Buying a new car and the hidden pitfalls of dealership financing
Buying a car can be a very exciting time in one’s life, however it is important you are aware of your financing options to avoid being caught up in dealership financing packages offered to you by car sales representatives.
There are many hidden traps with dealership financing. Ensure you know exactly what you are applying for. None of us like to be locked in, especially when it comes to deciding on the make and model of the car you wish to buy. It’s important to be flexible and with dealership finance, there are many hidden pitfalls.
So let’s uncover what many of us do not know about dealership financing
Firstly, this form of financing is limited to specific makes and models of new cars. In addition, customers cannot negotiate the price of the vehicle, leaving you locked into the terms of the loan which may include upfront or ongoing monthly fees. This can offset the low interest rate which is usually a strong selling point.
Whilst dealerships may offer an initial low interest rate, there is a hidden trap!
Low rates are only available for a limited period of time usually up to 3 years. Dealerships can get away with offering an initial lower interest rate as many car manufacturers provide a rebate to the dealer allowing them to pass on the perceived ‘lower rate’ to their clients. Little do you know, you are not really getting a lower rate but are exposed to many other hidden terms and conditions.
Dealerships Finance and Insurance representatives will present you with one, if not two options to finance your car and will have one insurance provider who will recommend products like GAP insurance and extended warranties. While both of these products are beneficial, they are inconsiderate of your needs and may not be the most suitable option. It is important you check the amount charged is not above the market value.
Another hidden fact to be aware of is your repayments. Car sales representatives will try to match your budget to show how you can afford the regular repayments. However at the end of the loan there will be money still owing, forcing you to make a balloon payment to ensure the balance is repaid. In today’s society with regular payments and tight family budgets, any extra payments due can have a significant impact on your family’s finances.
Don’t get caught in the pitfalls of dealer financing. Explore many more smarter car financing options today with Marco from Stars Broking Services.
Call today on 0405 252 808
