Are new cars looking expensive?

My office is constantly being asked to prepare quotations against new car purchases from main franchised dealerships. What we are seeing is that there is clearly a shortage of all makes of cars (especially electric) but also that the dealerships are pushing their own manufacturer finance products with interest rate that seem higher than expected. Obviously the cost of money is moving, but not by the comparison levels being passed on by the showrooms to consumers. There seems to be a take it or leave it approach, which may be their reaction in comfort to the supply and demand situation. Don’t rush in, the real cost of any purchase and indeed of the total ownership is in the detail. Check the offer and talk to us, our interest rate offering across all lenders is competitive and currently running at 1-2% lower most franchised dealer offerings.

How?

Remember, once you have driven from the forecourt the responsibility for your purchase becomes yours, monthly payments, depreciation risks, and ultimately a final balloon payment to bear in the future. Imagine buying your home and facing a final payment equivalent to 60% of its purchase price, unthinkable really, but we do it on cars and very expensive ones too!

Why?

My own thoughts are that the people selling the products focus you on the monthly payment, rather than the overall ownership cost and when the emotion of a new car purchase is running through our veins, we may not be as vigilant as we could be. It can be a fast transaction and often we don’t slow it down to look clearly at the detail.

So what should I be looking for?

Check the overall deal, monthly payment is one thing, but what about the interest rate and charges. If there is heavy or creative discounting on the car then the dealership has to make up their margin somewhere. From my own experience, I have found that dealer staff do not explain a package properly, because they don’t really understand it themselves, despite being legally bound to ensure we are being treated fairly.

The monthly payment looks cheap!

If it does then really check the detail. As I suggest above, nothing comes for nothing and you will be paying for it somewhere and usually at the end of the agreement when the depreciation has taken its toll. Quite often we see negative equity and it’s always the result of a small deposit and exaggerated balloon.

If you are looking to buy a car, van, or truck from a franchised dealer, ask us to compare the numbers and more importantly the type of facility. We will undoubtedly fully explain the detail and if it looks like a good deal we will endorse it for you. If not – look to improve it!