BUYING A CAR, TRUCK, FORKLIFT, EXCAVATOR, BOAT, JETSKI, OR AIRPLANE?
GET YOUR FINANCE PRE-APPROVED Securing finance for your new VEHICLE through the dealership is easy. Produce your driver’s license and a few other documents and, before you know it, you’re behind the wheel of your new car.
But not so fast.
In the year to November 2018, Australians borrowed $8.1 billion to buy vehicles. That means “more than $1.4 million in interest is paid back on these new cars every single day. That’s around the same value as 39 new cars,” says Graham Cooke from the comparison site Finder.
Most of us don’t have a spare $30,000 lying around to pay for our new vehicle, so we need to secure finance. But to prevent a severe case of buyer’s remorse, we must take a closer look at the reasons why you should arrive at the car yard with pre-arranged finance with your broker.
1. BARGAINING POWER
Walking into a car yard is not a fair fight. While you might purchase a car every five years, salespeople practice their selling techniques every day. Therefore, it’s important to go in knowing what you want before you step onto the lot.
Do your research. Set and stick to your price point. Know the recommended price and pre-plan your insurance and finance options. Going in with your money pre-arranged gives you greater bargaining power. With preapproval, you effectively become a cash buyer and there is no need to deal with the finance department.
Car sales is a study in human motivational psychology. There is the pressure to buy now – the so-called ‘impending event’ strategy that will convince you that the deal will disappear quickly.
2. ROLL UP, ROLL UP, GET YOUR NEW LOAN HERE!
Pre-arranging finance helps you to avoid a much bigger problem – getting sucked into a bundle of costly extras that makes a lot of money for the dealer.
Both ASIC and the Royal Commission have been critical of the high-pressure sales tactics in car yards that force consumers to quickly make a decision on rolling up a range of products into one single finance deal including the car, the costs of the finance and insurances.
The Royal Commission has recommended a pause in the sales model so that insurance can only be offered at a different time to the sale of the car. A particularly nasty practice was so-called ‘flex commissions’ where car yards were able to inflate the interest rate above that offered by the lender and were rewarded a handsome commission for their efforts. ASIC banned the practice in November 2016.
3. LEGAL AND REGULATORY REQUIREMENTS
Smoke and mirrors are smoke and mirrors; there is still the issue of conflict of interest in the area of the financing of cars, when the dealer is directly remunerated by the lender.
Having your finance pre-arranged means being able to tyre-kick at your leisure - without the high-pressure tactics to get you into a finance package – one that serves the commission structure of the dealer over your needs and personal budget.
Cars cost money to buy and run. There’s interest on any finance, insurance, registration, and maintenance. The key to making a good purchase is being prepared, and pre-approved. This will help you get the best deal and allow you to enjoy your new wheels.
Collingwood Park (Ipswich) Qld 4301
Please Take Note
U1st Realty is a licenced real estate agent and is able to give property advice within the scope of their licence. The nature of the professional advice given will vary depending on the nature of the Real Estate Activities you engage in; but will require (at a minimum) you need to be advised by a licensed real estate agent, a licensed builder, a solicitor, a Financial Advisor, and/or an accountant. You further acknowledge and agree that U1st Realy Pty Ltd is not licenced to provide financial advice and therefore any information we may offer you is entirely factual information in nature, except in the areas that we are licensed to advise you on. We provide quality factual information and real estate guidance to our clients so that you are able to question and engage the various appropriately licenced professionals to get the personal advice you need; and to help you learn from the experiences of others that have already engaged in certain Real Estate Activities that you may be considering.
Allan Pearson of RedCap Finance Brokers is an authorised finance advisor with EZFinance Pty Ltd. ACN:140178383 - Australian Credit Licence Number (ACL): 392611 and it's authorised Advisors are fully qualified to give advice and assist with all/any consumer lending. EZFinance Pty Ltd is a member of AFCA.
Allan Pearson of RedCap Finance Brokers is an authorised finance advisor with EZFinance Commercial Pty Ltd (ACN:639833604) and it's authorised advisors are fully qualified to give advice and assist with all/any Commercial / Business lending. EZFinance Commercial Pty Ltd only advise and assist with "Non-Coded" finance (as described in the NCCP act 2009) and are not a member of AFCA.