Is your car costing you more than you think?
With great power comes great responsibility - and with a great car comes even greater expenses. Contrary to popular belief, filling up petrol isn’t the biggest weekly expense for car owners, and neither is the cost of a car loan - for drivers on a good deal.
The stinger for most drivers is actually the cost of depreciation, which can add over $100 a week to the cost of owning a car, according to RACQ research.
Australia’s best-selling car, the Toyota HiLux dual-cab ute, showed depreciation of more than $106.46 a week. The next biggest cost was registration, insurance and license fees clocking in at about $45 a week.
Comparatively, the RACQ report revealed that car loan interest, based on a 5 year loan at a fixed interest rate of 6.17% with a $395 establishment fee, averaged out to only $34 a week.
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“While this is a relatively low, accessible cost, keep in mind this is based on interest only, whereas with a normal loan you’ll be paying both principal and interest,” said Mozo Data Manager, Peter Marshall.
RACQ head of technical and safety policy Steve Spalding said that it’s important to shop around and know what to look out for when car shopping.
“Drivers can save a lot of money by making informed choices when buying a car,” said Spalding.
Marshall agreed that people needed to be smart about their options when buying a vehicle, including financing the purchase.
“With budgets getting tighter and tighter, it’s important for people to shop around and make sure they’re not paying more than they have to on necessities such as a car, and that means finding the right car loan.”
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In fact, we crunched the numbers in Mozo’s car loan repayment calculator, and found that by comparing rates, Aussies could save staggering amounts on their new car loan.
For example, if you went with the average car loan interest rate of 7.55%, you’d pay $92 a week (principal and interest) on a $20,000 loan over 5 years. However, if you opted for the lowest car loan rate in our database, Community First's 5.34% p.a. New Car Loan, you’d only be paying $88 a week. That’s a saving of $4 a week, working out to $1,213 over the life of your loan.
So, if you’re after a new set of wheels, make sure you’re getting a competitive deal on your car loan. Check out Mozo’s car loan comparison table for competitive interest rates side-by-side. If you’ve already got a car loan and are looking to trade it out for a better interest rate, our switch and save calculator will help you figure out much you might save on repayments.