Car Cash
Sydney Morning Herald
Wednesday June 4, 2003
Leeanne Bland looks at a competitive loan for new motor vehicles.
What it is Community First Credit Union's New
Car Loan.
How it works It's a dedicated car loan that's available for a minimum loan amount of $20,000 and a maximum loan amount of $60,000. Borrowers are not required to put down a deposit, and no security is taken over the vehicle or any other asset.
What it costs It carries an interest rate of 7.2 per cent. This can be fixed for a term of one to five years. It has no early repayment penalties, no establishment fees and no account-keeping fees.
The Pros The interest rate is competitive and it would be hard to find another lender offering a similar car loan at this rate. No deposit is required and the loan is unsecured. This makes it a good option for those who want to buy a car now, but don't have a deposit or any other assets to use to obtain a secured loan.
The Cons It only applies to new cars with a minimum loan amount of $20,000. This will eliminate consumers who are too tight-fisted to buy a new car or can't afford one. It's worth noting that Community First also offers a Cash Car Loan, available for amounts from $5000. It carries a fixed interest rate of 9.5 per cent.
Where it fits in Community First says it's the largest community-based credit union operating throughout the Sydney region. Research company InfoChoice (www.infochoice.com.au) reports it's the cheapest unsecured car loan on the market. It says the next cheapest comes from National Australia Bank, with a five-year loan rate of 9.64 per cent.
Keith Delaney, the chief executive of Community First, says its low interest rate has attracted interest from both women and men who want to purchase new vehicles but not wanting to enter into less flexible finance arrangements with car dealers.
"Many people spend a lot of time shopping around to get the best deal available when purchasing a new car, but they fail to shop around to get the best deal on their car finance," he says.
It's worth noting, however, that if you're prepared to use the vehicle, or some other asset, as security, there are loans at an even cheaper rate available on the market. One comes from Community First. InfoChoice says it offers a secured car loan with a rate of 6.55 per cent. Meanwhile, CUA offers a rate of 6.95 per cent to borrowers with security and a 20 per cent deposit. InfoChoice advises this loan rate is available only for a limited time.
© 2003 Sydney Morning Herald
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