Top 10 car loan suburbs revealed
Fewer Australians are buying cars as the cost-of-living crunch squeezes budgets, but there are some standout suburbs where buyers are borrowing for new and used vehicles.
Analysis published on Monday by digital lender MoneyMe found residents in the Queensland suburb of Coomera are applying for the most automotive personal loans in the entire country.
Queensland more broadly has the highest number of loans per capita, with an average loan size of $18,475, compared to $14,593 across Victoria, where Hoppers Crossing was the top suburb.
In New South Wales the average loan size was $18,445.
MoneyMe chief sales officer Richard Bray said higher vehicle loan rates during the June quarter could reflect a higher demand for credit due to cost-of-living pressures.
One indication is that second-hand cars have proven particularly popular among buyers.
“It’s particularly notable that suburbs like Queensland’s Coomera and Victoria’s Hoppers Crossing show strong uptake in personal loans for car purchases,” he said.
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“Many of the suburbs in this list are in major growth corridors. Rapid development coupled with an influx of residents can drive up housing costs, rents and the price of entertainment such as dining out.
“These cost-of-living pressures may be one reason why locals seek personal loans to fund major automotive purchases or repairs as daily expenses grow.”
In one sense it’s unsurprising that more Australians are turning to credit to afford even second-hand vehicles, even the cost of insuring a car has skyrocketed over the past year.
Loans have the advantage of being able to help cover insurance and registration costs, which could be another reason buyers are looking for finance.
But it’s clear that the wider market for car sales has ground to a halt this year, with rates of purchases plunging as Australians look to cut costs amid decade-high interest rates.
Federal Chamber of Automotive Industries chief executive Tony Weber says motorists are delaying their vehicle purchases amid the cost of living crunch.
“During the early part of the year, we witnessed record numbers,” he said.
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“However, the September result shows that the state of the economy is impacting purchasing intentions.”
The slowdown in sales comes despite prices for used vehicles falling considerably this year, with higher stock levels at auto dealerships.
Sales are expected to pick up somewhat towards the end of 2024 as cost-of-living relief from the federal government and tax cuts start to underpin a recovery in household budgets.
What’s interesting though is that during the recent downturn in the market petrol car sales have fallen faster than hybrids.
Despite being more expensive on average than traditional cars, the half-EV, half-petrol option has emerged as a clear favourite for buyers.
FCAI data shows motorists bought more than 13,500 hybrids in September, which was up 34.4 per cent on the same period in 2023.
More than 2400 were plug-in hybrids, a rise of 89.9 per cent.
Hybrids are more expensive to purchase and insure than petrol cars, which are more widely available on the second-hand market.
But they’re cheaper to buy and insure than electric vehicles, helping to explain the appeal.
Another factor is running costs, which are considerably cheaper for EVs and hybrids amid ongoing uncertainty over petrol prices.
– TND
