What should you know about the luxury car market?
Buying a car has a lot in common with buying a house. These are not just one-off big purchases, but ones you will interact with on a daily basis. Comfort, taste and likeability all factor in – you'll be using this product for a long time, so you need to try and get something that suits your needs and preferences. It seems people have a predilection for the finer things when it comes to these factors, as the popularity of luxury cars continues to increase.
According to a CommSec economic insights piece from March 16 this year, there were 82,954 luxury vehicles sold in the 12 months to February this year – an increase of 15.6 per cent. Clearly, we as a country are more than comfortable putting that bit extra into our new car finance to make sure everything is just right. But what should you be keeping in mind about the luxury market when you look at taking out a new car loan?
Design for Australian conditions
On April 20, the Federal Chamber of Automotive Industries (FCAI) took issue with a piece published in the Australian Financial Review, which claimed that Australian cars such as the Mercedes-Benz ML350 BlueTec Diesel were more expensive here than in places like the United Kingdom.
The FCAI argued that these cars were priced differently because they were made differently. Depending on consumer preferences, road laws and the driving conditions of a country, specifications of a vehicle could vary significantly.
Engine details, cooling systems, fuel quality and even the entertainment aspects of cars are tailored to Australian conditions. This generally occurs across the board, but buying luxury vehicles here with a new car loan means getting the ultimate in comfort made with your experience in mind.
Watch out for the tax
One aspect of buying a luxury car that is vital to your budget is the tax involved. The Australian Taxation Office notes that for the 2014/2015 financial year, a tax rate of 33 per cent applies to luxury vehicles above the threshold of $61,884. However, if you are using new car finance to buy something that is fuel efficient, the limit goes up to $75,375.
This is a great incentive to get amongst the glut of more eco-friendly vehicles on the market, and could be something that influences your final decision at the car yard.
Of course, to get the right advice on financing a new car purchase, luxury or not, make sure to talk to AAA Finance. Our panel of more than 23 lenders could have you cashed up and ready to go within 24 hours.