Survey: One in four with current car loans gained a deferral during COVID-19

Posted on Tuesday, October 27, 2020 - 15:25

A new survey tracking Australian car buying sentiment shows two-thirds of Australians are uncomfortable with buying a car online, despite COVID-19 risks and ongoing government lockdowns.

A survey of 1,001 respondents commissioned by Savvy was split right down the middle among Male and Female demographics and almost evenly among all major age groups (18-24, 25-34, 35-44, 45-54, 55-64, 65+) showed that about 20.3% had bought a new car during the COVID-19 pandemic.

  • 53.3% happy with current vehicle, saw no reason to upgrade
  • One-in-four with current car loans gained a deferral
  • 4.3 million Australians are estimated to work from home
  • 20.3% of those surveyed purchased a new car

Deferrals on the rise

The survey also showed that 25.5% of people with an active car loan requested a payment deferral during the pandemic.

20% of people on JobKeeper payments also directed some of the funds to cover their car loan repayments.

“One in four people have gained a deferral, which means lenders and brokers are trying hard to reach equitable arrangements with people undergoing hardship due to the pandemic,” Tsouvalas says. “However, the industry must have a plan in place for vulnerable consumers when JobSeeker and JobKeeper end, if a robust recovery isn’t forthcoming.”

Car buying during COVID-19

About 40% respondents said they were “extremely uncomfortable” about home-facilitated test drives, virtual demonstrations, remote payments, and dealer delivery. 4% said they were “extremely comfortable” with online buying arrangements. “It seems we’re not quite there yet when it comes to buying big assets like cars online,” said Bill Tsouvalas, Managing Director of Savvy. “We don’t want to buy a car sight-unseen, but we are still in the market for cars and vehicles in general. Work From Home doesn’t seem to have made much of a dent in consumer sentiment – but the fact many aren’t prepared to take a leap of electronic faith has.”

Despite a removed need for commuting to the office or workplace, the work from home arrangements were the third least cited reason (3.9%) for holding off on buying a new vehicle. The bottom two results were job loss (1.6%) or using a partner’s vehicle instead (1.9%).

Almost all states in Australia instituted some form of social distancing or lockdown in March this year, which meant many had to work from home. This also meant they were unable to visit dealerships to inspect or purchase vehicles.

According to Roy Morgan research, a third of Australia’s workforce is now working from home, or 4.3 million Australians. 

“Aussies see car ownership as fundamental, not just as a means from getting to and from work,” Tsouvalas says. “It’s for getting around, taking holidays, getting the kids to their activities, and just to have that sense of freedom.”

Among the top reasons for holding off on buying, 20.7% of respondents said they were concerned about personal finances, 9.6% said they were comfortable with using public transport or alternative transport, and 9% said they’re waiting for better bargains. 53.3% said they’re holding off as they say it’s too early to upgrade.

The Federal Chamber of Automotive Industries recorded a 21.8% drop in car sales in September 2020 compared with the same period last year.

About Savvy

Savvy is one of Australia’s largest online financial brokers, focusing on personal and commercial financial products. Founded in 2012, the firm has seen rapid growth, a testament to their provision of market leading rates and reaching customers with the latest in media and technology. Savvy is a proud supporter of Kids Under Cover, a charity assisting homeless and at-risk youth to strengthen their bonds to community and education. Savvy was named one of BRW’s fastest growing companies in 2015.

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