It’s official; 2016 is the year of the new car with the latest car finance figures showing a 7.35 per cent spike in value in total loans taken out for a new set of wheels in the past year.
A RateCity.com.au analysis of ABS data has revealed that Aussie appetite for new car loans jumped in the 12 months to January 2016, compared to the same time the previous year. Used car loans on the other hand were down 0.50 per cent in the same period, suggesting a decline in the popularity of second hand rides.
Evidently, VFACTS February sales figures showed 96,443 brand new vehicles were sold.
Intention to buy a new car in the next four years is also up, with 2.21 million Aussies planning on making a purchase before 2020, according to Roy Morgan statistics.
So why the surge in new car purchases?
Sally Tindall, money editor at RateCity.com.au, says the higher costs of keeping a car on the road in recent years have reshaped Australians’ preferences.
“High fuel prices have driven customers to purchase smaller, more fuel efficient cars and the newer models on the market are some of the cheapest to run in this regard,” she says.
“With the cost of these cars below $12,000 in some instances more Australian’s can now easily afford to make a new car purchase with the help of the right car loan.”
Toyota and Mazda took out the largest percentage of sales last month to remain the most popular car brands in Australia. It is no coincidence that models such as the Mazda 2, Toyota Camry and Toyota Prado frequently feature on lists of the cheapest cars to run.
Bill Tsouvalas, founder & CEO at Savvy agrees, “Australian’s don’t mind spending the money on a new car if they know that it won’t cost them a fortune in the long run.”
“Fuel efficiency and reliability are big deciding factors in where Aussies take their business and newer cars seem to deliver these guarantees more effectively,” he says.
If you are one of the 585,000 people predicted to buy are new car by the end of the year then getting your finances in order early will improve your odds of getting the car you want when the time comes.
Chances are you don’t have the full amount saved up for your purchase so it might be wise to start looking at car finance options. When you purchase a new car through a dealership they will have a car loan option available but, while convenient, this might not always be the best deal.
Tsouvalas says you should compare car loans available on the market in advance to avoid committing to a loan in a spur of the moment decision.
“Taking out a car loan on impulse could result in you getting stuck with a high interest rate or a loan that doesn’t allow you to make extra repayments and pay off the loan early,” he says.