on the ground as manufacturers deal with the computer chip problem and shutdowns. In the law of supply and demand, this has pushed up prices significantly. Making some prices of vehicles that are several years old approaching or higher than the same brand new model.
While there are buyers that are willing to purchase at these prices, issues may arise in relation to the value of the vehicle when it comes to finance and insurance. If the lender perceives the value of the vehicle is not in line with the loan amount being requested, the lender may request the loan amount be reduced. This would mean buyers having to pay a deposit.
Insurance is required on all vehicles purchased with finance. The policy/insurer will establish the value of the vehicle. If a higher than value price has been paid, this may impact the policy and pricing.
Loan Types and Finance Products
Jade Car Loans offers a full range of used car finance products for both private and business car loans.
Used car finance includes:-
- Secured Car Loan and Unsecured Personal Loan for private buyers.
- Car Chattel Mortgage, Lease and Commercial Hire Purchase for business buyers.
While the loan types are the same as for new vehicles, there are a number of variations.
Interest rates vary on new v used vehicles (see below for coverage of this point).
Lenders take into account the age and condition of vehicles when assessing an application. Their assessment may result in not approving the full loan amount requested or not accepting the vehicle as security for the finance.
If the vehicle is not accepted as security, your Jade consultant can source a quote for an Unsecured Personal Loan.
Used Car Finance Lender Market
As with new car finance there are many lenders in the market. Banks, finance companies and many used car dealers now offer finance. The interest rates, fees and charges and loan details can vary depending on individual lenders.
Jade Car Loans is accredited with many banks and non-bank lenders so we do have the access and the capability to source the cheapest used car loan offer.
While the lending market is highly competitive, buyers should always consider the fine print of the offer document for any untoward or excessive charges.
If made a loan offer from say a dealer when inspecting a vehicle, astute buyers are those that contact another lender for a competitive quote or better still, hand the loan sourcing over to a broker to ensure the cheapest offer is achieved.
If a lender does decide that the vehicle is not suitable as security, does an unsecured loan mean it is ‘unsafe’? No. The ‘secured’ or ‘unsecured’ reference in finance relates to the security for the lender. The loan is secured or guaranteed by the goods. Unsecured simply means that no security by way of the goods being acquired is provided.
Lenders may request additional security in some form of property or asset as guarantee against the loan. The interest rate on unsecured loans may also be higher than for secured loans.
Used Car Loan Interest Rates
When it comes to interest rates, the rates may vary with new v used vehicles. Unless specifically noted, the interest rates advertised by ourselves and other banks and lenders will be for new vehicles. The rate offered for second hand cars may be more.
The other point to note on interest rates is credit rating. Most lenders will advertise their lowest available rate which is for applicants with a good credit profile. If seeking finance for a used vehicle, buyers can address their credit profile.
There are ways to fix errors in credit profiles and if planning ahead, a credit score may be able to be improved by reducing the amounts owed on other loans and debts and by ensuring all bills are paid on time. This shows lenders that the applicant has a good repayment record.
Buyer Beware: Updates
One new issue which has recently emerged in regard to the used car market is flood-damaged vehicles hitting the market. Thousands of vehicles were impacted during the major flood event in Queensland and NSW. Some may have been uninsured or not written off completely. Owners may put them on the market to sell. These vehicles may appear for sale anywhere in the country, not just in the flood-affected states.
Warnings have been issued by a number of authorities including Transport and Main Roads Queensland about damaged cars ending up in the market. Buyers need to be aware and always request or arrange an inspection certificate from a motoring organisation such as NRMA. Buyers can also search the topic online for hints of tell-tale signs to watch out for.
When selecting Jade Car Loans to arrange your used car finance your consultant will advise you of a range of these issues as well as sourcing cheap finance.
For a finance quote on a second-hand motor vehicle call Jade Car Loans on 1300 000 003
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.