Picture this: You’re about to buy a car and you need to apply for finance. You’ve got your paperwork in order, you’re almost ready to get started…you’ve just got one final question: Can you negotiate your car loan interest rate?
Would You Try to Negotiate Your Car Loan Interest Rate?
Despite our love of a bargain, Australians are surprisingly shy when it comes to asking for a better deal. Research shows that only 1 in 3 Australians will try and negotiate on price when buying a new car, and many will automatically accept whatever interest rates their dealership is offering. However, asking for a lower rate could save you a significant amount of money.
Understanding the Average Car Loan Interest Rate
Why is it important to understand the average car loan rate, as well as the interest rate being offered by the lender? Staying informed about average rates will allow you to assess whether or not the loan you’re being offered is a good deal. Researching and staying updated on interest rates will empower you to make informed decisions and secure the most competitive financing options available.
What Factors Influence Car Loan Interest Rates in Australia?
Car loan interest rates in Australia are generally influenced by a range of factors, including:
- Market conditions
- Lender policies
- The official cash rate set by the Reserve Bank of Australia (RBA)
- Current inflation levels
- Lender competition
The interest rate you’ll be offered by a lender will also depend on borrower-specific details, such as:
- Your credit score
- The size of the loan
- The length of the loan term
- Your home ownership status
- The specific car you are looking at purchasing
Can You Negotiate Car Loan Interest Rates?
The good news is you can negotiate for a better car loan deal! What steps can you take to ensure your current car loan interest rate is a competitive offer?
1. Improve Your Credit Rating
You can do this by paying your bills on time, reducing your credit card limits and paying off any unnecessary debt. A good credit score will give you improved bargaining power when it comes to negotiating for a lower interest rate.
2. Negotiate Directly With the Lender
Sometimes, this can be as simple as comparing loans from multiple lenders and then leveraging competitor offers to secure a lower interest rate from your preferred lender. However, not all lenders will be willing to negotiate directly with borrowers. Even if a lender is willing to discuss rates, it can be difficult to negotiate effectively without a comprehensive knowledge of the industry.
3. Ask a Broker to Negotiate For You
Having a car loan broker negotiate on your behalf is your best option for securing a competitive interest rate. A broker will not only have expert industry knowledge, but they’ll also have access to a wide panel of lenders. This means that they can leverage existing professional relationships to ensure you’re getting the very best car loan deal to suit your needs.
How Much Could You Save on Your Current Car Loan Interest Rates?
You could save a significant amount of money by having a broker negotiate on your behalf. On any given day, lenders will typically be offering a wide range of interest rates to new customers. In April 2024, when comparing advertised rates from around 80 different lenders, the difference between the lowest rate and the highest was 6.45%! On a $30,000 car loan with a 5-year term, that difference could work out to be thousands of dollars over the life of the loan.
Muscle Money Can Help You Negotiate a Lower Car Loan Interest Rate
Ready to secure a new car loan? Don’t miss out on the best value car loan interest rates! For expert industry knowledge and superior bargaining power, contact Muscle Money today. With our expertise and industry connections, we’ll negotiate on your behalf to ensure you get the right loan to suit your needs.
Don’t settle for less—contact Muscle Money now for a competitive car loan interest rate!
Caleb Waye-Harris, Senior Manager of Asset Finance at Muscle Money, has almost 15 years of relevant experience in the finance industry. His extensive background includes project management, consumer and commercial lending and asset-based lending.
