Death, taxes, COVID-19 and now interest rate rises – there are things that are virtually impossible to avoid. Or are they? Vaccinations are provided as a level of protection against coronavirus or at least the worst symptoms and outcomes. When it comes to the looming interest rate rises this may seem an inevitable occurrence. But fixed interest rate loans on consumer goods and business assets can provide insurance that rates and repayments won’t increase as the RBA lifts the cash rate.
We provide important information on what personal loans and business finance can be secured with a fixed interest rates and how both individuals and business owners can work to achieving the cheapest fixed rate loans. Loans and finance to purchase cars, motor vehicles, trucks, caravans, motorbikes, boats and a wide range of business plant, machinery and equipment.
Differentiating Interest Rates
Any discussion of general interest rates and especially the current discussions in media should start with differentiating between a few key concepts: fixed and variable interest rates and the home loans and loans for consumer goods and business equipment.
First variable interest rates v fixed interest rates. A fixed rate on consumer goods loans and business asset finance means the rate remains fixed for the loan term. A variable interest rate means that the lender can increase or decrease the rate on the loan in line with changes to say the cash rate or their own internal policies.
Now to point out some key aspects of home loans compared with other popular types of loans and finance. Home mortgages are the loans that are most in the spotlight and discussed in media reports in the conversation about interest rates. That’s because the home mortgage market is the largest lending sector and changes to rates impact a lot of households. But home loans are structured quite differently from the types of loans which are offered here through Jade Finance.
Fixed rate home loans may only have the fixed interest rate for a few years after which the borrower must renegotiate or the rate may revert to a variable rate and as such vary with market movements. Hence the phrases ‘fix your rate’ ‘lock in your rate’ and ‘look to change your rate’. As rates have decreased and not increased over the past 12 years, this has been regularly heard.
So when hearing general talk about interest rates, listen carefully to ensure the conversation relates to the type of finance or loan that you have or are interested in applying for.
Our Loans that Attract Fixed Interest Rates
Jade Finance offers fixed interest rates across many of the personal loans and business finance products in our portfolio. When a fixed interest rate is secured for these loans that means that the rate will remain unchanged at that level for the entirety of the loan period. That means that the rate and the repayments will be same for the whole term and no action, except meeting the repayments, needs to be taken by the borrower.
Fixed interest rate personal or private loans are available for:-
- Secured Car Loan
- Secured Motorcycle Loan
- Secured Caravan Loan
- Secured Boat Loan
Unsecured Personal Loans to purchase these types of goods may be secured at either a fixed or variable rate. This type of loan may be sought where our lender does not accept the goods being acquired as suitable security for a Secured Loan or in situations where the goods are not offered as security. These situations may occur with share boat or shared caravan purchases and for some used goods.
Fixed interest rate business finance is available for:-
- Chattel Mortgage for motor vehicles, trucks and all types of business equipment.
- Lease for motor vehicles, trucks and all types of business equipment.
- Commercial Hire Purchase for motor vehicles, trucks and all types of business equipment.
- Rent to Own Finance for trucks and some types of business equipment.
Commercial finance products such as Business Overdrafts, Insurance Premium Funding, Secured and Unsecured Business Loans and Debtor Invoice Funding can also be secured at a fixed interest rate.
Fixed interest rate loans are particularly important in a rising rate climate. The RBA may increase the cash rate on several occasions during this and next year. When a fixed interest rate loan is secured the borrower will not be impacted by rises that happen after they have secured their finance.
Fixed rate finance not only prevents repayments increasing it also provides essential certainty and confidence. Confidence to proceed with planning other acquisitions and budgeting for household and business expenditure moving forward.
Achieving the Cheapest Fixed Rate Loan
So we’ve made the case for securing fixed interest rate loans. Now, what can be done to achieve the cheapest fixed rate loan amidst possible RBA rate increases?
Here’s our tips and hints:-
- Maintain a good credit score. Refer to Moneysmart for how to access a copy of your report and fix any errors.
- Keep the personal and/or business balance sheet in good order. This can include reducing debt levels by paying down loans prior to applying for new finance.
- Focus on repayments as the cheap element rather than always on interest rates. The repayments can actually mean more than the rate. Use our calculators and play around with varying the loan amount and loan term to see which is the best combo to get the target repayment.
Top tip – utilising our finance broker services to access a vast lender market and have professional finance experts source and negotiate your loan offer.
Contact Jade Finance 1300 000 008 for a quote on a fixed interest rate loan for your next major purchase.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.