If you want to buy a used or new car, you usually have two routes to travel. You can either explore auto financing options and take out a car loan, or you can save up over time and buy a car with your savings.
Today, more and more Australian consumers are taking the first option and financing their vehicle purchases. But why are car loans growing in popularity here in Australia? The many answers to this question may actually surprise you, and this enlightening article will explore this topic in more detail, so continue reading to learn more.
So They Don’t Have to Wait
If you’ve ever been between vehicles, chances are you know just how frustrating it is to live without a car. In fact, most Victorian towns and suburbs are designed for car owners – so unless you’re living in Melbourne’s inner city regions, getting around without a car is likely to be a little difficult. That and out here in Euroa, the condition of country roads isn’t all that friendly for cyclists and motorcyclists either – or older vehicles, for that matter.
Thankfully, as long as car buyers have enough of a deposit saved up, they can get approved for a car loan as soon as their funds clear. This is instead of saving up the tens of thousands of dollars a new car costs over the years.
Once you’ve secured your car loan, all that’s required in the way of budgeting is paying off your loan each fortnight or month just as you would your rent or mortgage repayments. The ability to factor in car repayments alongside other monthly expenses allows single-income households and lower-income earners to buy the car they need for themselves or their family without having to compromise on safety, fuel efficiency, or other variables that impact their purchasing decisions.
So They Can Buy the Car they Want
Latest Stories
Historically, car buyers have had to wrestle between settling for a cheaper model or saving up for the one they’re really after – and potentially living without a car in the interim. The solution is to buy the car you’re after now without having to wait – and auto financing options allow precisely this.
With a suitable car loan, you won’t have to compromise on the car model you’re after, and you may even be able to make owning that vehicle far more cost-effective in the long term than if you were to make an outright purchase.
For instance, repayments on a $50,000 car loan might be $300 or so a fortnight—easily manageable for someone earning a decent wage. Simply put, instead of being locked into a price range that is dependent on their cash savings, finance unlocks the door to choice and control over what vehicle a consumer can purchase.
So They Can Buy a Car with no Deposit or more Financial Flexibility
Although car loans can require an upfront deposit, some car loan providers actually offer greater flexibility that allows Australian consumers to purchase a car using finance and without need for a larger down payment. For some people, this allows them to buy their dream car without having to stress about saving enough money for a deposit.
Similarly, consumers may also be able to find car loans with flexible payment plans that align with their own lifestyle and financial planning. If you love to budget, securing a car loan with payment schedules that align with your financial planning can help keep your weekly or monthly budgets in check over the long term.
With these attractive and accessible finance options, you can see why Aussies are flocking to take out a car loan that’s suitable for them.
So They Can Enjoy Lower Interest Rates with Secured Finance
Typically, an unsecured loan will attract a higher interest rate than a secured loan. A secured loan is when the borrower offers up an asset for security against defaulting on the loan. In the case of car finance, you can use the car you purchase as security against the loan.
This means that Aussie consumers can unlock lower interest rates and pass less interest fees on their car loan. The difference in interest rates can mean that an Aussie consumer will save thousands of dollars across the lifespan of the car loan. In this regard, car loans can actually be a lot less susceptible to rate hikes than, say, variable rate home loans.
So They Can Enjoy Tax Benefits for Business Use
Finally, there is a significant portion of Australia’s working population who relies on their car for work. For those of us who do use our cars to conduct business (i.e. to travel to callouts, make deliveries, operate as a rideshare driver, etc.), taking out a car loan can help you secure the vehicle you need to perform your professional services.
For instance, if you’re a tradesperson and you’re in need of a ute, you may be able to buy that business investment using car finance. Doing so can actually provide you with a few business tax benefits as well. In this case, the interest charged on the loan can be claimed on your business tax return, as well as the GST charged on the purchase and even the depreciation of that vehicle.
It’s important to keep in mind, however, that the proportion of expenses that can be claimed is dependent on the proportion of business use the vehicle sees. Some businesses will buy a whole fleet on finance, for this purpose and claim much back at tax time. However, if you’re only using your vehicle for select hours during the week and outside of these hours, the vehicle is used for personal purposes, then naturally only a portion of your operational costs can actually be claimed as business expenses.
Is a Car Loan the Right Investment for you?
In a nutshell, car loans allow Aussie consumers with the flexibility of choice to invest in a car that best caters to their personal or professional needs. Whether you’re looking for a suitable car for your family or a vehicle that can transport all your tools or equipment from job site to job site, millions of Aussie consumers simply cannot afford to compromise when selecting a vehicle that’s right for them.
If you want to retain the ultimate convenience, comfort, and safety of driving your own car, securing a car loan may support you in doing so. As is the case with all financial products, however, be sure to do your research on all loan providers and loan offers that are available to you. Doing your due diligence can help strengthen your chances of finding an auto financing option that works best for your personal and household budgeting.
