How have your dealership experiences been? They're pretty sophisticated in their approach at maximising their profit from your encounter with them, knowing that most likely they will only ever get once chance at you: even if the dealership is still there and you go back to them the same sales people will have long spent their commission they earned from you and moved on. At no stage do they seriously act for you, or in your best interests.
It’s important to distinguish the difference. The motor dealer business model is to sell you something shiny and pretty for not much profit, and while you’re distracted and excited at the prospect of the new car, introduce you to their ‘whole of wallet’ experience. For example: ’you want to protect your investment/image/don’t you? You’d spend a few dollars a week to make sure your car stays looking just like new right? Dealers often charge around $2500 for a ‘protection pack’ consisting of window tint (can buy from tint-a-car outlets for a couple of hundred dollars) fabric protection (2 or 3 cans of 3M Scotchguard for about 10 bucks each and how well do they apply it?) and paint protection (wax and polish $55 at Supercheap). Why feed the beast? Its your money.
I recently had to replace the brakes on my car. The dealer quoted me $2680. Using all original parts, a European car specialist charged me $921.
Is the dealer’s business model to look after you, or to make you feel like you were looked after? Ever notice when you buy a car, every second person in the dealership shakes you hand and congratulates you? For what? You didn’t just become a parent or get married! Its to keep the feeling of euphoria going so they can pump another ‘must have’ overpriced product or service into you.
We often get asked to review car finance that a dealer has quoted. Almost without exception, we see either;
· A decent rate with a hefty not disclosed ‘origination fee’ (I've seen $1500) added to the loan and monthly or fortnightly payment processing fees, or-
· A heavily subsidised interest rate (think 2.5% or even lower) where the dealer does actually pay to the finance company part of your interest on the loan to make it look lower. Of course, that’s less discount you’ll get on the sale price, or it will be last year’s base model in a colour the no-one else wanted (re-sale value is going to be how small?) and you’ll have to repay the loan over a maximum of 3 years.
We offer a free service of reviewing any other finance quote for any vehicle or equipment finance. We’ll tell you quickly and without any hard-sell if it’s a good deal or not, and if there are better options available, and what they are. We leave it to you decide, and if you’re kind enough to let us help you, you’ll have the flexibility to use the money to buy a similar vehicle of similar value, at pretty much any reputable dealer or car broker.
You wouldn’t buy your car insurance from a motor mechanic would you? Don’t risk your finance with anyone but a finance professional, offering consumer law protection, access to dispute resolution service, and full industry accreditation. In our case, we offer 30 years plus experience to back up our actions.
Until next time, eyes and minds open, and as always, feel free to call at any time to discuss any finance related matter.
John
Your Finance Insider
