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PART I

A common occurrence when financing a new asset especially a new vehicle or boat from a dealership is the consumer gets caught up in the emotion of buying the new item and tend to overlook what's important - the finer details of the purchase & finance contracts!! The salesman are trained to expose this to maximise their companies’ profits, they know your excited and play on the fact "you can get your new asset today, just sign here, here & here and it's not until you make the first payment a month later that it hits home and you look at what you signed, you soon realise you have been taken for a ride not only in the purchase of the car but also the finance package.

 PART II

Another tactic employed by some of the major franchised car dealerships is the Finance Manager will provide the customer who has just bought a vehicle through them with a finance package which includes a ridiculously high interest rate I.e 12-14%. The Finance Manger is hoping 1 of 2 things, you're too excited to even bother shopping around and you sign on the dotted line. If you know you can achieve a better rate by looking elsewhere then the Finance Manager lets you go and source a better deal elsewhere. As soon as you let them know you have found a better deal they will ask you "what interest rate did you obtain" you reply with, as an example "8%" and all of a sudden they can get you a better deal of 7.7% and you end up proceeding with their lower rate after wasting yours and another financiers time getting you that better deal! One thing you must ask yourself, does the dealership finance deserve your business? Especially when they were willing to charge you 12-14% only a day or two beforehand

PART III

Why use a broker? By using a finance broker you have access to a number of lenders, anywhere from 15-30 different options, depending on the asset you are financing and the company you are dealing with. Compare that with a bank where they are trying to sell you their ONE suitable product. More options means better packages for you. A broker will gather all of the necessary information they require from the client to be in a position to then sit down and match you with not only the best deal but also the financier that will most likely approve your application.

As an example, you approach one of the major banks for a $40k boat loan, they say “yes we can assist with that” knowing quite well they do not have a “Secured Boat Loan” product however they would rather tell you yes rather than no and most likely the person you will be dealing with will be applying for an “Unsecured Personal Loan”. What is so bad about that? You may ask, well most unsecured personal loans products incur a higher rate of interest as they are considered a higher risk as there is nothing the bank can take security over and ultimately repossess if you fall into arrears and or default.

By using a broker, it gives you more chances of 1. Being approved the first time, with no unnecessary enquiries on your credit file and 2. A more competitive loan package as they have many loans to compare against and not just the 1.

PART IV

How multiple applications for credit affect my ability to get the best deal, by all means it is your God given right to shop around however don't go overboard. If at first you don't succeed, don't try, try again until you've determined why you were rejected and have taken steps to address it. Credit scores are the primary determinant of who gets approved for loans, and if you didn't check your credit score before you applied the first time, it behooves you to do so before applying again. Many loan applications automatically trigger a credit check, each of which can knock a few more points off your credit score, making what might have been a bad situation even worse.

If your credit score is accurate and you've taken all possible steps to improve it, you're ready to do what we recommend for all car buyers: Shop around for a good interest rate before returning to a dealership. 

PART V

You’ve found the new car of your dreams but before you can drive off there’s one loose end...you need to sell your old car first! This is an area where most dealers capitalise on the customer’s lack of research and knowledge. When purchasing a new vehicle, the client will spend many hours researching a suitable vehicle and pricing via the internet before even stepping foot into a dealership, most of the time the prices for the new cars are everywhere and the competition is fierce and I can comfortably say that the profit margin on most new cars is very minimal. So an area that the dealers will try and exploit and make the most money from is the customer’s trade in.

So this is where the dealerships once again play on what I mentioned in Part I regarding the emotion, you have purchased the car you want and got it at a reasonable price, now it comes to the trade price of your car which you have not researched as thoroughly as the car you are buying, the dealerships offer you a ridiculous price and by this time you have already imagined yourself in the new car and you sign on the dotted line, little did you know that the money they did not make in the sale of the new vehicle they just made tenfold in your trade in.

A big consideration when you have a vehicle to trade is whether to sell privately or trade – it’s a perennial dilemma and not one that’s easily answered, for both methods of disposal have their weaknesses and benefits.

Low mileage, well looked after popular models are easy to sell privately – thanks in a large part to sites like carsales.com.au. Make sure you take great photos and in your ad be sure to describe why you think the car is a great buy. If you’re right and you’re realistic with your price – it’ll sell quickly.

As convenient as selling privately via the web is, if your car’s not a peach or you simply don’t have the time, then selling your old car to a dealer is usually quick and fuss free. You don't have to spend your time waiting for people to phone and show up, there are no advertising costs and you're not publishing your phone number for the world to see. 

There’s also no requirement to provide a roadworthy certificate when you sell to a dealer.

For some the fact you won't have complete strangers prodding and poking your pride and joy (and coming to your home or business) may have its benefits too.

Thus selling to a registered car dealer is all about convenience, which comes at a cost. That cost varies, but it amounts to the difference in price between selling the car privately and unloading it to the dealer. In some cases (for example, popular models) that difference can be very small. In other’s it’s not insignificant - in the case of, say, a $15,000 car, it might amount to $1500 or even $2000.

It’s here that it pays to do your research. Be realistic about the condition of your car and look at what dealers are charging for ones that are similar in age and equipment. Also look at how many are for sale. Both factors affect the value.

The price from a dealer will be lower than he/she sells them for – they’re a business, not a charity. The dealer looks at the car, you arrive at a price and a sale takes place. From then on, it's the dealer's responsibility, including anything wrong with the car.

If your car has its share of scrapes and bumps or missing trim items, don't waste money getting them fixed if selling to a dealer. Repairs that would cost you hundreds of dollars are likely to cost a dealer a fraction to put right.