Thanks to COVID-19, 2020 is shaping up to be a time of huge upheavals and uncertainty for businesses and households around the world. On the brighter side of things, it’s one that could deliver some major bargains if you know what to look for. The coronavirus has had a staggering impact on economies around the world, but it’s also brought a potential boon for anyone looking to buy a car.
As the downturn sets in, both businesses and households should be aware of these major trends affecting car buying and ownership. Staying aware of these trends could help you save big when buying a car and when you save big on your car you can also save big on your insurance policy.
Car sales have collapsed, bringing with it the prospect of heavily discounted deals. April 2020 saw car sales fall by 48.5% compared with the same month the previous year, according to figures from the Federal Chamber of Automotive Industries (FCAI).
The drop from 75,550 (April 2019) to 38,926 (April 2020) is the largest ever monthly decline recorded since the FCAI’s VFACTs figures were first recorded. Additionally, April 2020’s drop was the 25th consecutive decline in new car sales year-on-year, indicating a long term reduction in demand.
The Impact Of The Pandemic
FCAI Chief Executive Tony Weber noted the central driving factor was the coronavirus. The pandemic has led to a downturn in the broader economy. 20m Americans lost their jobs in April, and these broader impacts in turn push down consumer confidence and buying decisions.
Further, the banking royal commission and the pandemic have encouraged lenders to tighten car financing conditions, which has also contributed to the April slowdown in car sales. With lower demand and fewer sales, dealerships could be more likely to mark down their prices, allowing buyers to access some great bargains.
Second, if you’re looking for a cheap financing deal, there could be some very competitive deals out there. Car finance rates are at historic lows, but remember to compare deals by taking into account all the variables.
These include the interest rate, comparison rate, upfront fees, and monthly and any other ongoing fees. It’s especially important to shop around for insurance if you’ve been involved in a car accident, as regardless of fault, after an accident your premium could increase significantly.
Shop Around For Better Deals
Rather than accepting whatever deal is available at the dealership, shop around before you head to the dealership, including by using online car financing comparison tools. By comparing deals and doing through deal comparisons, you’ll give yourself the best chance of getting the best possible deal.
Also of note is the fact car loans might be gradually becoming easier to obtain, given the car industry is calling on lenders to loosen their lending criteria. This comes after the slowdown in April, which the industry attributes to rejected finance applications and stricter criteria.
Benefits For Business Owners
If you’re buying a vehicle for your business, note small businesses are eligible for the new, more generous write-off limits. The government has broadened the scope of the asset write-off program, and you’ll be able to claim a 50% accelerated depreciation deduction over what you can already deduct, up until 30 June 2021.
Additionally, up until 20 June 2020, the threshold has increased from $30,000 to $150,000 for businesses with a turnover of up to $500 million. These new limits mean your business can buy vehicles and save big on tax by instantly writing them off as well as claiming depreciation at a faster rate.
It’s not just petrol you might be saving on either. You could be saving on car ownership costs like registration fees and insurance. Various insurers are offering financial support in the form of gift cards, discounted premiums, and premium waivers. Others are offering fee waivers for policy cancellation, pauses on premium increases, and payment plans for excess payments on claims. Check with your insurer to see what you can access.
The coronavirus pandemic has brought about massive upheavals and considerable challenges, but there’s a silver lining for those buying a car. This so-called perfect storm has set the stage for massive bargains for car buyers. Running a car will also be much cheaper, with low petrol prices and car registration fees frozen in some states and territories.
Finally, if you’re hesitant about venturing out to test drive some vehicles, rest assured the FCAI has confirmed car brands and their dealer network have been deemed an essential service and will remain open. Keep in mind also dealers are introducing new tools and features like virtual inspections that help you research and decide online.