How Brokers Can Help With A Car Loan
With rising interest rates dominating the headlines, it’s not an ideal time to be in the market for a car loan – unless you have the right help with a broker.
Although an interest rate rise of 1% looks relatively small on paper, it’s important to do the maths and have a full understanding of how these changes have the potential to impact your day to day life. As an example, for a homeowner with a home loan principal of $500, 000 can expect to pay an extra $269 per month if the interest rates increase by as little as 1%.
However, it’s not just the real estate industry that’s affected by rising interest rates, as these fluctuations will influence almost any type of loan, including car finance. While the prospect of getting a new car is exciting, many people just want the process handled quickly and avoid doing their due diligence on the best car loan rates.
In contrast, the alternative is enlisting the services of a car broker. Although there’s a common misconception that the services of a broker are exclusive to mortgages and home loans, an appropriately qualified broker will often cover car finance as well.
Sourcing The Best Car Loan Rates Through A Broker
When you’re a customer in a complex market, the process of obtaining finance for a car loan is more supply driven than demand driven. That is as a buyer, all too often you are forced to deal with what is being offered, rather than taking charge and settling on the type of finance that you actually need.
When shopping around for the right car loan, it’s important to note the key points of difference between financial products with the most common being secured and unsecured car loans. A secured loan is when your purchase acts as security against the loan, and means that if you default on your payments, the lender has a right to seize your car. In contrast, an unsecured loan will often only be issued under certain circumstances. Even then, they often come with a higher interest rate and uncompromising repayment period.
For those wondering what car loan rates look like at the moment, data from April 2022 shows that the average annual percentage rate (APR) was 4.7% for new financed vehicles, and 8.0% for used vehicles. While that’s largely unchanged when compared to the last few years, the tide will inevitably turn once the Reserve Bank starts to pass on further interest rate increases.
The key benefit of using a car broker is usually sourcing favourable interest rates and loan packages that best fits your circumstances. Even a savings of 2-3% of a car loan over a five year loan period can reduce your payments significantly, let alone if you are able to package your new car loan with your existing mortgage or home loan product.
In addition, using a broker for car finance is also usually a free service. Most forms of finance brokers don’t charge customers for help with finding the loan with the most competitive rates and repayments. Instead, the broker is paid directly by the lender of choice, meaning the benefits of using a broker don’t come as an extra charge in what is already an expensive exercise.
Aside from servicing standard vehicle purchases, car loan brokers can also help with buying an electric car. While not everyone has the budget for a brand new Tesla, skyrocketing fuel prices and the need for a greener planet has seen an uptick in electric car purchases in Australia. While they may function completely differently when compared to their predecessors, a car broker can also help with these new age automobiles as well.
For those getting ready to purchase their first home, refinance their existing one, or even those looking for help with a new car loan, it should come as no surprise that six in ten Australians are now working with a broker for help in navigating the world of finance – but where do you find one?
Partner With Personal Finance Experts
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
Relentless in their pursuit of gold star customer service, the team at Madd have now expanded their services to include end to end financial planning. Through Madd Life, the aim is to collaborate with clients to identify long term goals, and transform them into a road map.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd proudly work together as a collective to turn your goals into reality.
