Lock in a low rate
It’s time to exploit car makers’ finance rivalries
SUBSIDISED interest rates, extended warranties, roadside assistance offers and free servicing are among the latest deals designed to get customers into car showrooms.
European and Asian brands alike have marketing plans for a final push to increase sales in 2011. The tsunami at the start of the year skewed results and companies such as Toyota are looking to claw back ground.
That’s one of the reasons Toyota leveraged its AFL grand final connection last weekend to show it ‘‘ means business’’ with a 3.9 per cent comparison rate based on $30,000 over four years. The deal is for primary producers, private and small fleet buyers and includes all models, from a Yaris to a Camry Hybrid, HiLux Workmate and long wheelbase HiAce van.
‘‘ It’s similar to the campaign we ran last year with Camry and Corolla but across a bigger range of vehicles,’’ says Toyota financial services head John Chandler. ‘‘ We expect to get a surge of customers in on the interest rates because it’s a pretty attractive deal. At a time when there are worries about interest rates, people can lock in a low rate for up to four years and get capped service costs for three years as added reassurance.’’
Chandler also says that there will be ‘‘ something in the marketplace around 2012’’ based on the European model catering for younger motorists who opt to lease a vehicle rather than buy it outright.
All brands realise selling a good product is no longer enough in an increasingly competitive market.
It is one of the reasons Renault is launching its diesel Megane with a campaign until the end of October for 2.9 per cent finance and free services for the first three years. The French brand has followed the South Korean duo of Kia and Hyundai and lifted its warranty to five years to reassure customers on quality.
Holden is matching that fiveyear warranty term this month and the likes of Ford Mazda, Kia and Hyundai are actively pushing drive-away deals.
Private and fleet buyers alike regard financing the vehicle— whether an outright purchase or some form of lease, with the life-of-ownership servicing costs— as a key area in deciding which model to buy.
Leases are nearly as varied as the vehicles and, while personal circumstances will dictate which lease and vehicle suit, it pays to shop around.
LOOKOUTFOR There are two aspects of car finance that you need to understand before signing on the dotted line.
The first is the establishment costs (if any) and the size of the monthly, quarterly or annual service fees (if any) on the loan.
A company with a low interest rate may be offsetting that with high sign-up and service costs.
The chances are good that if the financier is playing that angle, there also will be a hefty exit fee if you realise what the game is and go for another finance company. Take the time to read the contract.
The second aspect is the true, or comparative, rate you’re signing up for over the term of the purchase or lease. That rate includes the fees listed above— an ‘‘ advertised’’ rate often will not include them. Read the contract and, if you’re still unsure of the terminology, query the provider.
STANDARD LOAN This is the conventional loan— walk into the bank (or credit union) and finance the car before you head out to buy it. The financier and you will have negotiated a maximum amount you can afford to repay over the term of the loan you’ve set and you can buy within that price limit. Secured loans (where you have offered something in compensation for defaulting on the loan) will generally have a lower interest rate than unsecured loans.
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