Used Car Loans: Used v New Considerations

Buyers wanting to buy a brand new car right now are facing challenges created by problems in the supply chain. Problems around the pandemic in key overseas manufacturing hubs, a global shortage of computer chips and more recently shipping issues are have serious consequences for the new motor vehicle market here in Australia. Demand is outstripping supply for some new vehicles and that has many turning to the used car market. Before making the purchase decision on a used car, Jade Car Loans provides prospective buyers with information on used car loans and other used v new considerations.

Motor Vehicle Market: Current Issues

As mentioned, the pandemic caused shutdowns in some overseas factories to be further exacerbated by the micro-processor shortage. The overseas production delays have flowed onto local dealers facing delays in filling their own orders for new cars with reports of several months’ wait on some popular vehicles.

With the predictions that the global supply chain crisis may extend well into 2022, new car buyers who do not want to wait are of course considering used cars. So as the theory of economics goes, as demand increases the prices of used cars has increased significantly. The soaring prices in the second hand car market have been a focus in the media lately and some of the comparisons with new car prices is quite eye-watering.

The decision over buying a new motor vehicle or a second hand model often comes down to personal preference. There are those that always buy new and those that see better value in a second-hand car. Jury’s out on that one! We provide finance for both new and used vehicles for both personal use buyers and those buying a business vehicle.

Used Car Loans and Finance

Comparing the purchase price of a used car to the newer model may be a key buying decider. But if you can’t take delivery of the new for several months and you need a new vehicle, the next issue to consider may be the finance available for used cars.

Here are a few key points to keep in mind:-

  • Motor vehicle finance interest rates as displayed by banks and lenders are for new cars unless it is specified that the rate applies to used goods. We can achieve cheap interest rate finance on used cars but all applications are assessed individually.
  • When assessing new car loan applications, the main priority for lenders is the risk assessment of the credit profile of the applicant. But when it comes to used car finance applications, the age and condition of the car and the loan amount being requested will also be taken into consideration.
  • Used car loans may differ from new car loans in the loan amount approved. With prices of cars in the second hand market soaring, the price being asked may exceed the industry valuation of the vehicle. This may impact the loan amount being requested. Lenders may request that the loan total be reduced for the finance to be more in line with the valuation.
  • To attract buyers, second hand motor vehicle dealers that have a financing connection often display a ‘price per week’. That ‘price’ referring to the loan repayments. When contemplating auto dealer finance it is strongly advised to check the interest rate including the comparison rate for consumer loans and ask us for a quote to compare. We can provide you with a quick quote so as not to lengthen the buying timeframe.
  • Securing pre-approved used car finance prior to heading out to visit dealerships can place buyers in a good position to commit to the sale and hence not miss out when stock is limited.

Heads-ups for Used Car Buyers

If you are usually a new car buyer that has turned to the used car market or this is your first car purchase, we offer a few alerts to stay across during the process.

  • If buying online or from a private seller, refer to ScamWatch to update yourself of what to watch out for. An uptick in online fraud has been identified as a result of lockdowns and more people buying via online platforms.
  • Checking vehicle ID through REVs and the PPSR regardless of the seller – dealer or private, is always advised. When using Jade to source your used car loan, your consultant will do many of these checks through our motor vehicle lending industry resources.
  • Motor vehicle dealers should be licensed and display their credentials.
  • Get a vehicle inspection from a reputable expert of motoring body.
  • Check Red Book for a valuation to ensure the price being asked is reasonable.
  • When returning to actually pick-up your purchase, do a thorough inspection to ensure that no features such as accessories or the tyres have been changed since the time you first saw and paid the deposit on the car.
  • If possible, request service records. Research the make/model online to try to get an idea of what parts/components may need replacing in the near future and what, if any, problems are typically encountered with the vehicle. This may give you an idea of what repair and servicing costs you could be in for ahead.
  • Check the warranty and be clear as to what you are covered for and for how long.

There are some great value and great quality vehicles in the used car market. Many companies, car rental companies and government departments regularly upgrade their fleets and on-sell the vehicles. These can be in very good condition and well-maintained and make good second hand car buys.

So if you can’t wait or don’t want to wait for your preferred new vehicle to be available, speak with us to secure a pre-approved used car loan and head to the used car market to secure your new vehicle.

Contact Jade Finance by phone 1300 000 008 for used car loans