Why Car Salesmen LOVE Car finance – MyCarLoan.net.au – (*Aussie Car Loans*)

Hi Again! Iím Brenton Hunt from My Car Loans. Iíve just looked in my local newspaper and
Iím really mad! There are car Salesmen out there blatantly
breaking Federal financial advertising and disclosure
regulations! What upsets me the most is that some of the
ëDealsí that are advertised Would actually cost you MORE than if the deal
wasnít offered at all! In my opinion this is pure dishonesty There is little wonder why the ASIC website:
www.MoneySmart.gov.au says: ì…although car dealer finance is convenient,
it can be cheaper to get car finance elsewhere.î And also ìSpecialist Lending and leasing
companies all offer car loans So check out whatís on offer before you opt
for dealer finance.” If you havenít seen our last video We covered an overview of Car Finance in Australia. Now in this video Iím going to talk about Why Car Salesmen just LOVE Car Finance! I will show you how and where they are making
money From you that you probably arenít even aware
of Iíll also go through 2 pieces of advertising That mislead you into thinking you are getting
a good deal. The fact is however that by taking up one
of those deals It would cost you MORE money than if you didnít
take it up! But first, I want you to understand what makes
me so angry about the car finance industry I have no problems with salesmen making a
fair living. But I deal with real people, and I feel gutted
for them When they find out that what they signed for
isnít what they thought it was When I go through their car loan a lot of
clients donít realise that the term and/or the total amount of the
contract that they have signed up for As I explained in the previous video, we had
a client buy a car with a sticker price of $50,000, but the loan
contract was for $55,000! To understand this industry better we need
to understand what life is like for a car salesman They sell us the second most expensive asset
we will ever buy Purchasing a car is an emotional time, and
a car salesman knows it! They also know that they only get paid by
selling cars So how much they make per car, and how many
cars they sell Determines exactly what they get in their
back pocket. Unfortunately people fall in love with a car And then work out how to finance it, or do
whatever it takes to finance it Really what they should be doing is finding
out how much they qualify for And what is appropriate for their budget,
and then Find the best car that they can get for that
amount A car salesman rarely sells a car if the customer
hasnít first sat in it Therefore his advertising needs to be geared
to getting the client To come and look at the cars in his yard Whether the deal is a good one or not, it
is essential that the advertising Is appealing enough to get the client to go
and see the car And this is something that we shouldnít forget Weíll look at some real life examples Of the advertising tricks that they use later
in this video. So what do you need to look out for when walking
into a car yard? Early on in the conversation A car salesman will want to know if you are
going to finance the car or pay cash One of the early questions they usually ask
when financing is ìHow much can you afford per week?î or ìHow much are you paying a week?î If you answer this question, the salesman
is going to do all his calculations Based on meeting this figure, or very close
to it Even if it means adding a couple of extra
years To your loan that is the only figure he is
aiming for If you answer $100/week then donít expect
that he is going to show you A solution for anything substantially less
than that Even if he does have a much cheaper solution
he is not going to tell you Because youíve told him what you are willing
to pay. Whatever you do, donít tell the salesman
what you can afford The best way to answer the question by telling
him that You will give him the opportunity to offer
on the finance But you will go with whoever gives the best
deal Even if it comes down to a couple of dollars
per week. More importantly though, negotiate hard on
the cash price Of the car BEFORE ANYTHING ELSE Donít forget that if you are able to reduce
the price even by $500 You are saving this PLUS the interest over
the life of the loan. Also remember $100/week is not $400/month Itís actually $433/month Itís natural to think that $100/week sounds
affordable Thatís what the salesman wants you to think But itís fair to say that people will think
harder about Committing to $433/month rather than $100/week And thinking hard is exactly what the salesman
DOESNíT want you to do! A salesman is conflicted in the TRUST that
comes with dealing with someoneís financial situation Snd the raw FACT that they will only get paid
when they sell you something. Sometimes you will be told that you can drive
away today if you take their finance The salesman may also suggest that using a
broker to arrange finance will take ìdaysî The fact is that brokers can settle car loans And have the money in the salesmanís account In less time than it takes the car to get
a Vehicle Inspection Certificate The salesmanís tactic is to get you to commit
while you are hot to trot Donít fall for this trick! Even if there is a small difference in the
weekly rate Remember $5/week isnít just a cup of coffee $5/week is $1,300 over a 5 year loan How many tyres or car services could this
pay for? I donít understand why it is necessary for
people to take their new car immediately Surely it is more important to SAVE money
and get the BEST deal possible Even if it takes a just a LITTLE longer The saying ìBuy in haste – Lament at leisureî Is very true when you are more focused on
driving the vehicle out of the car yard Rather than the details of the loan that you
are signing Extended Warranty and GAP Insurance Again, the ASIC MoneySmart Website says ìCar dealers usually receive a commission
for selling these products And may have an incentive to try and get you
to buy them.î Extended warranty insurance sounds good But it is usually very expensive How does $4,995 sound for a comprehensive
5 year warranty? The conditions that you need to comply with In order to have a claim paid are very onerous Some conditions include a strict vehicle maintenance
regime That includes sending the insurer copies of
service invoices Within 10 days of the car getting serviced Or risk voiding the warranty Would a normal person remember to do this? Commissions for salesmen selling extended
warranties Can be up to a staggering 80% of the premium
amount! GAP insurance is the difference (or GAP) of
the value of the car If it is written off in an accident and the
amount still owing on the loan So that means that if the vehicle is written
off and it is worth $10,000 And there $15,000 owing on the loan, then
the insurance pays the difference Sounds like a good deal, right? Wrong! Not many cars ever get in an accident, let
alone written off If a car is written off, and it has been fully
& properly insured With a normal car insurer, then the difference
is only ever going to be something like $500-$1,000 Gap insurance costs $500-1,000 over the term
of the loan So that is an extremely high premium to pay Again the salesman can be receiving Up to 50% of the premium as a commission So on a $1,000 policy, he is getting $500
the day you sign up While you pay it off over the life of your
loan Sound fair? Simply by insuring your new car for an agreed
value You will negate the need for GAP insurance,
and probably make a huge saving Now letís look at car advertising We recently saw an advertisement for a car
at $20,835 – drive away The advertisement also said that it was $66.69/week No other details were made available This implies that $66/week will cover the
$20,835 loan, which sounds really cheap We rang the dealer and were told the $66.69/week
offer was only Based on cost price of $19,990 and a 35%,
or $7,000, deposit The buyer still needed to fund $845 of on
road costs on top of the $7,000 deposit When we enquired about financing the total
driveaway cost we were told that It would cost over $112/week to finance No deposit and over 5 years and at ënormalí
bank interest rates When we ran the numbers we found that our
client would get this loan at $102/week Saving $10/week or $2,600 over the life of
the loan. We also checked the legality of this ad The ACCC informed us that this advertising
was misleading and deceptive ASIC said that advertisement was unlawful Because the offer did not stipulate the extent
of the Terms & Conditions So be aware that although advertising regulations
exist Not all advertisers follow them! But what was the car yard actually trying
to do? They wanted their $20,835 car to look like
it was only $66.69/week They knew that the vehicle cost was $112/week
when fully financed So the aim of the ad was to make the car look
cheap and affordable so people would come and look at it Once at the car yard, the salesman would Have the opportunity to get the client in
the car and let them fall in love with it There was little expectation that they would
be selling it at $66.69/week As rarely someone would meet the large upfront
deposit required. And hereís another example A large car dealer sent out an offer which
came to us by e-mail The offer featured no repayments for 6 months On a range of typical ëschool runí type
vehicles Unlike the previous example there were some
terms and conditions These included The time frame of the offer That stock was limited to what was in stock That Government and Fleet buyers were excluded That they reserved the right to change, supersede,
or extend the offer And that the maximum loan period was for 5
years These Terms and Conditions were fine as far
as we are concerned What caught our eyes were Interest starts on the day the loan starts i.e at the start of the six month ërepayment
freeí period That it was only available to businesses with
an ABN No interest rate is mentioned So what this offer means is that interest
starts the day you get the car keys Instead of payments spread over 5 years They were reduced to 4 Ω years, making the
payments higher On a $20,000 car, NOT making any repayments
for 6 months Increases the debt by about $780, or $15/month
just to cover that extra interest! So not only will the repayments be higher
because there are 54 instead of 60 But the total amount paid will also be higher It would be financially better to say I donít want the 6 month payment holiday
offer But the hook in their advertising was to make
you think that By having a 6 month payment holiday you were
getting something for free. This deal was restricted to businesses with
an ABN But the funny thing was These were not typical business type vehicles So what business would be interested in such
an offer – none! By not declaring the interest rate Which they donít have to do because it is
a business loan Normal people cannot decide whether the offer
is good or bad. So what was this dealership really trying
to do? They seemed to have an attractive offer for
vehicles that a business normally wouldnít buy The whole idea of the advertisement was to
get people in their door And get them interested in any of the vehicles
that they had for sale Remember they canít sell their cars if people
havenít sat in them first. Therefore next time you see a car deal that
looks good Drill down and read the small print If there is any, and then analyse what they
are really saying These are everyday examples of the conflict
that happens When mixing car finance and car purchasing
together into one business. The fact that the regulatory bodies suggest
that consumers shop around For finance probably tells you that they get
complaints all the time Read between the lines My guess is that they have been swamped with
complaints! Once you get into a car finance contract you
cannot back out of it Cars are not like houses that can be easily
refinanced You usually cannot refinance a car loan into
another car loan You can however finance a car loan into a
home mortgage Cars have a high diminishing value I will go into the basics of Car Loan Agreements
in the next video There are very few car dealers who do not Receive a benefit from having one of their
cars financed This income may make up to 25% or more Of their profit on a car for very little work The Uniform Consumer Credit Code is designed
to protect people In obtaining finance for non-business use Under this code, any kickbacks by the originators Are supposed to be declared to the client Unfortunately for some reason car dealers
are exempt from this legislation Even though they come in contact with consumers
who need protection We can tell you that every car salesman that
we have come across Wants to make a personal profit from their
client if they are getting finance The client usually doesnít know that the
salesmen is benefiting from them When it comes to buying a new car It pays to analyse the advertising that you
respond to Getting more than one finance offer will allow You to choose the best and most competitive
deal. I hope that you have found this video informative Maybe you will look at Car advertising a little
bit differently in the future And drill down a bit on those ìdealsî that
look REALLY good. In the next video we are going to take you
through the car loan process Iím going to take you through the steps that
are involved So that you can see how the process works And what you can do to get a better deal. If you have found the information valuable Please place a comment in the section below We would love to read your feedback about What you found interesting or important in
this video. Iíll see you in the next video

3 comments on “Why Car Salesmen LOVE Car finance – MyCarLoan.net.au – (*Aussie Car Loans*)”

  1. William Sinclair says:

    I like your video but absolutely don't agree with your opinion on gap cover. I've seen a number of customers and some family benefit from this protection. I totally agree that 'dealers' get 60-80% commissions on these products but it is unfair to blame the salesperson directly. I am not a car salesman but having worker at dealers in the past in finance and sales management roles salespeople don't even know what most of the finance product are.

  2. james mclarty says:

    You sound exactly like a sales person yourself…except not a good one because your tactic is to slag your competitors. So how does your business run? no commissions? no profits? $4995 for an extended warranty? You are a hypocrite and a liar

  3. Michael Dube says:

    best-auto-loans.co this is where one can get a good car loan

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