Depending on the person, buying a new car represents a milestone and some added responsibility. And according to recent numbers from the Australian Bureau of Statistics (ABS), many Aussies met that milestone in 2017.
Vehicle sales rose by 4.5% in December and was recorded as the biggest increase in almost six years.
According to CommSec, a combination of improved vehicle quality and affordability was the reason for the jump in sales.
Surprisingly, car sales also outnumbered home loans in 2017, with around 100,476 new cars being sold each month, compared to 86,250 home loans.
And if you’re wondering which car came out on top as the most popular, it was the family-friendly SUV, with approximately 42,240 being sold in the month of December.
Overall, Victoria saw the biggest jump in the number of cards sold followed by New South Wales, South Australia, Queensland, Tasmania and in the Northern Territory, while sales in Western Australia and the ACT dropped.
If you’re an Aussie who thinks 2018 is the year to make your motorhead dreams come true with a new car, you might be thinking about getting a car loan. Similar to a personal loan, a car loan allows you to borrow money from a provider and pay it back over time. But before you begin searching for the perfect deal, here a few things you should know about car loans:
What are the types of car loans?
- Secured loan - A secured loan involves using an asset as security on the loan. Depending on the provider, you can offer your home or even jewellery. A secured loan also means lower interest rates and fees and is a great option for Aussies looking to borrow a generous amount of money for that Sports Car they’ve always dreamed of. However, if you start to default on repayments, your lender does have the right to take possession of your asset.
- Unsecured loan - On the other hand, an unsecured loan does not require any security so you won’t feel pressure about missing any repayments. However, if you are applying for an unsecured loan, you’ll need a good credit rating and secure employment as your provider will assess how much of a ‘risk’ you are.
What features should I look for in a car loan?
- Extra repayments - Being able to make extra repayments on your loan will help pay it off faster. However, some providers may charge for you for doing this, so it’s worth taking the time to shop around on car loans before taking the first offer you see.
- Redraw facility - If you’ve made extra repayments on your loan or have repaid a large portion, a redraw facility allows you to redraw the money. This feature can come in handy if you’ve suffered from sudden injury or received an unexpected bill.
- The loan term - This will depend on the type of car loan you choose, for instance, a secured loan can range between 1 - 15 years, while an unsecured loan is usually between 1 - 7 years.
Are there any fees with a car loan?
- Application fee - This is a one off fee you’ll pay once you start the loan and can also be referred to as a ‘start-up fee’.
- Break cost fee - You may be expected to a fee if you pay off the loan in full before the loan term.
- Ongoing fee - Also known as a maintenance or annual fee and is paid during the loan.
- Discharge fee - A discharge fee occurs at the end of the loan that is put towards terminating your account.
- Laye payment fee - If you miss a payment, you’ll be charged a late payment fee.
- Early payout fee - This is a fee charged if you default, transfer or pay off your loan before the loan term.
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