What COVID-19 means for car buyers (past and present)
The World Health Organisation (WHO) has officially declared COVID-19 a pandemic of global concern, and the impact it is having on everyone’s ability to live their daily lives is unprecedented. But the pandemic isn’t just a global health risk, it’s putting jobs and livelihoods at risk abroad and at home, and this can make it especially difficult for those that are paying off any kind of debt. This includes car loans.
If you have an existing loan and are struggling to meet repayments because of changes to your circumstances, or need to purchase a vehicle to continue going about your daily life, here’s what you need to know:
The past: already have a car loan and wondering what COVID-19 might mean for you?
Our lenders are supporting those suffering financial hardship
Lenders have long-held policies in place to provide assistance to individuals experiencing financial hardship, and this extends to those who have had their circumstances adversely changed as a direct result of the virus.
While most Australian lenders are yet to come out with official responses to the outbreak, internationally, banks are offering financial relief to COVID-19-affected areas by halting repayments.
Depending on your personal circumstances, your lender may be able assist in a number of different ways, including:
- Deferred loan repayments,
- Waived fees and charges,
- Interest free periods or no interest rate increases, and
- Debt consolidation to help make repayments more manageable.
If your circumstances have adversely changed as a result of the virus, contact your lender directly and they may be able to help.
Will the RBA rate cuts be passed on to my next car loan?
At its March 2020 meeting, the Reserve Bank of Australia (RBA) decided to cut the nation’s cash rate to a new record low of 0.50 per cent and some experts are speculating that the cash rate will be cut again this week.
But what does this mean for the cost of car loans?
While most Australian lenders immediately passed the full rate cut on to mortgage customers, car loans, credit cards and other personal loans generally don’t feel the impact of the cuts for at least several months. Car loans are also a fixed rate product, which means the rate remains constant over the entire life of the loan.
This means that lower interest rates will not be passed on to existing car loan consumers, and probably won’t impact the rates for new customers for some time to come.
There is some good news that’s emerged in recent weeks though, with two of Driva’s key lenders having dropped their rates.
While unrelated to coronavirus or recent rate cuts, this means that Driva’s new starting rate is just 4.47% for eligible applicants, and is lower across the board for customers of most credit score tiers.
Refinancing an existing car loan can help you make the most of the rate cuts
Since car loans are a fixed rate product, you naturally won’t benefit from the rate reduction without refinancing your loan.
When you refinance, you replace an existing loan with a new loan that pays off the debt of the old loan. The new loan should have better terms or features that improve the overall cost of the loan.
If you already have a car loan and want to make the most of this rate cut, you can use Driva car loan quoting tool to see if you’re eligible for lower monthly repayments.
The present: what the outbreak means for those that need to buy a car right now
Car dealerships and lenders are still operating as usual
For Australians still in need of a new vehicle or those part-way through the car buying process, vendors are still operating as usual.
Car dealers and lenders continue to be open for business, and while the responsibility lies with every Australian to participate in social distancing where possible, we know the needs of everyday workers and families for a reliable and safe means of transport will continue.
With rates reduced across some of Driva’s key lenders, you’ll also likely be able to finance your vehicle at lower rates than before.
You can purchase a vehicle without leaving your home
Driva has partnered with one of Australia’s largest car fleet providers that use their purchasing power to buy new cars at a price that is normally only available to companies who purchase hundreds of vehicles each month.
This means that you can secure your new vehicle at a great price and get it delivered, all without having to leave your home.
If you want to hear more about how COVID-19 is impacting your next car loan, please feel free to reach out to our team on 1300 755 494 or send us an email at info@driva.com.au
