Car Finance - Great News, More Options!

June 24, 2013
Ben Herden

Hi all

You may know that we have offered car loans for quite a while.  We can arrange these in a little as 24 hours - it's a very quick turnaround (as opposed to a home loan application).  

The good news is our lending panel has just exploded - we now have 11 lenders all fighting for you business.  

Did you know that finance through a car yard, while presented as a cheap easy solution, can actually end up costing you MUCH more in the long-run?  They use a lot of tricks.  For example - those 2%pa deals you often see.  What can go wrong?  The interest has been built into the cost of the car! You're paying more for the car!  You need to borrow more for it. Shop around on the phone, find a car yard not offering the cheap rate and see what you can save on the purchase price. 

But so what - what difference does that make?  You'll be paying the same amount at the end of the day, right?  The problem comes in 3 years time (yes, these offers are quite often for 3 years only) when it comes time to value your car for a tradein or new finance.  Let's say you bought a $40,000 car, but ended up paying $45,000 for (the interest being built into the car price).  That car wil depreciate to 50% of it's value within 2-3 years, so lets assume it's only worth $20,000 in 3 years time.  The car will be worth 50% of the original value (not what you paid for it).  This could leave you with the serious issue of "negative equity" - you will owe more than the car is worth.  Problem.  You'll need to contribute a serious cash injection.

Another thing to watch is that some car yards quite often will only disclose the "base" interest rate, not the rate you will actually be paying.  They will add in commissions and insurances on top of the base rate which will push the real rate of the loan (and the repayments) higher.  

The best bet is to get a pre-approval before you go shopping.  That way you will be in total control - no tricks, no confusion, no emotive buying.   All you need to worry about is getting the best price for the car.  The loan can be settled and the new car all yours in 24 hours - it's very fast.

Call Mortgage Choice at Gymea on 02 9525 4544.  We'd love to help you into your new car.

Posted in: Car loans & leasing

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