Am I Understanding This Car Finance Package Correctly?

barbienewb on 10/03/2018 - 16:40
Last edited 10/03/2018 - 16:47

Hi,

(Apologies for those tired with following my journey to buying a new car…!)

I had a phone-call from the finance department to take deposit for my new car and whilst doing so they tried to sell me on the below finance package through Hyundai Finance / St. George Bank. I was intending to pay cash, but this offer seemed interesting and I wanted to run it by those who are a bit more experienced to either help me ask the right questions and/or check my math…..

· Term: 36 Months
· Total Deposit : $7200
· Balloon: N/A
· Rate: 0.04%
· Fees: $455.80 ( Establishment fee + Security Interest fee)
· Monthly Repayments: $846.63 ( inclusive of $5.95 Direct Debit Fees)

He also said there would be no early repayment fee, although I don't have that in writing yet or do I have the full contract ts and cs. He did say that this deal was a special offer tied to the particular model I was buying..

Based on doing the math above though the total cost to me over three Years would be $38,134.48.

The cost of the car drive-away was $36,990 meaning i'd only be paying an extra $1,144.48 (3.09% more).

Have I understood that correctly? I've tried to do some quick research from banks to compare whether I could get a better deal elsewhere, but so far I can't find one and this deal seems to have the air of 'to be good to be true'?

I also thought that if I went ahead with this finance package I could put the money set aside for the car (less the deposit of $7,200) into a ING savings account at 2.8% and over the course of the 36 months the interest I would earn on the $30,090 savings (less the $846.63 p/m) would work out at $1,266.89.

The convenience of paying $846 per month is attractive to me whilst still having access to the money we saved for the cars should we need it for whatever reason.

Am I missing something? - is the finance guys trying to sucker me into an application to then alter the terms based on my circumstance (n.b Have been fully employed for 4 years with good credit rating).

Any advice for those who are more experienced than me would be extremely valued. I am currently leaning towards doing this…

Automotive

Comments

  • original15 on 10/03/2018 - 16:54
    +1

    Does car being under finance impact what you pay for insurance? (Have no idea but is always one of the qs u have to complete on insurance quotes)*

    *assuming you’re not one of those people who can afford a car but after they have an accident say they couldn’t afford insurance and start a thread asking for advice

    • barbienewb on 10/03/2018 - 17:02

      Good point that I hadn't considered - I just rang my insurance company and it would only impact the quote I received by a further $29.63 which I would be happy to swallow.

    • Ocker on 10/03/2018 - 18:31

      Yes it does

  • oscargamer on 10/03/2018 - 16:57

    What's the exact make, model and build year of the car? (not model year)

    And paying any fees for DD is total and utter BS. Costs them NOTHING

    • barbienewb on 10/03/2018 - 17:05

      Thanks for your response Oscar!

      It's a 2017 Hyundai Santa Fe Active X Auto 2WD MY18 (DM5 Series II)

      The finance guy said there were no fees, but when I pushed he clarified to say there was no brokerage fee but there was an establishment fee. Are you suggesting I could negotiate this down to nil?

  • oscargamer on 10/03/2018 - 17:15
    +1

    DA price is OK to start with, but I guess you are beyond that point though.

    Realistically you need the contract in front of you before we can comment meaningfully and before you can meaningfully attempt to change anything (that may or may not exist)

    At the moment, my only comment would be, I would tell him to stick the DD fees up his axxx ($215 saving).

    • barbienewb on 10/03/2018 - 17:20

      Yea - As the intention was to pay cash I felt I had got the DA price as low as I could get them (including getting a couple of minor extras thrown in). This finance option was something I wasn't expecting to get my head turned by and as I have so much mis-trust for these finance guys i'm incredibly skeptical.

      I'll request the full contract and let him know that I am not happy paying DD fees and report back.

      Thanks again Oscargamer2

  • [Deactivated] on 10/03/2018 - 17:55

    Do you have a mortgage?

    • barbienewb on 10/03/2018 - 18:32

      Nope

      • Quantumcat on 13/03/2018 - 10:34

        Since you have $38,000 lying around have you considered getting one?

  • spackbace on 10/03/2018 - 18:05

    Does sound a bit too good to be true

    He won't waive the fees or Establishment Fee - Establishment fee is likely his commission, and DD fees would be out of his control

    But yeah I've never heard of a manufacturer doing close to 0% that wasn't Toyota (on Camry/Aurion petrol)

    • barbienewb on 10/03/2018 - 18:34

      Yea - I’ve assumed as much that he’s making his commission on the establishment fee. I’ll see what he comes back with on the DD fee and in the full contract terms and conditions too to see if there are any hidden surprises.

  • zonra on 10/03/2018 - 18:13

    Keep in mind that you’d need to pay tax on the interest earnings in your ING account so take that into consideration.
    If you have a mortgage offset acc maybe parking the fund there is a better option.
    Personally financing sounds like it’s way more trouble than it’s worth unless you really think you’re gonna need the fund.

    • barbienewb on 10/03/2018 - 18:38

      Yup - that’s true and I hadn’t considered that. Thanks for highlighting!

      No mortgage offset acc for us. We’re living the great renters dream…

      I’ve always thought personal financing was more trouble than it’s worth and have stayed clear as a result. If there is no early repayment penalty though than I could always pay it off a couple of months down the line if I feel it’s not working for me….

      • zonra on 10/03/2018 - 19:28
        +1

        That’s the main reason I stay away from finance and lease terms, the hidden fees and clauses.
        You’d want to go over that whole contract with a super fine comb. In the end, all that effort and worrying kinda negate any sort of benefit from it, especially when you can afford it up front.
        Unless of course, you can foresee that you might need the fund somehow.

  • djkelly69 on 10/03/2018 - 18:49

    Are you sure the interest rate is 0.04%? Not 4% (which even seems low for a dealer)??

  • barbienewb on 10/03/2018 - 19:15

    It’s what he said over the phone and confirmed in his email. I’m sceptical though that he is/was hiding the true costs elsewhere which is why I wanted to check with anyone on this community who may have better experience.

    • barbienewb on 11/03/2018 - 09:44

      Cheers - have spent some time reading through that. It looks like this is the offer he is trying to sell me on, but I can't quite get the numbers to match. His 0.04% interest rate then must be contained in the 1.1% comparison rate once his fees are included right? ugh… you shouldn't have to be detective to try and clarify these matters should you…

      • oscargamer on 11/03/2018 - 11:45

        i guess you should take some comfort that it's a legit deal, not some shonky back yard lender

      • spackbace on 11/03/2018 - 12:48
        +1

        Comparison rate includes fees, but likely doesn't factor the DD fees

  • MITM on 10/03/2018 - 23:06

    Always use OPiuM (other peoples money) when you can - meantime you could sell (loan) your money through one or more of the P2P micro lending sites for up to 10% or more where the risk is spread amongst multiple lenders. (Nimble etc)
    Over 36 months you could earn 7-8 thousand dollars.

    • barbienewb on 11/03/2018 - 09:45

      Not sure how comfortable I am loaning out the money I need to pay the car back with…sounds a bit risky and also unsure of the practicalities of this when paying back monthly amounts too. Appreciate the idea and all but not sure this is for me.

  • Klevakiwi on 15/03/2018 - 11:26

    Followed this thread with interest, what was your decision?

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