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.
Mark Bona is the managing director of My Choice Finance, the company is a mortgage broker offering new car finance and new car loan.