Finder’s latest analysis of ABS data has found that Australians borrowed $8.1 billion in car loans last year.
According to the market researchers, 1,175,908 new cars were sold in the 12 months to November 2018, with 19 per cent attached to car loans.
With the average new car loan interest rate close to 6.3 per cent and the average financed car purchased for $36,139, this means that an estimated $513 million will be paid in car loan interest in 2019.
Graham Cook, insights manager at Finder, said the figures suggest a new car is bought in Australia every 27 seconds and a car loan is taken out every 2.5 minutes.
“It’s mind-blowing to think that more than $1.4 million in interest is paid back on these new cars every single day. That’s around the same value as 39 new cars,” he said.
He recommended Australians conduct thorough research before taking out a loan, to assess whether the terms are right for them.
“Learn about the car loan rates available online before you go to buy, and remember that in all financing matters, knowledge is power – use it to improve your personal situation,” he said.
He said Australians interested in taking out a car loan should understand that a cheaper interest rate does not necessarily equate to a better deal.
“It is possible for the cheaper rate to cost you more if the upfront or monthly fees are higher,” he said.
He advised that prospective borrowers consider looking into the range of interest rates available on the market, negotiating with their preferred lender and/or borrowing less if they are certain about adopting a car loan.