Is Automotive Finance a Good Idea?

As record numbers of Australians source automotive financial solutions, the trend for committing to automotive finance deals continues. However, before you sign on the dotted line, you need to consider if it is a good idea for you.

The Growing Trend in Automotive Finance:

New research conducted on automotive financial services has shown that record numbers of Australians are snapping up new deals. The research documents that those most likely to sign up are consumers in their thirties or forties, who have signed up for a home loan in the last five years. IBISWorld research documents that it is not only increasing numbers of people signing up for automotive finance but the amounts are increasing. The research shows that the amount borrowed to finance new cars or station wagons has increased fifteen percent each year. This means that the amount borrowed has more than doubled from $3.4 billion back in 2009 to $6.9 billion last year.

Back in 2009, the average amount financed was $3,718 but this has increased to $6,110. Industry analysts have credited the rising house prices for this increase. Since the higher property prices have allowed homeowners to refinance and release equity from their homes. This trend has encouraged homeowners to make larger big ticket one-time purchases such as new cars, in spite of concerns about cash flow and income.

Official car figures show that there were new car sales of over 1.113 million in 2014. This is actually a two percent decrease on the previous year and marks the biggest sales drop since the 2011 natural disasters and the 2009 GFC. Yet, with the average sum of $6,110 being financed on an average five-year rate at 12.68, customers could be paying up to $2,100 more in interest charges.

Getting the Right Deal:

For many of us, automotive finance is necessary to purchase a new or pre-owned vehicle. Fortunately, there are a number of ways to avoid paying over the odds and securing a great deal. It is important to obtain quotes from automotive finance services specialists. There are reputable brokers who can assist you in searching the marketplace for deals on offer from these industry specialists. This can help you to avoid paying the excessive charges and rates offered at high street banks and dealerships.

It is also important that you consider the long-term financial implications of your decision. While it may be possible for you to secure a car loan for a higher amount, you will need to assess the affordability in the long term. You will need to consider that you will be required to make a monthly payment for typically five years, so even stretching your finances by ten or twenty dollars a month can make this unfeasible in the long term.

If you are in need of automotive finance, contact us. We can offer access to great deals on automotive financial solutions through our panel of specialist lenders. Our advisor team would be happy to discuss your requirements and help you to source the deal best suited to your particular circumstances.