Lock in a low rate

It’s time to ex­ploit car mak­ers’ fi­nance ri­val­ries

Herald Sun - Motoring - - Car Finance - CRAIG DUFF craig.duff@cars­guide.com.au

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.

LOANTYPES

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.

The ben­e­fit of this type of loan is the cus­tomer usu­ally has a credit the fina should op­tions

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