Hi all,
What's the best way to get competive car finance rates? Having had a look online, they all seem higher than normal?
Cheers,
T4Z
Researching Interest Rates (Car)
the4thzodiac on 30/12/2017 - 20:32
Comments
Trust me, you are paying interest on these loans. You can’t haggle with the delaer, the price is fixed and only on certain models. It’s a way of getting gullible people across the line when buying a car. The interest is built into the price of the vehicle… Worst of all, a lot of these 0% loans have balloon payments at the end that run into the thousands and most people have to take out another loan to cover the balloon payment…
Just type “zero interest finance scam” into google and see what it comes up with…
You can often end up better off by haggling with the dealer and obtaining outside finance at a much lower rate…
I can only talk from personal experience purchased a Toyota with zero interest and was able to haggle down the sticker price. Paid a $7.50 fee but that was it. You could however only get a maximum of four years and it is your choice if you want balloon payment at end. I did at the time because I was paying the balance of another loan but once that was paid made sure I upped repayments so that I had no residue left. Paid absolutely no interest as far as I know unless you count the $7.50 fee.
Did you check the price compared to elsewhere to make sure it wasn't artificially higher?
I can confirm (and you can believe me or not) that the 0% on Camry/Aurion doesn't cost the sales department anything, so purchase price will be the same regardless of payment method.
@Quantumcat: yes phoned several dealerships b4 heading to local one and did not mention I was going to go interest free. Took lowest quote to dealership and used that as part of my bargaining strategy including some other tactics I had up my sleeve. They even used the 'leave the mobile phone on desk whilst they went to talk to sales manager' which I used to my advantage after telling the salesman I needed to make a call to my wife.
@mgh4me: What's the leave mobile phone on desk trick?
Any strategies to share that might help uncertain hagglers like myself?
Also - how much reduction were you able to achieve, if you don't mind me asking, thanks.
@the4thzodiac: purchased late 2012 so speaking from memory. I think at the time the aurions were 33k for basic white and I got one in burgundy 29999 drive away. The phone trick is common one used by car salesmen particulary if you are with your spouse or partner. Sales manger phones them they answer and leave phone in convenient place, go to sales manager and listen in on your conversation. In this case I told my wife over the phone that I will go for the offer from the other dealer of 29k drive away (no such offer had been made). When salesman came down the first thing he did was to pikup mobile phone and I told him the best I could do was 29999 drive away or I would have to go else where. Accepted offer after going to sales manager again which is all part of the drama. The other stratergy I used concerned colour choice. After looking at cars they had in stock I told them I wanted a colour they did not have although I wanted the burgundy one they had on the lot all along. When talking to wife on the phone I complained that I would have to go to dealer who had the preferred colour. When haggling down sticker price I added that burgundy was not my choice but would be willing to take it if they would do for price I wanted. Deal done and my offer was accepted.
It's finished now but let me just chime in by saying the Toyota deals are genuine 0%/3.9%. Doesn't cost the new car department anything to do, and finance commission is SFA.
This is an exception though as Toyota have their own finance division.
What you say was correct when Holden ran a 0.5% promo
Anything from 6% to 8% is normal from 3rd party finance (not the dealer or manufacturer).
What do you think is higher than normal?
Do the sums on 6% on a 30k car over 3 years… it’s actually not that much interest.
It is $2,855.69 interest ~ 9.5% of the cost of the car is not much?
Correct. Spread out over 3 years it’s not much for the right to buy a brand new 30k car with no upfront capital.
12% variable with $199 est fee (BOM) and typically 8-9 online via google search.
Shop around then. 6-8% can be had. Depends on your finances though I guess.
Depends on your finances though I guess.
That's the main kicker, not everyone is in the same position
Rather than going direct to your bank or using the dealers provider; contact a broker (someone like Stratton or Aussie). These guys deal with all major providers/institutions and will get you the best rate possible, without you doing the leg work. I have bought a number of cars like this, and it’s been a breeze. I often had rates between 4-6% depending on amount borrowed and life of loan. Both mine and my missus are done with Macquarie at 4.9% on 5 years, with no termination fees. The lower the rate often has admin costs associated should you want to terminate early. But your personal risk will be a factor too. And then lastly what the market is doing - all the majors have just had extensive scrutiny on their borrowing, which I understand has had a play on pushing things up a tad.
Things to note though;
They will push a loan where they get greater commission, but just stick to your guns - ensure you ask what are the admin costs, early termination etc to get a proper understanding how it all works
They will try slot in a broker fee above the standard establishment fee set by the bank (~$300/400) once you settle on someone and the paper work is drawn up; ensure you tell them you want this waived if you see it (never had a broker refuse given they already getting commissions). If they say no, threaten to walk as pen is not to paper at this point. You will already have the info of the provider so they will know you can go direct if they don’t.Other info;
Interest free loans are a gimmick - they often don’t let you haggle the car price (even the 1-2% loans don’t have much wiggle room).Cheers - much appreciated, that's a lot of insight.
Thanks guys, yes you're right - early stages of research, so trying to gather info apart from just the googles.
Depending on what vehicle you want. Some vehicle manufacturers offer zero or very low interest but only on new cars.