Monday, March 12, 2012

Equipment Finance - Dealer Rates of 2-3%

It is not uncommon to see motor dealers offering finance at around 2% or 3% on new vehicles.

How do they do this?
The car manufacturer compensates the financier for providing the finance at the lower rate on condition that the car is sold at the recommended retail price.

What do they hope to achieve?
To reduce the level of excess stock holdings for certain vehicles.
If cars are being sold at a discount, this could devalue the brand and upset customers that purchased the cars at the old price.

What’s the catch?
You may not qualify for the lower finance rate if you negotiate a discount on the car price.
The period of the finance is normally limited to 4 years with little or no residuals.
The dealer includes excessive establishment fees in the amount financed.
You may be considerably better off waiving your right to the low interest rate offer and take the discount on the car.

What you should do.
You could consider a buyers agent or make sure you getting the best price for the car.  At the least you should get an expert to have a look at the finance arangement and makes sure it is OK.  If you need assistance, please contact Equitimax and we can put you in touch with Darren Goodman from ProLease.  Darren not only looks are after our clients - he also looks after our own equipment finance. Both Robert & John have a chattel mortgages & commercial hire purchase financed through Darren.

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