Car loans churn through Aussie household budgets
Article by Roisin Kelly-Goldsmith
Car loan repayments make up the largest portion of what Australian households spend on transport each year, revealed the Transport Affordability Index.
The Australian Automobile Association (AAA) used ABS data to develop a hypothetical average family for the Index, which included a couple on separate incomes with two children, and two cars in the driveway. It was designed to help the public understand how much getting around really affected their hip pockets.
“Australians know transport is expensive, but they might be surprised to know just how expensive,” said AAA Chief Executive, Michael Bradley.
Bradley added that “around 13% of an average household budget in most capital cities is spent on transport, which is remarkable when you consider that electricity, water and telecommunications costs account for only one to three percent of income combined.”
While car loan repayments were the biggest money drain in transport costs for households, the Index listed fuel, public transport and licencing close behind.
According to the report, Sydney families are burdened the most by the cost of transport and fork out around $420 per week just to get around.
If you liked this, try reading: ASIC's MoneySmart app reveals true cost of a new or used car
If your car loan repayments are putting a dent in your family budget, you may want to consider refinancing to a more competitive loan.
For instance, say you had a secured $30k car loan with one of the big banks on a five year contract. Based on one big bank’s car loan comparison rate at the time of writing, you would be handing over $631 each month to pay it off.
But if you switched to the lowest car loan rate currently on our database offered by Loans.com.au, thanks to the lower comparison rate of 5.24%, you would be paying $569 each month. That’s a $62 difference, and over 12 months, would save you almost $750!
If you’re in a situation like this right now and want to switch loans, take the next step by visiting Mozo’s car loan refinancing hub.