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Quote Me Now!Ever wondered if you're getting a good deal on your finance? How would you know though, if you didn't know what a good rate was to begin with... ? So you start shopping and comparing quotes. Here's the catch though, with car and equipment finance there are some tricks to the trade that every consumer should know about. When banks and lenders offer equipment finance to business's, there is a base rate, which is marked up by the profit they make on the finance, the 'loaded' rate (or REAL rate). What is interesting though, is that a lot of lenders, brokers and banks will often quote the 'base rate' and not the real rate that you pay, and sometimes the base rate is the one on the loan documents!! This is because Equipment Finance is still a relatively unregulated industry unlike for instance, home loans.
So how do you know if you're being quoted the base rate, or the real rate? Well, for one thing FAT Finance always quotes the real rate. Let's say though, that you're quote is from someone else, how do you compare it to a FAT Finance quote? Well you base your comparison on the repayments that's how! We often have clients that ask us, how is our rate higher, but our repayment so much lower?? Good question! It's because the rate isn't actually higher, we have just not quoted the misleading base rate, as we believe this is unfair. So, when comparing quotes, be sure to compare the monthly repayment, also ensure that you are comparing the same balloon payment, the same term, and same amount, and you will be able to sort through the good deals and the bad! Yes, it's really that easy to not be fooled by base rate quotes!
For other handy finance tips get on our newsletter by emailing info@fatfinance.com.au
The team at FAT Finance would like to wish their clients, friends and followers a Merry Christmas and a Happy New Year! Remember to drive safely in your cars and stop revive and survive! (Even if this just applies to Christmas day eating and drinking!).
For any assistance over the Christmas period, please call Liz on 0414 798 760. The office will be operating remotely but still open to assist!
We'll leave you with this Christmas Joke...
A father asked his young daughter what she would like for Christmas.She said that she wanted more than anything else was a baby brother.And it so happened that on Christmas Eve her mother came from hospital clutching a baby boy.The following year,the father again asked his daughter what she would like for Christmas."Well" she replied,"If it's not too uncomfortable for Mummy,I'd like a pony."
The time to get your finance pre-approved is now. The governments business tax break is due to end on the 31st December 2009, so if you're considering a new vehcile, get your paperwork in order now. Approvals can be turned around in 24 to 48 hours at FAT Finance.
Some lenders are introducing new policies to reward clients with better rates if you have the following:
A good credit history - have you recently borrowed and paid off debts and never missed a beat on repayments? Proof of this via your credit report will help you.
Equity in your home - Do you have an unencumbered property, or a large amount of equity in your own home? In any instance, simply having a mortgaged home will put you above a renter.
Are you in a skilled profession or trade? Have you been stable in your employment? i.e. been working for your employer, or self employed, for two years or more?
Have you got a good balance sheet? Do your assets far outweight your liabilties?
Are you buying a new car as opposed to a used car?
All of these things, can help you drive the rate down. Not to worry if you dont meet the criteria though, it may just mean we hunt down a different lender for you, one that works on a less detailed basis!
Did you know we can now do Low Doc car loans? Just go to www.fatfinance.com.au/lowdoc to find out more
Something has been been troubling FAT about fixed rates lately. It's that a lot of our clients dont realize that you can't fix your loan, at the current variable rate. For those of you new to the game, banks set fixed rates taking into consideration likely changes in interest rates. With the Reserve Bank expected to tighten monetary policy considerably over the next twevle to eighteen months, the fixed rates charged by banks reflect this fact in order to compensate for the increase in their cost of funds. Variable rates float in line with the bank's costs of funds at a point in time, which largely moves in line with changes in the overnight cash rate set by the Reserve Bank of Australia. Whilst your variable home loan might travel at 5.04% today, you will definately not find that you can lock in a fixed rate that low today!! Fixed rates are now in the 6's and 7's for most terms (1 to 15 year terms). In a market where rates are predicted to go down, fixed rates might be lower then the current variable. The thing is, you can't say there is a general trend in fixed rates, they are not 'always below' or 'always above' the variable rate. What you need to know is that they reflect market expectations, so they're indicative of the bank's cost of funds over a particular term. How does this affect you? Well you need to work out how much risk you can afford to take by going variable or conversly, by locking in. We can access hundreds of home loan fixed rates if you want information on them.
The RBA hiked interest rates today for the first time in 19 months. The 25 basis point rise took the cash rate to 3.25% - still 4% lower than its recent peak of 7.25% in early to mid 2008. The rate rise is 0.25%, that is still a whole 4% lower (or 16 x 0.25% rate hikes away) from the recent peak of 7.25% last year.
FIRST HOME OWNERS GRANT CHANGES 1st October 2009
For contracts signed from the 1st of October 2009 until the 31st December 2009 the first home owners grant is $10,500 for established homes and $14,000 for new or construction contracts. After that there has been no speculation of the grant ending in full, but rather, returning to the $7,000 standard.
Whilst brokers cannot give you advice, I can give you perspective. A competitive variable rate incorporating today’s hike will be 5.29% at a major bank. A 3 year fixed rate at the a major bank today is 6.99%. Theoretically, if variable rates travelled in a regular linear fashion upwards for 3 years, they would need to reach over 8.69% by October 2012 for the average rate to be better under the current 3 year fixed rate. Representing a further increase of 3.40%.STEVENS, GOVERNOR MONETARY POLICY
The global economy is resuming growth. With economic policy settings likely to remain expansionary for some time, the recovery will likely continue during 2010 and forecasts are being revised higher. The expansion is generally expected to be modest in the major countries, due to the continuing legacy of the financial crisis. Prospects for Australia’s Asian trading partners appear to be noticeably better. Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets. For Australia’s trading partner group, growth in 2010 is likely to be close to trend. Sentiment in global financial markets has continued to improve. Nonetheless, the state of balance sheets in some major countries remains a potential constraint on their expansion. Economic conditions in Australia have been stronger than expected and measures of confidence have recovered. Some spending has probably been brought forward by the various policy initiatives. As those effects diminish, these areas of demand may soften somewhat. Some types of capital spending are likely to be held back for a while by financing constraints, but it now appears that private investment will not be as weak as earlier expected. Medium-term prospects for investment appear, moreover, to be strengthening. Higher dwelling activity and public infrastructure spending is also starting to provide more support to spending. Overall, growth through 2010 looks likely to be close to trend. Unemployment has not risen as far as had been expected. The weaker demand for labour over the past year or so nonetheless has seen a moderation in labour costs. Helped by this and the earlier fall in energy and commodity prices, inflation has been declining, though measures of underlying inflation remained higher than the target on the latest reading. Underlying inflation should continue to moderate in the near term, but now will probably not fall as far as earlier thought. Housing credit growth has been solid and dwelling prices have risen appreciably over the past six months. Business borrowing has been declining, as companies have sought to reduce leverage in an environment of tighter lending standards. Share markets have recovered significant ground. Interest rates facing prospective borrowers on fixed-rate loans have already risen to some extent, as markets have anticipated a higher level of the cash rate. For many business borrowers, increases in risk margins will still be occurring for some time yet. In addition, the exchange rate has appreciated considerably over the past year, which will dampen pressure on prices and constrain growth in the tradeables sector. These factors have been carefully considered by the Board.
EXCERPT OF STATEMENT BY GLENN STEVENS, GOVENOR MONETARY POLICY 6th October 2009