Post-Lockdown Lending Outlook

‘Life interrupted’ eventually appears to be coming to an end – at last! Vaccination rates hitting targets, restrictions being lifted, businesses reopening and time to start revisiting those ‘want’, ‘wish’ and ‘must have’ lists. Time to get out and starting checking out cars, boats, caravans and bikes to make those purchases you’ve have to put on hold.

For some, time could be of the essence as global supply chain issues are having impacts on stocks of some vehicles. In the leisure sector – boats and caravans, demand has been high for over a year and manufacturers have been working hard to meet buyer orders.

With no time to waste, many will want to get their loans in order before making a commitment to a purchase. Jade Finance provides an update on what to expect if you’re in the market for a personal car, boat, caravan or motorbike loan.

Interest Rates

Interest rates are central to the cost of a loan and in concert with the total amount borrowed and loan term, determine the monthly repayments. For many buyers, this is the figure that is most important – how much the goods will cost them each month. Interest rates vary across the different categories of consumer goods and across the lending market and are determined on a number of factors. These include particularly the credit profile of the loan applicant and the age and condition of the goods.

While interest rates on different goods and different types of loans vary across the lending sector – banks, finance companies, non-bank lenders, the lenders do have one commonality – their lending rates reflect changes and the level of what is known as the official cash rate.

The official cash rate is determined by the Reserve Bank of Australia (RBA) and, as a simplistic explanation, forms the foundation from which lenders establish the rates they offer on both loans and savings.

During the 2020 phase of the coronavirus pandemic, the RBA cut the official cash rate on a number of occasions as part of the overall policies to stimulate and support the economy. In November 2020 the rate hit a historic low of 0.1% and the RBA has left the rate on hold at that level since.

At the October meeting, the Board left their monetary policy settings in place again and once again established around 2024 as the timeframe they consider conditions may be right for a rate increase. The economic conditions they are seeking for this to happen are inflation around 2-3% and sustained in that range and both wage growth and unemployment to be improved on current levels.

What these historic low interest rates mean for those seeking finance are lower interest rate loans. Great news if you’re looking to make that major purchase! When checking out interest rates, you will notice there are two rates advertised for consumer finance – Advertised Interest Rate and Comparison Interest Rate. We have provided an explainer of the difference which you can review. In simplistic summary form, the Comparison Rate is based on a specific example of a loan for certain goods and includes fees and charges. Unless otherwise specified, most advertised interest rates for consumer loans are for new goods. Second hand goods may attract a different rate.

Fixed and Variable Interest Rate Loans

Interest rates can be fixed or variable. In the case of most secured loans for new goods, the interest rate will be fixed. That means the rate will stay the same on the loan over the entire time of the loan term. With our Jade Finance Secured Loans, we achieve a fixed interest rate and a fixed term so the repayments also remain constant until the loan is finalised. That provides our customers with confidence and certainty in managing their finances.

In some circumstances and for some, usually used, goods, customers may request an Unsecured Personal Loan. These can be secured with either a fixed or a variable interest rate. A variable rate may change over time. Changes may be in line with changes in the official cash rate.

So if you take out say a car loan in 2021 over 5 years at a fixed interest rate, in 2026 when the loan term is completed, your loan would still only be attracting the low rate achievable at this current time. Even if the RBA increases rates in 2024 your loan would remain unchanged.

Securing a Consumer Loan

If you’re planning to make that special purchase, you may like to arrange your loan prior to speaking with a seller and negotiating price. Knowing you have your finance secured and knowing for how much before selecting the make and model can be highly beneficial. Buyers have a budget to work towards.

Applying for a loan can be commenced before you commit to a purchase or after. Pre-approved loans are available across our portfolio and attract the same interest rates as loans that are arranged after a purchase commitment is made.

Our consultants make the entire process as simple and easy for our customers as possible. We do the heavy-lifting when it comes to sourcing the cheapest loan from across our vast selection of banks and lenders. We negotiate on rates and terms, get your application approval and assist with finalising settlement.

Applications can be made online or over the phone. To speed up the process, have your financial details including employment and income etc accessible to complete the necessary details.

No longer interrupted by lockdown – get online to our loan calculators and start working up repayment estimates on the car, boat, bike or caravan that you want. Or just give us a call for a low interest rate loan quote.

Contact Jade Finance by phone 1300 000 008 or online for a quote on a consumer loan for cars, boats, motorbikes and caravans.