The number of Australians failing to keep up with their car loans will continue to rise, with those living in regional centres most likely to fall behind on their payments. A November report by Moody’s Investor Services found the average 30-day or more delinquency rate increased 1.18% in the year to September 30. “We expect delinquencies and defaults to increase moderately through the remainder of 2016 and in 2017, in particular in regions exposed to the slowdown in the mining sector,” says Alena Chen, Moody’s vice-president and senior analyst.
New-car sales in Western Australia have declined by more than 10% in the past two years. Roy Morgan research released last week showed the number of Australians intending to buy a new car within the next 12 months has fallen since the start of the year.
Amanda Varidel, Managing Director, says that while a car purchase is exciting (I should know as I recent purchased a new car myself), buyers should take steps to protect their finances and not end up as a statistic. Amanda said that “There is plenty of jargon around when it comes to the finance options with cars. It is important that you understand the terms of the contract you are getting yourself into. Is it a personal loan, hire purchase, or lease agreement?”
Amanda suggests that “you should shop around for the best loan, negotiate on prices and consider the tax implications of the purchase.”
Amanda Top Tips:
· Understand your cash flow to ensure you can afford the repayments over time. Consider the option of salary packaging which could provide tax benefits and balance out the running costs if you are a high income earner.
· Download the ‘Money Smart Cars App’ put together by ASIC, with tips and traps when buying a car.
· Take your time with the process. Don’t get caught up in the excitement of the sales experience.
· Shop around for the right loan and get the best deal on interest rates by using our services. We will get you a better deal!
· Understand the type of loan you are getting into, including fees and balloon payments at the end of the term.
· Delay the purchase to pay cash or a larger deposit to borrow less and make the long term cost more affordable.
· Seek out advice we are more than happy to assist in your journey.
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