Rising Interest Rates: What It Means For Your New Car

On the search for a new car?

Maybe you’re looking to go a little greener, or just need an upgrade on your older model. 

With inflation sparking massive changes to the cost of living, we’re all looking to make shifts that will help us in the long run. Finding a new, more fuel-efficient (even electric) car can be a great step in the right direction. 

The government is doing this in its own way too. You may have seen some jumps in interest rates over the last couple of months, in order to bring Australia’s economy back to pre-COVID levels, whilst mitigating the impact of inflation. This emergency record-breaking level was set in place back in late 2020 to establish more borrowing and spending across the nation – which kept the economy from toppling over the last couple of years. 

Now though, the cash rates of 0.15% have done their job and are returning to a more usual level. This is further accentuated by the need to slow economic spending and inflation – whereby interest rates are raised to make it more costly to borrow money. These two things paired together mean for some significant hikes in interest rates.  

Unfortunately though, this can make the journey of buying a car feel pretty overwhelming. With life and work, it can easily be put on the back burner, becoming a ‘one day’ kind of thing. 

This fear and concern often stems from one place inside our minds – a lack of understanding. We get it, we’ve all been there – it can be really difficult to make a confident and informed decision with so many things up in the air. So, we’ve got your back.

In saying that, we’re sure you’ll be thinking ‘what on earth do these interest rates have to do with my car purchase?!’

Well, according to the Governor of the Reserve Bank of Australia (RBA), Philip Lowe, these rate rises aren’t quite over. With inflation heading toward 7% by the end of 2022, Lowe highlights that rate increases help “chart a course” back to economic stability. When considering a car purchase, this means that repayments are likely to increase more as time goes by.

This means your power lies in making the decision to purchase a new car sooner rather than later. Ultimately, it will mean your repayments will be lower than they would be moving forward. Alongside this, the value of used cars is high, which means trade-ins have never been so cost-effective. 

So, at the end of the day, looking at buying a new car in the short term could allow you to avoid further rises in interest rates, whilst potentially helping you avoid paying more for fuel in your old car!

With over 40 lenders to choose from at Rostron Finance, we’re never short on options to find you the best deal that works for your unique circumstances.

Want to chat more about purchasing your next car? Feel free to give us a call on 1300 70 70 39  – we’d love to hear from you!