Thursday’s rate cut by the Reserve Bank of Australia (RBA) left the official cash rate at a historical low of 0.25%. It was also the first out-of-cycle rate reduction since 1997. But the RBA wasn’t the only one dropping their rates last week, with two of Driva's key lenders also announcing a reduction for the first time this year.
Here’s what’s changed, and what it means for you:
The cash rate, which is the cost at which banks can charge or borrow funds, is now at a record low of 0.25%.
Broadly speaking, this means lenders can access funds more cheaply. The government encourages lenders to pass on these savings to customers in turn, which means less interest and lower monthly repayments.
Unlike mortgages, there’s often a fairly long delay between cash rates dropping and car loan rates changing. However, last week, Macquarie and Firstmac slashed their rates. This means any new loan written through either of these lenders would have lower monthly repayments than loans originated previously.
If you’re looking to finance a new vehicle, there’s no cheaper time than now.
Consider a borrower looking to finance a $30,000 car loan over a 5 year period with Macquarie.
Because of rate drops introduced at the end of last week, this customer will pay $1,390 less interest over the life of the loan than if they had opened the loan the week before.
For those that already have a car loan and are looking to take advantage of new rates, Driva’s smart loan matching platform can help! Simply enter the details of your existing vehicle and outstanding loan amount to see how much you could be saving on your existing monthly repayments!
Whether you’re thinking about financing a car, or already have a loan, now could be a good time to revisit your finance options. To find your best loan offers or to see if you’re eligible for a lower monthly repayment on an existing loan, use our obligation-free loan matching tool or contact us.