Reverse Honeymoon For Car Loans
Sun Herald
Sunday November 15, 1998
THE interest rate war has moved to car finance with one lender offering a reverse honeymoon - the rate drops after the first six months.
The Unicom Credit Union's unsecured new car loan rate starts at 7.99 per cent and after six months drops to 7.49pc, fixed for a year. It then reverts to the applicable variable rate (which, if nothing changes in the meantime, would be 8.45pc for a new car and 8.95pc for a second-hand vehicle).
General manager Michael Anstiss said financiers had been forced "to think more laterally than competitively".
The loan is not restricted to credit union members.
Mr Anstiss said a bill of sale was the only security required and "this is not hire purchase".
There is a $75 up-front fee but no other charges. The rate is about 2pc above most banks' personal loan rates. But is cheap the cheapest? Not according to the independent Cannex. It has calculated that over four years - the typical life of a car loan - the rate is a relatively low 8.15pc, but the ANZ Bank charges only 7.55pc to 8.05pc which can be fixed for one to five years. The catch is the minimum loan is $45,000 which rules out most Hyundai buyers. Unicom's minimum is $10,000.
Another credit union, Power, charges 7.95pc with a minimum loan of only $1,000. But this rate is fixed.
Cannex managing director Andrew Willink said Unicom's reducing car rate loan was one of the cheapest but warned "the structure of the loan with different rates makes it complicated to understand whether it is in fact the best product for a borrower." -
© 1998 Sun Herald
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