With end of financial year sales fast approaching, you may be looking to get a great deal on a new car. Purchasing a new car is an exciting experience and you’ll want to be out on the road as soon as possible.
To make this happen car dealerships offer a finance option with on-the-day approval, but this isn’t always the best decision in the long run.
Dealer finance is a tool to help salespeople get a deal across the line and doesn’t necessarily focus on the customers long-term financial wellbeing.
Here we discuss the pitfalls of dealer finance and things to look out for.
Zero percent finance deals can sound too good to be true, and that’s because they often are. The zero percent interest period may last for 12 or 24 months, but after that time the loan often reverts to a much higher interest rate.
It’s also important to remember that dealers will often incorporate the cost of offering lower interest rates in the price of the vehicle. That means that you might not be getting the great deal you think you are, and can mean that you won’t be able to negotiate a better price or trade-in offer.
Dealer finance will often incorporate a balloon payment that is paid at the end of the term of the loan. These lump sums can help manage cash flow and reduce repayments but can be a big hit when the time comes to pay it. Unfortunately due to depreciation, the balloon payment can even end up costing more than the car is actually worth.
Explore your options
When buying a new car, you should explore your finance options. Take the time to fully understand the loan including any upfront or ongoing fees and reading the fine print for any hidden terms. Keep an eye out for things such as extra repayment penalties and account keeping fees as these can add up!
At MOVE Bank, we just charge an establishment fee to set up the loan, but there are no ongoing fees or penalties for paying out the loan early.
Looking to buy a new car?
Drive confidently with our award-winning New Car Loan.
Fixed rate new Car Loan 1
59% p.a. (4.86% p.a. comparison rate2)
Apply for our New Car Loan online today at movebank.com.au/newcar or call us on 1300 362 216.
1 Available only for new lending and excludes internal refinance. 2 The comparison rate is based on a secured loan of $30,000 for a term of 5 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Fees and charges apply. Rates quoted are correct as stated and are subject to change without further notice. All rates quoted are per annum. All applications are subject to MOVE Bank’s standard credit assessment and eligibility criteria.