A rise in interest rates is now looking inevitable. The lending market has been at record low rates since November 2020. While Jade Car Loans will always secure the cheapest rate available to suit individual requirements, we source loans from across our lender panel. It’s vast, which provides us with more choice. But when lenders respond to RBA increases in the official cash rate, the car loan rates will follow. By how much is yet to be seen. While a rate rise is inevitable there are actions buyers can take and assistance available to ensure cheap car finance is secured after interest rates rise.
As experts in motor vehicle finance, we have compiled hints and tips for how you may go about that process and what support and assistance is available through Jade Car Loans to achieve the cheapest car loans possible.
Bring Forward Purchase Plans
Stock of motor vehicles has been seriously impaired due to pandemic supply chain problems. Many dealers have full order books with keen buyers having to wait months for delivery of some makes and models. The flood situation in NSW and Queensland has only added to the problem. Thousands of vehicles were lost in the deluges and those owners will also be joining the search for a new car.
While it may sound obvious, if you have been hanging out for that preferred vehicle to arrive, possibly it’s time to reassess the situation. Revert to Plan B, C and D with your preferences. Ring around dealers to see what vehicles are available to driveaway today. You will find many dealers have a ‘check our stock’ facility on their website. This is a quick and easy way to see exactly what vehicles they have to sell right now without having to make multiple phone calls or showroom visits.
Remember, you can always upgrade in a few years to your first preference when supply issues are resolved. Buying now, before interest rates start to rise in possibly June, could represent a marked difference in repayments. Differences which can add up when you calculate them over the number of months of repayments of the loan term.
While we as brokers focus on achieving better interest rates, the most significant factor to buyers with their car loans is very often the loan repayments. This is the amount needed to meet each month and can impact household budgets and business cash flow.
Shifting focus to address target repayment amounts can be a way we can assist buyers in achieving workable, cost-effective car loans. Finance that is ‘cheap’ when put in context of regular outgoings.
There are a number of ways to look at this, which can include:
- Loan Term: a longer loan period reduces repayments. More interest is payable, but a more workable monthly outgoing may be achieved.
- Finance Structure: businesses can look at varying the amount of the balloon/residual to achieve a target repayment.
- Reduce loan amount: while we can source ‘no deposit’ car loans, foregoing this and paying an upfront deposit will reduce the overall loan amount. This then reduces the loan repayments.
Negotiating yourself with lenders on these matters can be challenging. Leaving the task to your Jade consultant can save you time and may deliver the desired outcome.
Business Buyers: Reconsider Finance Type
Business buyers have a range of business car financing options to select from and each attracts a varying interest rate. If say the business has always opted for a Motor Vehicle Lease, considering if the cheaper-rated sole trader car financing may suit the business could be a money saver.
Calculate in Tax Benefits
Businesses can also work the tax deductions realised from different finance products into the overall ‘cost’ of motor vehicle finance. Currently IAWO and temporary full expensing are available which offer significant tax deductions to eligible businesses.
Improve Credit Rating
If you’re planning a vehicle purchase with finance down the track, then now is the time to see if you can improve your credit rating. The interest rates that you will see advertised by lenders, including Jade Car Loans, will predominantly be for applicants that have a good credit rating.
When rates go up, that good credit score will become even more important to ensure you are offered the lowest possible car loan interest rate. That goes for businesses and individuals.
What can you do? Refer to Moneysmart for ideas and actions, which may include:-
- Reduce current debt levels including credit card balances.
- Address any errors which may appear in your credit report. There are set processes which can be used to fix credit report errors.
- Maintain a good payment record for current commitments. That includes utilities payments, mobile phone bills, rent, home loans and credit cards.
Pay Greater Attention to Loan Application
Loan applications request information about assets and liabilities. If completing these types of forms in a hurry it can be easy to forget or overlook some details. Take stock of what you own and what you owe ahead of applying to ensure you have included all of your assets.
Lenders may look more favourably on a more complete and thorough application form. That more favourable outlook may mean a cheaper interest rate being offered. Your Jade consultant will guide you through this process.
Utilise Expert Assistance and Support
Lending interest rates across the board have been at very low and record lows for a long time. In fact, the RBA has not raised the official cash rate for over 12 years. When rates start to rise, it will be important than ever to source the cheapest finance.
Using our broker-style resources and support can be extremely beneficial to the process. Car finance broker services are not just for businesses. Individuals purchasing private vehicles are most welcome to utilise our services.
We hope this information has been helpful and to discuss further how we can assist you secure cheaper motor vehicle finance please have a conversation with one of our consultants.
Contact Jade Car Loans on 1300 000 003 for a quote on personal or business motor vehicle 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.