New cars now more affordable than ever

New cars now more affordable than ever

May 12, 2011

Australians purchased more new cars in the year to March 2011 than the previous year, bucking the trend at a time when spending slowed overall.

New car sales grew 7 percent more than the year to March 2010 figures, resulting in a spike in enquiries for new car loans. Sales don’t appear to be slowing any time soon either. The Australian Bureau of Statistics’ latest figures for March sales reached 87,141 vehicles (seasonally adjusted), up 3.4 percent on February 2011.

It’s a significant increase considering that most other spending dropped away in the same period, including retail spending, which grew overall by just 3 percent.

New car market gets a shake up
Competition in the domestic new car market heated up as a slew of low-priced cars arrived from Asia. China’s Chery Motors and Great Wall Motors were among the new arrivals nabbing consumer attention with prices lower than previously seen on the domestic market.

This week Chery Motor’s small car, the Chery J1, was advertised as just $10,990 after a $1000 cash-back deal was introduced. Suzuki’s Alto was priced from $12,490 drive away. Meanwhile Great Wall Motors advertised its single cab ute priced from $17,990 including on road costs.

By comparison, Holden advertised its working cars priced from $28,490 drive away. So there are plenty of savings to be had if you’re prepared to look beyond your favourite make and model.

Save up to $645 by selecting a better loan
The strong Australian dollar is set to further impact car sales in coming months as some manufacturers pass on discounts to Australian consumers. Affordability is expected to increase further as new budget vehicles arrive on our shores.

So if you’re in the market for a new car and are seeking finance to buy, then now may be a good time to consider your options.

By comparing car loans online, you’ll likely find savings north of $500. For instance, the average $20,000 new car loan with a five-year term available through RateCity has an interest rate of 10 percent. By comparison, one of the top loans on the site, IMB‘s Car Loan (new) has a rate of 8.9 percent for the same loan size and term.

By opting for the IMB loan over another loan at the market average rate, you could potentially save around $645 over five years.

So not only does it pay to shop around for a great deal on a new car, but shopping around for your car loan quote can really pay too.

 

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Learn more about car loans

Where can I get a student car loan?

Student car loans are not a necessarily a product in and of themselves, but what you may be looking for is a guarantor car loan.

A guarantor car loan has a third-party act as a form of guarantee for your loan application, telling the bank or lender that if you default on your loan, someone will pay the loan repayments.

Going guarantor on a car loan is no new thing, and before internet-based credit scores, guarantor car loan applicants would apply for loans with a guarantor or property owner who could vouch for the person borrowing the loan.

To get a guarantor car loan, you’ll need someone willing to act as a guarantor for your car loan.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

What is a car loan?

A car loan, also known as vehicle finance, is money that a consumer borrows with the express purpose of buying a vehicle, such as a car, motorbike, van, truck or campervan. Car loans can be used for both new and used vehicles.

What is an unsecured car loan?

An unsecured car loan is a loan that is not connected to a form of security, or collateral. Not all lenders provide unsecured car loans – and if they do, they generally charge higher interest rates for their unsecured car loans than their secured car loans.

How much can I get towards a new car as a single parent?

It really depends on your financial circumstances as to how much a lender will grant you towards a new car as a single parent. With most lenders, the smaller the loan you apply for, the higher your chances are of approval, so getting a cheaper car or adding some savings of your own, may be a valid option if you are struggling for approval on a car loan.

What is dealer finance?

Dealer finance is a car loan organised through a car dealer – as opposed to car loans organised by a finance broker or directly by the lender.

What is borrowing capacity?

Borrowing capacity is the amount of money that a consumer is able to borrow from a lender. Each consumer’s circumstances are unique, so different people will have different borrowing capacities. Lenders use their own in-house formulas to calculate borrowing capacity, so the same consumer might have different borrowing capacities at different lenders.

What is a novated lease?

A novated lease is a car lease that is ‘novated’, or transferred from one party to another. Novated leases are often used when companies provide a car as part of a salary package. The employer signs for the lease and makes the lease payments, but the employee assumes the responsibility of looking after the car. While most car leases involve two parties, novated leases involve three – employer, employee and financier.

What are the pros and cons of guarantor car loans?

Like all things, there are positives and negatives to guarantor car loans, though one may outweigh the other depending on your needs.

Guarantor car loan pros may include that you’re more likely to be approved for a long if you have no credit or a history with bad credit, that you’re more likely to secure a car loan with a lower interest rate, and that because your guarantor car loan is based on a relationship, you will be more inclined to meet your repayment schedule.

However, there are negatives, as well. Guarantor car loan cons may include leaving a detrimental mark on a personal relationship with added strain if you don’t meet your repayments, and you may take out a loan that you can’t actually afford.

Weighing these pros and cons will give you a greater understanding of whether a guarantor loan is ideal for your circumstances.

What is a redraw facility?

A redraw facility allows you to re-borrow any funds you may have repaid ahead of schedule – although conditions and fees often apply. Not all car loans come with a redraw facility.

What is a finance lease?

A finance lease, also known as an asset lease or car lease, is an arrangement by which a finance company buys a car on your behalf. You get to borrow the car in return for making regular payments to the financier. At the end of the lease, you can either buy the car or hand it back. 

What is salary packaging?

Salary packaging is an arrangement you can make with your employer that can allow you to buy a car from your pre-tax salary. The advantage of salary packaging is that it will redue your taxable income.

What is a pink slip?

A pink slip is another name for the safety check that needs to be done before a car owner can renew the vehicle’s registration.

What is an establishment fee?

Some lenders will charge you an establishment fee, or one-off upfront fee, to cover the cost of setting up your car loan.