Posts Tagged Looking
Looking for a New Car Loan in Australia – Then Use a Broker
Posted by in Uncategorized on January 20, 2010
Quite often when you are looking to buy a new car, the dealership will put considerable pressure on you to sign up for the finance with them. This was my experience recently when I purchased a new car. It would certainly have been more convenient to simply sign up at the dealership but I decided to check out other options and phoned my mortgage broker (he had helped me find a cheap home loan and I knew he also had access to cheap rates for people after a new car loan). What I discovered is that you need to be careful when considering a new car loan. Most new car finance includes a residual figure – this is the amount that remains owed on the car at the end of the lease period. For example you might obtain a new car loan for the purchase of a $50,000 Holden or Ford. The lease or hire purchase agreement will be for say $30,000 over a 3 or 5 year term with a residual of $20,000 – this is the amount that is payable by you at the end of the new car loan term. Quite often financiers will quote a weekly or monthly repayment figure which because it seems manageable also seems attractive. But more often than not the interest rate is much higher than you would think. Make sure when you take out a new car loan that you know the real interest rate that you are paying. While you may want to keep your monthly repayments to a minimum you should try and ensure that by the end of the new car loan term the residual amount you owe will be covered by the value of the car. There is nothing worse than taking obtaining new car finance for 5 years, making the minimum payment, then finding at the end of that new car loan you owe much more than the car is worth. It is painful to have to find $5000 in a lump sum to pay out the lease whereas if you has tightened your belt a little more during the new car loan term then instead of having to pay a shortfall you might find some extra dollars in your pocket. By talking to my mortgage broker I was able to access a terrific car lease and I was also advised about different new car loan structures that can be quite tax effective. My mortgage broker was able to put me onto a package that involved salary sacrifice as well as including roadside assistance and fuel so that after tax I was much better off. I had been unaware of such structures but by relying on my mortgage broker I actually ended up saving myself a lot of money. Don’t rush into the car dealership arrangement without first considering other new car finance available in the market. A good lease broker (or in my case my mortgage broker) will invariably be able to source a cheaper new car loan for you and may have recommendations on how to package it more tax effectively. My mortgage broker was also able to negotiate a better price on the actual car purchase as well, because of volume discount arrangement he had in place with a number of car dealers throughout Australia.
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Looking for a New Car Loan? Then Look Beyond the Car Yard!
Posted by in Uncategorized on January 8, 2010
Last weekend I was out looking to buy a new car – a Holden Calais 60th anniversary edition in fact. I had been to a few dealerships and finally made a decision to buy. The salesman asked whether I had pre-arranged a new car loan. I hadn’t done so and as a result I was ushered into the office and bombarded with a whole heap of numbers relating to a proposed new car loan. What I couldn’t understand was how instead of telling me an interest rate the dealer focused on the monthly installment and making sure I was happy with that. He juggled around with the residual value so that the new car loan amount was reduced when I indicated that I would struggle with the new car loan payments he first calculated. It’s funny how when you are considering a new car loan all you want is..to take delivery!! You don’t often take the time to run the numbers and actually establish just what interest you are paying. I decided to contact my mortgage broker – he had looked after me when I had recently applied for a cheap home loan and at the time had said he could also help with a new car loan if I was ever in the market. I am always astounded at the level of knowledge of my mortgage broker. He has his finger on the pulse – not just with mortgage finance but also with new car finance. He knows who is in the market, what their terms and conditions are, who is offering the best rate… why a new car loan with Lender A might be better than a new car loan with Lender B even though the monthly installment due with Lender B is lower than the new car loan repayment with Lender A. What really surprised me was threat my mortgage broker was also able to source me the identical car at a lower price. It seems that some mortgage brokers and lease brokers have arrangements in place with car dealerships whereby they can get the car cheaper. This is apparently because car dealerships often have a bonus structure operating and if a certain volume of cars are sold within a month then the bonus kicks in from the manufacturer. If say a car dealer needs to sell 30 cars in the month and coming in to the end of that month he is sitting at 28 cars then the bonus amount he will lose if he does not reach his volume target will be significantly higher than the amount by which he could discount the sale price to you. This guy is not worrying about the new car loan he just wants to ensure the target is reached. He’ll worry about the new car loan once he has secured the deal with you. As a random buyer you are not aware of these statistics but where a mortgage broker or lease broker deals with new car finance they will often know where the car dealership’s sales are at and whether the timing might be right to negotiate a good deal. I ended up a very happy chappie because I obtained a new car at a lower price with a new car loan that really suited me well.
Last weekend I was out looking to buy a new car – a Holden Calais 60th anniversary edition in fact. I had been to a few dealerships and finally made a decision to buy. The salesman asked whether I had pre-arranged a new car loan. I hadn’t done so and as a result I was ushered into the office and bombarded with a whole heap of numbers relating to a proposed new car loan. What I couldn’t understand was how instead of telling me an interest rate the dealer focused on the monthly installment and making sure I was happy with that. He juggled around with the residual value so that the new car loan amount was reduced when I indicated that I would struggle with the new car loan payments he first calculated. It’s funny how when you are considering a new car loan all you want is..to take delivery!! You don’t often take the time to run the numbers and actually establish just what interest you are paying. I decided to contact my mortgage broker – he had looked after me when I had recently applied for a cheap home loan and at the time had said he could also help with a new car loan if I was ever in the market. I am always astounded at the level of knowledge of my mortgage broker. He has his finger on the pulse – not just with mortgage finance but also with new car finance. He knows who is in the market, what their terms and conditions are, who is offering the best rate… why a new car loan with Lender A might be better than a new car loan with Lender B even though the monthly installment due with Lender B is lower than the new car loan repayment with Lender A. What really surprised me was threat my mortgage broker was also able to source me the identical car at a lower price. It seems that some mortgage brokers and lease brokers have arrangements in place with car dealerships whereby they can get the car cheaper. This is apparently because car dealerships often have a bonus structure operating and if a certain volume of cars are sold within a month then the bonus kicks in from the manufacturer. If say a car dealer needs to sell 30 cars in the month and coming in to the end of that month he is sitting at 28 cars then the bonus amount he will lose if he does not reach his volume target will be significantly higher than the amount by which he could discount the sale price to you. This guy is not worrying about the new car loan he just wants to ensure the target is reached. He’ll worry about the new car loan once he has secured the deal with you. As a random buyer you are not aware of these statistics but where a mortgage broker or lease broker deals with new car finance they will often know where the car dealership’s sales are at and whether the timing might be right to negotiate a good deal. I ended up a very happy chappie because I obtained a new car at a lower price with a new car loan that really suited me well.
