Affordable Car Loans For Me
The good news is that according to the CommSec affordability survey, car affordability is at a 38 year high. What this means is that the average Aussie on the average wage would need to work for approximately 26 weeks to own a Ford Falcon XT. This is down from around 30 weeks just two years ago for the same worker. This golden time for affordability is due to the high Aussie dollar, stronger competition for car companies and also the increasing salary of Australian workers.
CommSec also notes that the average wage has increased by over 55% in the last decade whilst car prices haven’t risen above 10%, some vehicles have even dropped in price.
This isn’t to say you should rush out and buy a car that is out of your means. As a vehicle is a depreciating asset and often touted as the second biggest purchase of our lives (unless you own a grand piano), you should always be looking for ways to reduce the hit that you take from ongoing running costs such as fuel, maintenance, registration and insurance costs and don’t forget the interest that is a part of every car loan. Another consideration is your job security as falling behind on car loan repayments isn’t something that anyone would wish for.
But I want a luxury car as a status symbol!
If you can afford a luxury car, then we are envious of you. However, you might be surprised to see a study by Dr Thomas J Stanley that finds that “the median price paid for the most recent motor vehicle purchased by a millionaire was $31,367”. So, do you want to act rich or be rich?
So, how affordable are affordable car loans?
Well, don’t ask Joe Hockey…
There are many tips on the net that suggest you should spend a maximum of 20% of your income on your car payment. Other economists lean toward taking 1/6th of your monthly income and putting that toward your car loan repayments.
Although they are good food for thought, the above suggestions are quite general and don’t take into consideration the lifestyle of the individual. Some of us have ongoing gym memberships, multiple daily coffees, and mortgage repayments just to name a few. For this reason we recommend having a financial advisor help you drill down what you can afford before applying for a car loan. It may even help to talk with a friend or family member about what you plan to purchase and the sacrifices you are willing to take to own your desired vehicle.
This way, they will be able to see what you really spend and can assist with figuring out what your expenses will be throughout the ownership of the vehicle.
So, even though affordability is at its best since 1976, remember that you don’t want to over extend yourself when purchasing such a large asset. To get a better idea of what you can afford, take a look at our new car loan calculator or give a 360 consultant a call today.
Data gathered from;