RBA interest rate cut of 0.25% in May should flow through heavy vehicle finance markets but with variations with different lenders and different loan products. Operators planning to upgrade their vehicles may now be able to do so with cheaper finance. The RBA’s May decision may make refinancing a workable prospect to ease pressure on cash flow. But with lenders making their own decisions around passing on rate cuts for asset acquisition finance products, the variations in rates across the market and with the possibility of further cuts in coming months, there is a lot for business owners to consider.
To assist business owners to get clarity on the truck loan interest rate scenario, we unpack the details of the May Reserve Bank decision. Providing the background to the decision, outlining the factors which may lead to additional cuts, and provide information on how operators can be confident of securing their lowest possible truck finance rates.
May RBA Interest Rate Cut
The Board of the Reserve Bank met on 19-20 May to discuss Monetary Policy and announced the decision to make a 0.25% reduction to the cash rate to 3.85%. This decision was highly expected by the markets, though some analysts were tipping a 0.5% cut. The decision comes on the back of inflation continuing to fall as reported in the Quarterly Inflation Figures from the ABS. The result putting the current inflation rate within the RBA’s target zone of 2-3%. This is the first time that inflation has been in that range for over three years.
While the rate of inflation has been central to Monetary Policy decisions over recent years, the global tariff and trade situation is now a key issue for the Bank. In the statement announcing the Board’s May decision, Michelle Bullock, Governor of the Reserve Bank, highlighted the global uncertainties. These uncertainties relating to how countries will react to the tariffs imposed by the USA, and how those responses impact global and domestic economic growth.
The uncertainties have contributed to a weaker outlook for growth, inflation and employment. But sustaining a stable rate of inflation remains the Board’s priority. Further information on what was discussed at the Board meeting will be available with the 3 June release of the Minutes. The Board next meets to make a decision on Monetary Policy, that is interest rates, on 7-8 July.
What May Rate Cut Means for Truck Loans
Current fixed rate truck loans with not be impacted by the interest rate cuts. Operators that have Unsecured Loans and Overdrafts at a variable rate should see their rate reduced, depending on individual lender decisions.
For operators taking on finance for new vehicle acquisitions, rates should come down across the market on all credit facilities including Lease, Chattel Mortgage, Rent to Own, and Commercial Hire Purchase. But lenders make their own decisions in setting interest rates and variations will still be seen across the market.
Utilising our access to a vast lender market which includes the major banks, other banks and specialist non-bank lenders, provides operators with opportunities to capture their best possible rates.
Getting Cheapest Finance with RBA Interest Rate Cut
The May Reserve Bank decision should be ideal timing for operators looking to upgrade vehicles prior to the end of the financial year to optimise any available tax benefits. It may also be advantageous to capitalise on any end of financial year sales with no further rate changes due until at least early July. Offering the opportunity for a lower purchase price but also lower finance payments.
With variations across the market, operators can benefit by using our expert broker services and access to specialist heavy vehicle lenders to capture their cheapest rates and cheapest finance. While rates will vary with individual business profiles, a guide to repayments can be obtained using the latest best rates we are achieving with our Finance Calculator.
RBA Rate Cut – Is it time to refinance?
Refinancing could be top of mind for operators experiencing cash flow pressures. Lower rates may now be possible, but operators need to keep in mind that used truck rates apply to refinancing and the loan required will include the costs of finalising the existing loan and setting up the new loan.
Requesting a quote may provide clarity around refinancing decisions.
When will the next interest rate cut come?
The timing for any further cuts from the RBA could depend heavily on what happens globally. The global uncertainties were key to Governor Bullock’s comments around the May decision and the outlook. Some experts are predicting an August cut, but the Board of the Reserve Bank will be considering the data as available.
To capitalise on the RBA interest rate cut with competitive heavy vehicle finance, speak with Jade Truck Loans on 1300 000 003.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.
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