Driving away with debt: Australians shelling out $8 billion in car loans - finder.com.au
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Driving away with debt: Australians shelling out $8 billion in car loans

    • More than $513 million will be paid in car loan interest in 2019
    • 1 new car sold every 27 seconds last year
    • Tips to help you save on a car loan

24 January, 2019, Sydney, Australia – Aussies’ love affair with new cars is coming with an eye-popping price tag, according to new research by Finder, Australia’s most visited comparison site.

Finder analysis of Australian Bureau of Statistics (ABS) data found that $8.1 billion was lent against new cars in the past 12 months.

With the average new car loan interest rate around 6.3% and the average financed car selling for $36,139, Finder estimates $513 million will be paid in car loan interest in 2019.

ABS data shows that in the 12 months to November 2018, there were 1,175,908 new cars sold and 19% had car loans attached to them.

Graham Cooke, Insights Manager at Finder said Aussies are buying a new car every 27 seconds, and taking out a car loan every 2.5 minutes.

“It’s mind-blowing to think that more than $1.4 million in interest is paid back on these new cars every single day. That’s around the same value as 39 new cars,” he said.

Luckily for Australians, motor vehicles have been gradually declining in price when you consider inflation.

ABS inflation data shows that a motor vehicle that would have cost $20,000 in the year 2000 has come down in price by around 16% and would cost around $16,753 in 2018.

“Cars have been gradually getting cheaper, and improvements in technology mean Aussies are getting more bang for their buck.

“If you can’t pay for your ride upfront, a car loan can be a useful tool. Just remember that each optional extra you add will increase the overall price and the amount of interest you pay over time,” he said.

Cooke said a little research can go a long way toward an informed decision.

“Learn about the car loan rates available online before you go to buy and remember that in all financing matters, knowledge is power – use it to improve your personal situation,” he said.

Car loans for a $36,139 vehicle and monthly repayments over 5 years

Car LoanInterest rateLoan termMonthly repayment over 5 yearsTotal repayment over 5 years
Loans.com.auFrom 5.44% fixed3 to 5 years$696.93$41,816
Beyond Bank Low RateFrom 5.69% fixed1 to 7 years$696.83$41,810
IMB New Car LoanFrom 5.89% fixed1 to 7 years$701.64$42,098
RACV New Car LoansFrom 5.99% fixed1 to 7 years$706.21$42,373
CUA Secured Fixed Car LoanFrom 6.79% fixed1 to 7 years$717.24$43,034

Source: finder.com.au

Top tips for car loans

  • Cheapest rate isn’t always the lowest cost. You may think a low interest rate car loan is the best deal, but it is possible for the cheaper rate to cost you more if the upfront or monthly fees are higher.
  • Be aware of interest rates in the market. Take a few minutes and familiarise yourself with what interest rates are available from a range of lenders. This gives you a leg to stand on when you are ready to negotiate with your lender.
  • Negotiate a price with the seller. If you're keen to stay with your own bank or credit union for your car finance, take your interest rate information with you when you make your enquiries and ask the lending officer if there is any room to reduce the rate they offer you.
  • Borrow less. It sounds obvious, but if you can borrow even a little bit less on your loan, you won’t pay as much on your monthly repayments. Borrowing $5,000 over a 5-year loan term adds up to $1,000 per year extra you have to pay back. When you add the interest charged on that amount, this means approximately $100 per month out of your pocket.

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Disclaimer

The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.

About Finder

Every month 2.6 million unique visitors turn to Finder to save money and time, and to make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.

Our free service is 100% independently-owned by three Australians: Fred Schebesta, Frank Restuccia and Jeremy Cabral. Since launching in 2006, Finder has helped Aussies find what they need from 1,800+ brands across 100+ categories.

We continue to expand and launch around the globe, and now have offices in Australia, the United States, the United Kingdom, Canada, Poland and the Philippines. For further information visit www.finder.com.au.

12.6 million average unique monthly audience (June- September 2019), Nielsen Digital Panel

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