Personal loans fuel new car sales

Aussies wanting new cars are applying for personal loans in their droves, according to a new report.

With the car market sitting a healthy 3.6% higher than this time last year, with small to medium SUVs growing at over 20%.

FCAI chief executive Tony Weber said yesterday that vehicle affordability is at an all time high – and the marketplace is certainly listening.

Alex Scriven, from new banking service .act, says low interest rates on personal loans and a hyper-competitive finance market sees unsecured personal loans a popular choice with buyers – particularly those buying small, relatively inexpensive vehicles.

Electric cars are also becoming a popular purchase with customers taking up this type of loan.

“With the costs of electric cars due to come down, potentially in conjunction with loan rates, it’s easy to see a situation where people are strategically buying cars and energy systems in one transaction, but right now, you could split your transaction in two: one loan for the energy system and one for the car,” said Scriven.

“If the electric car was purchased at a price comparable to an internal combustion car, then the savings made on servicing and fuel could be used to repay the finance faster. There are so many new technologies changing the way that we live and financial service firms can play a really meaningful role in the uptake of these technologies. We may see a situation where mass utilisation of new financing solutions assists a rapid, customer driven shift,” he said.