How you finance your next vehicle is an important decision that needs to be made objectively. It is easy to be swayed by the lure of car dealership finance – after all, it can all be dealt with in-house, they clearly specialise in car loans, and the interest rates seem on par.
However, car yards are motivated for you to finance the vehicle through them, and will be determined to make the most out of the sale. They’re a business trying to make money after all. And while at face value it might seem the easiest choice, it’s often the most expensive. It might be the best car sitting in the yard, but the best finance might be somewhere else entirely. Here’s why a finance broker is your best option:
1. Brokers work for you
You can find any vehicle in any car yard, and your broker will do the finance shopping for you. Which means there’s no leg work for you. Your broker finds the deal while you find the car.
By contacting your finance broker in advance to secure pre-approval, you can go into this vehicle purchase armed. You’ll know how much you can spend, and you will avoid having to deal with the car dealership keen to sell you on their own financing option.
It makes sense that car yards will push for your business. They won’t earn any interest on car finance obtained elsewhere. The in-house option might seem convincing, but understanding that the dealership is in the business of profit can help you to be objective. Preparation is key. Having brokered finance already in place can give you the upper hand in negotiations.
2. Brokers can offer greater flexibility
Since your finance broker is not affiliated with the car yard, they’re able to look for a finance deal that has the options and flexibility you want. Once you’ve found the financing option you want, you can go to any car yard and choose your vehicle.
If you finance directly through the dealer you will find the finance option far less flexible, which can cost you hundreds if not thousands more over the term of the loan. The loan options can be more restrictive with higher fees and penalties for early payout.
You’ll also have less negotiating power over the purchase price, and could be locked into paying more for the car as part of the in-house financing deal. In-house financing means you are bound to the car in their lot. You can’t take your business elsewhere if you find a better car somewhere else. Car yards are understandably only going to finance their own vehicles.
This means if you change your mind about the car at the last moment, you can’t take that finance anywhere else. You’ll have to go through the entire financing process again with another car dealership.
Brokered finance is portable, giving you the freedom to choose the car you want from any yard.
3. Brokers have a network of lenders
Since your finance broker works in the industry of financing, they have access to their network of lenders to get you the best deal. They can access great options you won’t get through a car yard.
Your broker can present you with different types of financing options. Do you need a secured or unsecured loan? Is this a commercial hire purchase? Do you need a line of credit and flexible repayment options? A broker can tailor your financing solution to suit your particular vehicle purchase.
Final thoughts
The key is to avoid being at the mercy of car dealers, and confined to limited and costly finance. Your time is valuable, and your money hard-earned. A knowledgeable experienced broker will know what the best deals are, and be able to customise them to your personal circumstances and budget.
If you are in the market to purchase a new vehicle for personal or business use, contact Ron on 0412 534 503.
This article first appeared at Westminster National.
