Car interest rates around the world
Curious about the cost of car finance in Australia? Here's how a typical Australian car loan interest rate compares on the world stage.
|Country||Currency||Example car loan interest rate*||Financial institution|
|Canada||CAD||7.50%||Canadian Western Bank|
*These rates have been collected using public information available from major financial institutions in each country. They do not necessarily represent the lowest, highest or average interest rate available for that country. Verified correct March 16, 2016.
Aussies may not have the lowest car loan interest rates – but we are still far from the most expensive! Some of the countries with the most expensive interest rates include Venezuela, Ukraine, Argentina and Brazil.
Australia's car loans seem pretty cheap when compared to rates of up to 30%!
Most countries have a central bank that will attempt to influence interest rates. Specifically, central banks set the cash rate – the rate of interest charged to commercial banks – as a mechanism for managing the economy.
This means that if the RBA sets a higher rate, it is expected that banks will also raise interest rates on everything from home loans, personal loans and car loans.
What are other costs of car finance?
Of course, not everyone can access the same car loan interest rate. In Australia, banks look at each car loan application to determine whether finance is appropriate and what rate is suitable.
Some things that affect the cost of a loan include:
- Credit history – Banks charge higher interest rates to customers who pose as a greater default risk. A credit history makes up part of this assessment – that’s why bad credit car loan interest rates are often higher.
- The car loan type – Most car loans are 'secured' car loans. That means that the lender has the right to repossess the vehicle if the borrower defaults on the loan. This reduces the risk to the lender, and therefore the interest rate charged.
- Other fees – There are other costs associated with a loan, including establishment fees and charges for early repayment or termination. Be sure to compare loans using the comparison rate, and review any potential fees.
Is shopping for a car loan as simple as comparing rates on a comparison site? In short, no. Without the context of your financial situation, the interest rates displayed on comparison sites can be irrelevant. It may be possible that you can access a lower rate.
A finance broker is an alternative way to find a competitive car loan. A finance broker is a type of specialist that looks over your situation and recommends a financial product matched to your needs. They can even negotiate with lenders to open up additional options and deals for their clients.
How to get a cheap car loan deal in Australia
If you want a low rate car loan, there's not much you can do about economic factors. But there are some things that you can do about your application. If you're looking for a low interest rate, the following tips will help you on your search:
- Check your credit history – Know what you're working with. If you have a bad credit history, then this will affect how you approach your car loan. You may need extra help if your situation is complicated.
- Compare loans – Shop around to make sure that you understand the range of options available to you.
- Get only the features you need – Need the flexibility to make early repayments? Finding a car loan with the right feature set will pay off later down the track.
Let’s help you find a great car loan
If you're looking for a car loan, we could help you find a great deal. A Rapid Finance car loan specialist has access to a range of car loans for almost any situation or circumstance, including a bad credit history.
Call the Rapid Finance team on 1300 467 274 today.