CAR LOANS

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The silver lining of a slow new car market

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June 27, 2011

New cars have lost some of their sparkle this year, with sales at 21-month lows. Not only has flailing consumer confidence hit the car market hard, but low stock levels from earthquake and tsunami-ravished Japanese manufacturers has put the brakes on local sales.

But there are still some good deals to be found in car yards around the country, with end of financial year sales particularly appealing in the European imports sector. That, combined with steady interest rates and a flurry of low-rate car loans on the market means now may be a good time to buy your dream car.

The stats
Overall, just shy of 76,800 new vehicles were sold in May 2011, which was 7.6 percent less than in April 2011.

All vehicle types felt the pinch with sales of new passenger vehicles, sports utility and other vehicles all less in May than April, down 7.5 percent, 10.6 percent and 4.5 percent respectively, according to Australian Bureau of Statistic's seasonally adjusted data.

There was similar sentiment around the country with residents of all eight states and territories avoiding new car yards in higher numbers during May. In seasonally adjusted terms, Victoria recorded the largest percentage decrease of 12.3 percent followed by the ACT with sales down 8.5 percent for the month and Queensland, where new car sales dropped 7.3 percent in May.

NSW residents again bought the most new cars of all their state counterparts, with just over 24,000 new vehicles sold in the state during the month.

Save thousands
With the new car market in the doldrums and many good deals to be found, it may be tempting to go with the first car loan you come across when you're caught up in the excitement of buying a new car. But you'll almost always benefit from taking the time to shop around for the best deal available.

At the moment, the average interest rate on five year car loans of $20,000 available through RateCity is fairly low at just 10 percent. But there are a number of options with rates even less than this.

For instance, IMB's New Car Loan has a rate of 8.9 percent, CUA's loan for vehicles less than two years old and worth up to $30,000 has a rate of 8.99 percent, and RACV's Secured Car Loan has a fixed rate of 9.25 percent, to name a few.

It takes less than a few minutes to compare car loans online and the savings can be significant. By switching from a typical car loan of $20,000 with a rate of 10 percent to one with a rate of just 8.9 percent, you could reduce your monthly repayment by at least $10 or $600 after five years.

If you're currently paying a higher rate of say, 13.9 percent, the savings could be more dramatic if you switch to a rate of 8.9 percent. That's a saving of $50 per month or $3000 after five years. Wouldn't that be better in your pocket?

 

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