Tag: interest rates

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Interest Rates

What Is A Good Interest Rate?

what is a good interest rate?
Find out what is a good interest rate and move forward with a loan that benefits you.

Taking out a loan of any kind can be the perfect way to get the financial help you need to achieve your goals. From a mortgage to buy a house, to a personal loan to fund that next holidays, there is a large variety of loan options on offer depending on your needs.

The one thing all these loans have in common is that they charge an interest rate on top of the loan price. This means you end up paying back the loan amount, with interest, over a set period of time. It stands to reason you want that interest rate to be as low as possible to save you money. So, what is a good interest rate?

What Is The Interest Rate?

First, let’s take a look at what exactly the interest rate is. An interest rate is a percentage amount that the lender charges in return for lending you the money. It is additional money that needs to be paid off on top of the amount borrowed for the loan.

If you look at it simply, interest is the fee you pay for using someone else’s money. In this case, the lender. This is how lenders profit out of loans, giving them an incentive to provide you with one in the first place. Many people take out a loan when they don’t have the cash available for what they need to purchase. The interest rate is the fee for borrowing that money.

Here are some things you need to understand about your loan before working out the interest rate:

  • Principal amount: this is the amount you are looking to borrow.
  • Loan term: this is how long you will be taking to pay off your loan. The longer your loan term, the more interest you pay.

The best way to look at it is by using an example:

You have taken out a personal loan of $20,000. It has a set term of 5 years, with an interest rate of 8.40% and you are making monthly payments.

To work it out, you divide the interest rate by the number of payments in a year, then multiple this by the loan principal to work out the interest you will be paying.

In this case: (0.084 divided by 12) x 20,000 = 140

This is the amount of interest you will be paying when you take out an interest-only loan. This figure will change when you start paying the principal down the track.

With this in mind, what is a good interest rate?

fixed vs variable itnerest rates

Fixed Vs Variable Interest Rates

There are two types of interest rates you can lock in when you take out a loan. Knowing what is a good interest rate will help you work out the best options for your needs.

Fixed interest rate: this is where the interest rate is locked in at the beginning of the loan term and doesn’t change. They remain the same throughout the life of the loan. It means from the start of your loan, you can calculate the interest you be charge throughout and this figure won’t change. It is considered a safer option.

Variable interest rate: on the other hand, a variable interest rate changes with the market rate. When that rate rises, so will your loan payment. At the same time, if that rate lowers, you reap the benefits. This is considered a more risky option, but it can pay off in the long run.

What Is A Good Interest Rate?

Are you wondering what is a good interest rate? It all depends on the market at the time you are borrowing. Before you take out a loan, it is a good idea to shop around to see what interest rates are on offer. When it comes to comparing lenders to take out a loan with, you can look at the interest rates they were charging and use this to determine where the best value for you lies. You can often find a number of comparative tools online, which help you get a great overview of what a competitive interest rate looks like.

It all comes down to doing your research before diving in and taking out a loan. By determining what a good interest rate looks like you can save yourself plenty of money over the course of your loan and end up paying significantly less overall.

good interest rate

What Is A Good Interest Rate On Your Next Loan?

Are you on the hunt for a new loan for your situation? If you are looking to lock in the best interest rate, then speak to the experts at Australian Lending Centre. We will help you hunt down the best interest rates and provide you with a number of competitive options when it comes time to take out your next loan.

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Interest Rates News

When Will Australian Interest Rates Rise Again?

when will australian interest rate rise again
Banks have dropped interest rates, but as Australia’s economy continues to deteriorate. when will Australian interest rates rise again?

The global pandemic COVID-19 has had a drastic impact on all industries. People have found themselves out of work, businesses have been forced to close down and people have been self-isolating from home. Australia’s economy has deteriorated under the impact. To protect the economy, Australian interest rates have dropped to rock bottom, however, this can only continue for so long. In this article, we discuss when will Australian interest rates rise again?

The primary response to the crisis has been focused on public health. While the secondary response has been saving what’s left of the Australian economy. Back in March 2020, the Reserve Bank responded by slashing the interest rates to a record low of 0.25 per cent. As we slowly return to life as normal, we are left wondering when will Australian interest rates rise again?

The Current Climate

With the onset of the global pandemic and the situation changing daily, no one could have predicted the impact this health crisis would have globally. Yet, as soon as social distancing laws were placed in Australia, many businesses were forced to shut down. This lead to an immediate 5.5% slump in jobs. Data suggests that 780,000 people found themselves out of work by the beginning of April. Shockingly, restrictions were only introduced on 30 March. In addition to this, wages were said to be down 6.7% in the three weeks following this.

To combat this, the Government introduced the Job Seeker and Job Keeper packages. This was an effort to keep the economy flowing and as many people in employment as possible. The Reserve Bank of Australia also stepped up by slashing interest rates. They now sit at the lowest ever in Australia’s history.

interest rate increase

How Do low Interest Rates Help?

These interest rate changes have a huge impact on everyday Australians. However, the level of impact depends on whether they hold fixed or variable loans. If they hold a fixed loan, they will see no change. But those with variable loans will be able to save plenty of money with a reduced amount of interest charged on their account. This, in turn, impacts on their consumer behaviour. If they are able to free up more money, they will spend it in the economy. As a result, giving it a much-needed boost. It also lowers the cost of taking out a loan. Those struggling with finances during this crisis can use a loan as a viable option to help them out with the loan interest rates.

Now that restrictions have eased with children returning to school and people returning to work, where does that leave interest rates? When will Australian interest rates rise again?

When Will Australian Interest Rates Rise Again?

The simple answer: nobody knows. What we do know is that it is unlikely we will see a further drop in interest rates. But at the same time, they are also unlikely to rise any time soon. Reserve Bank governor Philip Lowe said the bank would hold the cash rate at 0.25 per cent “until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2-3 per cent target band”. While restrictions have eased, life is yet to return to normal. Unfortunately, it could be a long time before we see the economy make a recovery from the effects of the pandemic.

According to Dr Low, this rate could remain in place for years, as the economy slowly builds its way back up again.

At the moment, there are too many unanswered questions to be able to put in place an accurate prediction. With restrictions beginning to ease, we have to wait and see if we are hit with a second wave of the virus. This would result in stricter measures coming back into play. These are all new waters we are navigating. Sadly, it doesn’t look like we should expect things to change anytime soon.

The good news is, now is the perfect time to get your finances in order as much as possible in your situation. You can use the rate cuts to save your money so it is put away for a rainy day, pay off any existing debt while the interest is low, or even refinance your loans into one new low interest rate. Now is the time to start exploring your options.

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Need Help?

With the current climate, now is a good take a good hard look at your financial situation. From here, you can see what changes you can make to secure your future. Work out which option is the best for your current situation now. From here, you can put a plan into place while the interest rates remain low for the foreseeable future. If you are looking for a helping hand to navigate these waters, contact the experts at Australian Lending Centre. We can help you get on track with your loans. With our assistance, you can capitalise on the low-interest rates.

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Short Term Business Loans

Are Short Term Loans a Good Option for Small Business Owners?

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short term business loans inventory high interest rate short term loans

It goes without saying that a business is doomed to go under without proper funding. Small companies are more prone to dying out, at least in the beginning, if funding isn’t injected into them. If your small business is however growing, you may also need funding to help expand your operations.

In both cases, a short term business loan may be your saving grace.

What are short term business loans?

A short term business loan is a fast and flexible loan type, that can help improve your business cash flow. Short term business loans are typically quick to access and require minimal documentation. They are generally used for the following reasons;

Cover a business initial start-up costs

  • Pay staff
  • Purchase inventory or equipment
  • Pay for emergency situations
  • Purchase stock
  • Pay BAS or Tax Payments
  • Working Capital
  • Marketing or Advertising.

The benefits of short term business loans

Quick funding

Short term loans provide immediate aid to business owners that need it. The process is quite short, and the requirements are easy to fulfill. To give you a hint of how quick the funding is, the approval period of a short term loan can be 24 hours.

That, of course, does not apply to a large loan. Bear in mind that you can use this money to seize some opportunities; they’re not only for worst-case scenarios (going bankrupt or risking closure, for instance).

They are given to people with bad credit score

Not only are these loans given in a matter of hours (depending on the policy of the lender, really), but they are handed out to people who would be rejected by banks on account of their low credit score.

In this light, short term loans are life-savers. Given that they are short-term, creditors know that you will be able to pay the loan back, even if your credit score is a little low.

Short term business loans can be given for a variety of purposes

You can use the money from a short term loan for any business-related expense. This may include; an investment into a product or service that will better the business such as a marketing campaign. No matter what you need, you’re set with a short term loan.

Drawbacks of Short Term Business Loans

Smaller sums of money

Short term business loans may not allow you to borrow large sums of money. For example, If you need to borrow $50,000 you may not be eligible for a short term business loan. Bigger sums of money are not given out as a short term loan because of the nature of the loan, which has to be repaid in less than one year.

High-interest rates

Many lenders know that, once you’re looking for short term loans, you’re probably in dire straits. Unfortunately, this generally translates to higher interest rates. It is therefore important to do your research and make sure that you find the right lender. This way, you can at least make sure you’ll be going with the one that will take the least from you.

Other strings attached

Apart from the high-interest rates, you may be required to pay some other additional fees imposed by the lender (depending on each lender).

Risk of losing the collateral

Short term loans are usually secured by collateral, even though they’re basically to be repaid within a few months. Should you default, you could lose your car or whatever it is you secured the loan on.

People seem to think that secured loans are so much better than their unsecured peers. If you are 100% certain that you can repay the loan, consider a secured loan.  If possible, always get short terms loans without any collateral. There’s no way you will default on a loan like this. It’s almost impossible, given that the sum of money you’ve borrowed is quite small.

Loans with short term make sense for small business, but they also have some unpleasant downsides. If you have a financial advisor in your company, it would be a good idea for you to consult with him/her before making a decision. If you don’t have an advisor, you can speak to one of our expert loan consultants at Australian Lending Centre.

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News

How Are Interest Rates Made? 3 Factors That Increase Loan Interest Rates

low interest rates australia

Aside from your credit score, did you know lenders sometimes determine interest rate levels depending on the supply and demand of credit? Or that you might be able to get lower interest rates by applying for the same loan in another financing company? In fact, these could be some of the strongest factors that lenders would consider in charging an interest rate on your loan. Let’s discuss these factors that can increase loan interest rates…

Economic factors

Some of the most important basis of the banks in setting their interest rates includes some factors that can either push interest rates lower or higher depending on the lenders’ interest:

  • Gross Domestic Product-The growth of GDP or the monetary measure of Australia’s market value of the final goods and services produced within a specific quarter affects the interest rates of the loan. Australia’s GDP Annual Growth Rate increased by 3.4 per cent from 1960 to the last quarter of 2016. This means, the country’s economy is growing and so is the investment.
  • Inflation– or the continuous increase in the overall price level of goods and services in Australia’s economy over a period of time can result in a decrease in the value of Australian dollars overtime. Since inflation increases the value of consumer goods and services, it will also change interest rates on loans.
  • Interest rate volatility –Lenders watch the wild swings of interest rate closely and take measures to avoid loss of profits. While some borrowers may hold off from applying for financing and postpone important investments, there are those who settle for high-interest loans to address their current financial issues.

Income


Typically, more income results in a lower interest rate. Similarly, if you don’t meet the income requirements, you may find yourself on the higher end of the loan interest rate.

Borrowers with stable income plus a good credit score are most likely to pay back their loans. Some lenders may agree to waiving fees or lowering rates and could end up saving a good amount of money with high income.

Credit report


Another one of the factors which can increase loan interest rates is your credit report. Lenders typically adjust their interest rates when determining how much to give to a specific borrower depending on various factors. After they determine the eligibility of a borrower, they adjust the rates that would best match the borrower. So, if you have an excellent credit your borrowing capacity may increase significantly. When you have a good credit report, your borrowers would consider you as a responsible debtor that can handle more credit. You can also enjoy an attractive rate for your loans when you have a clean credit history.

While people with high credit scores have some bargaining power and lenders will be happy to offer you lower-than-average financing rates, the same thing is not true to those with poor credit rating. Most of the time, only those applicants that lenders believe would be paying back the loan on time enjoy this treatment.

Interest rates are made by creditors based on their own criteria. If you have bad credit and you need cash fast, Australian Lending Centre can provide you with easy-to-pay, low-interest loan solutions.

Contact the Australian Lending Centre today!

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Interest Rates

4 Reasons Why the Australian Reserve Bank has not Cut Interest Rates

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Australian Reserve Bank has not Cut Interest Rates

The Reserve Bank of Australia (RBA) has slashed interest rates to 3%, a record low, in November 2011. For the last 15 months, it has refused to increase or further cut it. The central bank has decided to leave the rates unchanged during its first policy meeting for this year, which was held in the first week of February. As it seems, the monetary policy of the country keeps the mode on a wait-and-see program.

Interest rates were last trimmed down to help spur possible growth after the then decade-long mining boom had indicated clear signs of losing its momentum. The economy somehow slowed in the entire 2012 because export demand for raw materials coming from the country eased.

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Financial Planning

How Can Financial Distress Impact Your Health

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The stress caused by the economic downturns and financial shortcomings can literally make you sick. This is quite logical. In the recent global economic downturn, many evidences were recorded linking financial distress to various health conditions. That link is not surprising.

In 2005, a research was conducted in the US to identify possible health implications of financial distress. That study explored specific health effects that are often and logically associated with financial problems. It surveyed random individuals from across the country.

The results showed that there are various perceived possible effects of financial stress on both physical and mental health. Financial problems and poor health are associated. Stress is the main health impact of job loss, piling debts, loan defaults, and budget shortages. From there, many other health conditions can possibly ensue.

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Interest Rates

7 Things which Contribute to Interest Rate Cuts

what causes interest rate cuts

Interest rate is the amount charged by lenders or loan providers against the borrowed money of consumers/borrowers. As a consumer, you probably are always monitoring it. When rates are low, it can be ideal to apply for and obtain loans. It is the time when borrowing will not be that expensive.
Interest rates usually go up, especially these days when global economies and finances turn volatile. But at times, governments and central banks also cut such rates. Here are seven factors that usually lead to reduced or lowered borrowing rates.

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Interest Rates

Australian Economy is Growing – Interest Rate Impact

Australian Economy Snapshot

The Australian economy grew 1.2% in the second quarter of fiscal year 2011. That growth exceeded expectations of a 1% economic expansion. This surprised numerous economic analysts and market observers, who mostly predicted a slower growth in the period. According to some experts, the economic boost could be attributed to stronger performance of several sectors aside from mining, which for quite some time has been solely driving growth of national economy.

Investors look at this news as an additional positive development. A better performing Australian economy could translate to better profitability. Most company shares in the market have been rising following the announcement of the better-than-expected economic growth. The local currency is also gaining strength against the dollar, which is ideal for many businesses, especially those that require importation of raw materials. But what is the impact of this news to consumers, particularly to the interest rates?

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News

Unemployment Projected to Rise

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The continuing interest rate squeeze and falling share markets, are expected to slice consumer spending habits, which in turn will slow the economy and force an extra 75,000 Australians into unemployment by the middle of next year.

While there has been a small concession for Australian households last week with the Reserve Bank’s first rate cut in 7 years, we are not out of the dark yet it seems. David Uren, the Economics correspondent for The Australian cautions the “Treasury expects the unemployment rate to rise from its recent historic low of 4 per cent to reach 4.75 per cent by the middle of next year.”

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Interest Rates

First Interest Rate Cut in 7 Years

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Australians have welcomed with open arms the Reserve Bank’s first official drop of interest rates in 7 years. The RBA on September 2nd, dropped its cash rate by 0.25 to 7%, its first cut since December 2001.

While this comes as a certain relief to many families struggling under the pressure of mortgages, many are still cautious. As Prime Minister Rudd announced “Interest rates took a long time to rise and they will take a long time to come back down. And the road will be a very uneven one on the way through.” However many remain optimistic, especially those struggling to make ends meet, and spiralling into debt.

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Interest Rates

Interest Rates on the Rise Again

interest rate rise

After raising interest rates three times in quick succession in late 2009, the Reserve Bank of Australia (RBA) increased interest rates again in March – the first rate hike for 2010.

According to the Australian Bureau of Statistics (ABS), retail sales rose a higher-than-expected 1.2% to $20.14 billion in January – up from $19.91 billion in December. After the ABS announced strong growth in retail sales, the Reserve Bank decided to raise the official cash rate to 4.00%, marking the fourth rate rise in five RBA meetings.

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Refinance and Refinancing

Home Loan Stress from Interest Rates Hike

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As some of the big banks have raised their interest rates higher than the Reserve Bank, many Australians are looking for a way to defuse their mortgage stress.

By refusing to pass on all interest-rate reductions, inflating the Reserve Bank’s increases or adding hikes of their own, the banks have widened the gap between the cash rate and their key interest rates by as much as 1%.

If you’re struggling with home loan repayments you may want to consider refinancing your home loan. Refinancing can allow you to access cheaper interest rates or even unlock the equity in your home to renovate, buy an investment property or consolidate debt. The Australian Lending Centre has years of experience helping people to refinance to achieve these goals.

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News

Inflation Rise Confirms a Rate Rise

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Kevin Rudd admits record low rates are certain to increase after an inflation rise of 2.1%.

The inflation rate has economists tipping a fourth consecutive interest rate rise when the Reserve Bank meets next Tuesday.

Figures from the Australian Bureau of Statistics reveal headline inflation rose 0.5% in the three months to December, for an annual rate of 2.1%.

Mr. Rudd said interest rates would obviously rise again.

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Interest Rates

Homeowners Sigh Breath of Relief as Interest Rate Rises Halt

Interest Rates Halt

Homeowners Australia wide have sighed a breath of relief this month, as the Reserve Bank did not raise interest rates. There has been an ongoing climb in interest rates, with 12 steady rate hikes since 2002. This month signals the first time the RBA has remained static in 6 years.

As Icap senior economist Matthew Johnson discerned recently, “The bond market is saying pretty strongly that the RBA is not going to raise interest rates”. This is welcomed news for home owners struggling under the increasing pressures of mortgage repayments.

The stresses of mortgage debt is a wide spread problem across the nation, with homeowners’ living budgets suffering as they struggle to meet house basic repayments. The end to the rate rise crisis momentarily gives a cautious optimism for Australians.

If you are struggling under the rate rises and are falling into mortgage debt, ALC can help refinance your repayments into one easy monthly sum. For more information on the options right for you call us now on 1300 138 188.
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Interest Rates

Budget Aims to Tame Inflation: Will Interest Rates…

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16 May 2008

Many analysts have praised the new 2008 Rudd Government Budget for its spending cuts in an amiable move to stop the rising problem of inflation, however will it be enough?

The aim to put downward pressure on the inflation crisis has seen slashes to high income earner benefits, with the media responses generally positive towards the Budget’s target. However there has also been speculation about how far the budget can go in entirely tackling the monstrous inflation, “the Reserve Bank of Australia is not out of the woods yet” warned Bank economist Riki Polygenis.

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Mortgage

New Trend Forced in Mortgage Market

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New figures suggest that there is a new trend emerging in the mortgage market; non romantic couples entering into a shared mortgage.

It is becoming more and more common for people to enter into a joint borrowing arrangement which maximises their deposit and lowers the ever increasing repayments. The alternatives of soaring rent prices or individually entering a staggering mortgage have forced these platonic loan applications. With debt rates rising, as individuals are struggling to meet repayments with the ever increasing interest rates, it seems the shared option is becoming more attractive.

However there are disadvantages and possible complications. As NSW Law Society president Hugh Macken warns, all parties need to “plan for contingencies”, and that there needs to be a written agreement to avoid discrepancies when it comes time to sell or renegotiate mortgage terms.

For more information on our range of competitive home loans contact ALC on 1300 138 188.

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Interest Rates

Flood Crisis Leading to Interest Rates Increase

interest rate increase

As the rain has ceased and the flood waters have begun receding, we as a country are starting to feel some of the affects from the flood crisis. At your local market you may have noticed prices in the produce section are beginning to rise and are becoming scarce. For example, mangoes are nearly impossible to find. Along with mangoes, tomatoes and lettuce have become more expensive. Other produce starting to see changes are zucchini, bananas, broccoli, sweet potatoes, capsicum and watermelons.

The major supermarkets, Woolworths and Coles, have released statements claiming they are in the process of identifying whether it is more cost efficient to start importing primary produce to avoid massive influx in prices. As these two supermarket giants control 45% of the fruit and vegetable sales nationally, they play a major part in the control over prices.

In addition to the immediate affect of an influx of prices, there is also key concerns on how the farmers will be able to bounce back to plant the winter staples such as corn, cabbage, potatoes and chillies. With the floods washing away the majority of the crucial topsoil, the forecasts are declaring all crops will be low this year.

If the prices on all produce does skyrocket and nothing is done to counteract this, fruit and vegetable prices will force inflation upwards. With the already looming rumours of interest rates increasing in March, the flood crisis will undoubtedly make those suspicions true.

With inflation around the corner, interest rates will move upwards which may affect your current mortgage or additional debt, such as credit cards or personal loans. In order to avoid this increase and lock into the lowest rate you can – you should look into a debt consolidation or refinancing your loans now while interest rates are still decent.

With a debt consolidation at Australian Lending Centre, you will be able to roll all of your debt into one loan on a fixed interest rate that will not be affected by inflation. Through this option you will also be able control and pay off your debts faster since you will be using one low rate and not focusing on various payments with varying interest rates.

If you want assistance with your debt call the Australian Lending Centre on 1300 138 188 today to speak with a debt consolidation consultant. Alternatively, fill out the enquiry form to the right and a consultant will contact you shortly.

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Refinance and Refinancing Home Loans

Advantages of Refinancing

Advantages of Refinancing

Refinancing refers to the process of paying off your current loan with a second loan.  If the timing is right for you, refinancing can be a very beneficial exercise and may ultimately save you thousands. Learn the advantages of refinancing here.

When is the best time to refinance your mortgage?

Refinancing your mortgage works best when the interest rates are low.  If they aren’t lower than your current rate, then refinancing is probably not worth your while.  The idea of refinancing your home loan is for the likelihood that the monthly repayment amount will be reduced noticeably resulting in a considerably lower home loan repayment in the long-term.

How do you measure costs and advantages of refinancing my home loan?

There are advantages and disadvantages to refinancing your home loan.  The idea is to understand what you’re in for with your particular situation.  For some people, the best method when considering whether to refinance is a simple comparison.

Compare all the costs of your current home loan to the new loan over a future period.  Since the loan period may vary according to how steadfast your repayments are, just make the best guess as to how long you will have the new home loan.  If the total costs are going to be lower with the home loan, then you should refinance.

How much are you able to borrow by refinancing your home loan?

Most lenders will consider the following four aspects when assessing your home loan refinance application.

  1. Your ability to pay. It is important that you have a regular income.
  2. Your credit history.
  3. All other monetary obligations. It is important for a lender to understand your current financial commitments so that they can determine if refinancing is going to be the best option for you.
  4. The value of your property.  This is usually in the case of home equity loans.

The advantages of refinancing are astonishing, provided that the situation is right for a home loan to refinance.  What makes it stand out is the fact that it can cost you less compared to most loans and refinancing can be very effective to consolidate high-interest debts.

If you would like to speak with a consultant to find out if refinancing is the best option for you, please call 1300 138 188 today, alternatively fill out an enquiry form on the right and a consultant will contact you shortly for a free appraisal.