Avoid Car Dealer Tricks

Buying a car, a truck or an excavator aren’t an everyday experience for most people, leaving us vulnerable to the sales techniques of the dealership.

Car finance can be particularly tricky, with multiple, unfamiliar variables in play. You will own this car for years so give yourself time to prepare and negotiate. These tips on understanding car dealer finance tricks will help you avoid common pitfalls and potentially save thousands.

Equipment Finance, Asset Finance, Lease Financing


Trick No1 – One price for cash… One for finance

Low or no interest loans are very motivating. Most of us focus on the rate like there is nothing else that matters.. this is fraught with danger!

Beware, dealerships have to make up the cost of the low interest rates elsewhere in the deal. This may be in a non-negotiable car price or limited terms. Before you sign up for the finance deal, ask for a separate, itemised purchase invoice and a loan offer contract. Compare these with the cash price. You can often get a much better deal shopping around and securing you car finance with a broker and then going shopping for the car once approved.

‘cheap’ finance usually translates in a higher car price at the dealership

Trick No2 – Interest rates vs repayments

A small increase in the monthly repayment will equal to a large increase in the total amount you pay for the new car over the period of the finance contract. For example, to most people a difference of $30 or $40 per month in repayment is neither here nor there. – over a 5 year finance contract however this can equal to a few thousands of dollars. Dealers use this to great advantage in order to divert focus from the total price paid and focus on the baragin car price they have given you instead.

A bargain car price usually translates in a higher Fiannce repayment at the dealership

Trick No3 – Low interest finance for everyone

Dealerships will quote low entry interest rates before even looking at your particular circumstances… However, a car loan rate will depend on the year of manufacture of the car, the type of vehicle it is and your particular circumstances. You see banks & lenders will price the rate of a loan according to risk.

If the dealership has offered you a low rate walking in you still may walk out with a higher rate (and higher repayments) without even noticing much of a difference

Watch out for advertised ‘teaser’ low interest rates

Trick No4 – Bamboozling balloons

To achieve a low monthly repayment, the dealer may ‘adjust’ or include a “balloon” or residual payment at the end of the loan. Although there is nothing wrong with a balloon in itself, it is important not to get tricked in thinking the dealer achieved a low monthly repayment when in fact he just increased the balloon to do this; this will leave you with a nasty surprise at the end of the contract. You need to be able to answer such questions as – Can you afford the this lump sum payment at the end of the term? Will you need to sell the car or finance the repayment to afford it?

As you can see organising your car or equipment finance through the dealership is fraught with danger. And unlike us they are rarely looking for repeat business so have far less incentive to ‘do the right thing’

When we organise you car or equipment loan, we will do it in such a way that:

  • You have the peace of mind of knowing that we got you the best deal and rate available at the time

  • you are pre-approved and know what you can afford in terms of price

  • You will know how much it costs you before you buy your new car or equipment

  • You understand the terms of the finance contract and are happy with those

  • You are in the best position to negotiate on the price of the car, truck or equipment with the dealership

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