Main Dealer Finance – Friend or Foe?
Undoubtedly the franchised motor industry has faced some major setbacks this year with the high volume brands being forced to be extra creative with amazing offers to get you into the driver’s seat. The luxury marques seem to be caught totally unaware of how to sell a car in a difficult market. Finance is always the “fall back” tool when times get tough but is it necessarily to your benefit? No longer is the low-interest rate the clincher but more the by-product of a “have now pay later culture”. However a purchase is dressed up, the fact is that someone, somewhere will end up paying, and generally that becomes us, the customer!
Remember, once you have driven away 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 50% of its purchase price, unthinkable really, but we do it on cars and very expensive ones too!
My own thoughts are that the people selling the products focus us 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? 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 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.
Classic & Sports Finance is an affinity partner to the SVA. To get in touch with them please click on any of the images above or go to our Partners page to contact them.