End of Financial Year Car Sales

End of Financial Year Car Sales

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Beware of the finance traps 

The EOFY car sale ads have started and now can be a great time to buy a new car if you’re in the market. However beware of finance deals that may be put to you at the car yards.

Car manufacturers are good at dangling irresistible deals in front of consumers with visions of shiny new cars dancing in their heads.
A 0% interest rate, for instance, can lure in even the wariest of car buyers. But before signing on the dotted line, it's imperative you check the fine print. Often low interest rate deals offer a nice affordable repayment at the beginning of the loan; however this only applies to part of the loan. In the fine print stating that after a period of time (example 3 years) the buyer will be required to pay 50% of the RRP as a lump sum ‘balloon payment’. This often catches people out as they cannot come up with the balloon payment which is quite significant (often in excess of $20,000).

Alternatively, another offer which can be just as dangerous is so-called ‘guaranteed future value offers’. Under such an offer, you could buy, for example, a new car for $49 a week over three years. At the end of that period, you must make a balloon payment of 70% of the RRP to hold on to the car. Again this often catches people out as they cannot come up with such a significant payment.

There are range of dealer finance options that will be put to you. All too often they have traps built into the fine print such as unnecessary insurance, longer loan terms than required, excessive application fees, the inability to make additional repayments, penalties for paying the loan out early, plus other clauses such as extended warranty, paint protection or other extras to grow the profit margin or their commissions.

We suggest getting pre-approved finance before you start looking at the car yards. This will give you maximum negotiating power when purchasing your car. If you have the money already approved and can buy there and then, you can often negotiate a much lower price on your car.

South West Credit’s Rate Crusher Car Loan offers a fantastic low interest rate and offers many benefits such as additional repayments without penalty, early payout without penalty and no monthly loan fees.

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