car finance brokers are a rort!!

The Mighty Red · 24-07-2008, 10:03 AM

I have just had an interesting few days with a car yard and a car finance brokerage..........

the ute i was looking at buying was $9,000 , the dealer tried to get me to put a deposit down there and then , I said when my finance is soughted I will put a deposit down , the yard didnt like it but I was adamant......
Really glad I said this because if I did put the $300 down I would of lost it.

So here's the thing , the finance broker was trying to charge me $770 for a max of 2 hours work to send my credit file to a credit lender.....As far as I am aware car finance brokers get a payment from the finance company and also from the car yards aswell......$770 IS AN ABSOLUTE RORT!

car......................$9000
loan application fee.$350
Broker fee..............$770

So what do these SHARKS do that gives them the right to charge these insane amounts money for so little work and qualifications???

Tobey · 24-07-2008, 10:10 AM

Why didnt you just find out about finance at the yard? Or how about just go to your bank?

Smoke Pursuit · 24-07-2008, 10:11 AM

The fact that they can supply money when others can't..

Its a bit like the Motor Finance Wizard, hes always on ACA because of his apparently high rates / jacked cars but people forget that 90% of the people he supplies finance to are bankrupts, so with the increased risk there comes a cost and unfortunately thats life..

For 9 grand your better off talking to your own bank and getting finance that way... Thats if your credit rating is A+

BIGJB · 24-07-2008, 10:30 AM

Quote:

Originally Posted by LSTerritoryGhia

The fact that they can supply money when others can't..

Its a bit like the Motor Finance Wizard, hes always on ACA because of his apparently high rates / jacked cars but people forget that 90% of the people he supplies finance to are bankrupts, so with the increased risk there comes a cost and unfortunately thats life..

For 9 grand your better off talking to your own bank and getting finance that way... Thats if your credit rating is A+

He is a dead set crook. But wat he is doing is legal. It may not be moral but it is unfortunately legal.

FPV GT40 · 24-07-2008, 10:59 AM

Just organise your own finance, they can charge what they like, but doesn't mean you have to pay for it, just go somewhere else.

Plugg3r · 24-07-2008, 10:12 AM

They're basically more qualified car dealers mate.

I have great story about my run in with this.

Started with me having to sign a form to take a car for a test drive *Which turned out to be a binding contract* then ended them locking my car i owned in there shed when I was inside with the contract.

Ended with me having to nearly knock 3 guys out to get my car back and stop the deal going through.

The Mighty Red · 24-07-2008, 10:24 AM

Tobey, that was through the car yards finance broker.....

LS, Yes I do have an A+ credit rating but because I hadnt organised credit and the salesman said our finance guy happens to be here right now do you want to talk to him I said sure why not.......I will be deffinitely going to the bank now.....

maybe I'm a bit slow catching on

BIGJB · 24-07-2008, 10:28 AM

When you put a deposit down you always do it subject to finance. So therefore if the yard is a rep yard they will return your deposit. If you don't put down a deposit you can't expect that the vehicle you are purchasing will still be there when you get back. As for the brokers if it is one at a yard (ie a finance manager) you shouldn't be paying for their services as they are paid by the dealership for the work that they perform. You will always have setup\application fees to the finance company but in most cases these are only payable if you go ahead with the loan. I know what I'm talking about Red and if I can be of any help to you please don't hesitate to contact me. This goes for any member of the forum. Nothing p.....s me off more than people being taken by dodgy people in the car industry as it reflects on those of use who are professional take pride in what we do.

Chippar · 24-07-2008, 05:59 PM

Quote:

Originally Posted by 99GHIA

When you put a deposit down you always do it subject to finance. So therefore if the yard is a rep yard they will return your deposit. If you don't put down a deposit you can't expect that the vehicle you are purchasing will still be there when you get back. As for the brokers if it is one at a yard (ie a finance manager) you shouldn't be paying for their services as they are paid by the dealership for the work that they perform. You will always have setup\application fees to the finance company but in most cases these are only payable if you go ahead with the loan. I know what I'm talking about Red and if I can be of any help to you please don't hesitate to contact me. This goes for any member of the forum. Nothing p.....s me off more than people being taken by dodgy people in the car industry as it reflects on those of use who are professional take pride in what we do.

That's not entirely correct. If you put a deposit down on anything, with a rider clause saying, "Subject to finance", you could still be easily caught and also lose your deposit, or even forced to go ahead with the deal, because the car yard is able to arrange finance for you. You may not be happy with the terms, however the rider Clause, "subject to finance" has been satisfied by the car yard and that is all they're interested in.

On the other hand if your rider clause stated, "Subject to me arranging finance, satisfactory to me, from the ANZ bank." You would be completely covered if the finance from the ANZ bank, was not forthcoming or not to your liking, then your deposit has to be returned to you and you are not obliged to go on with the deal, because none of your stipulations has been satisfied.

It might seem silly at the time, to insert phrases of this type in a rider clause and a yard, or other retailer, might mock you and try to talk you out of adding it but, believe me, when you're making a decision to make a large purchase commitment, like a car, you have to have every base covered, to your advantage.

XR06T · 24-07-2008, 12:46 PM

a fee at a finance broker, thats a bit steep!! mine was free.

flappist · 24-07-2008, 02:20 PM

Quote:

Originally Posted by XR06T

a fee at a finance broker, thats a bit steep!! mine was free.

I bet you have lots of stuff from Harvey Norman on 24 months interest free too........

Saski · 24-07-2008, 02:47 PM

Its also handy to note that car brokers/dealers can also jack up the interest rate up to a certain percentage on top of the lenders rate. About 6% on top of the std base rate is about their maximum, so in effect you are paying them an ongoing income from the rate too.....on top of brokerage fees.

Hunter · 24-07-2008, 03:06 PM

Quote:

Originally Posted by flappist

I bet you have lots of stuff from Harvey Norman on 24 months interest free too........

There's nothing wrong with this so long as you pay it off BEFORE the payment and interest period starts. I've bought several items on my GE card and never had problem because I pay them off before they are due. Having said that, I think they're bastards but hey I'm happy to take advantage of their system (which banks on buyers not paying it off in time and taking it up the khyber when interest time comes around). Of course it takes a bit of discipline and good planning to make sure you have the cash when you need it but it isn't rocket science...

Re car brokers... don't like them. Our new Mazda 3 was bought through the dealer (on behalf of St George) - originally I had decided to go with Suncorp, got approved etc and then the dealer said 'we'll do a better deal'. I didn't believe them but no, they were able to offer us almost 2% less interest rate than Suncorp offered us, less fees, flat early exit fee of $100 and with the added advantage of having the finance finalised on the spot. And yes we did read the contract (my partner is a lawyer so she reads the fine print ALL THE TIME

).

I won't even get started on how expensive the Commonwealth's secured personal loans are...

XR06T · 24-07-2008, 03:28 PM

Quote:

Originally Posted by flappist

I bet you have lots of stuff from Harvey Norman on 24 months interest free too........

a bit, why?

flappist · 24-07-2008, 06:56 PM

Quote:

Originally Posted by XR06T

a bit, why?

Because like your "free" finance brokerage you pay the fees in hidden ways.

e.g. Big TV $3000 24 month interest free OR $2500 if you have cash. The $500 is the fee (not interest) they take for giving you the money.
And then if you are silly enough not to pay it out completely they hit you with a squillion percent interest back dated to the day of purchace.
Read the tiny writing on your contract.

There is no such thing as a free lunch...........

snappy · 24-07-2008, 07:03 PM

Quote:

Originally Posted by flappist

Because like your "free" finance brokerage you pay the fees in hidden ways.

e.g. Big TV $3000 24 month interest free OR $2500 if you have cash. The $500 is the fee (not interest) they take for giving you the money.
And then if you are silly enough not to pay it out completely they hit you with a squillion percent interest back dated to the day of purchace.
Read the tiny writing on your contract.

There is no such thing as a free lunch...........

second that. My aunty's brother owns a harvey norman and he told me to stay away he said that they make more from it then a cash sale . An also said in a nutshell the interest was included in the price.

Hunter · 24-07-2008, 08:48 PM

Quote:

Originally Posted by flappist

Because like your "free" finance brokerage you pay the fees in hidden ways.

e.g. Big TV $3000 24 month interest free OR $2500 if you have cash. The $500 is the fee (not interest) they take for giving you the money.
And then if you are silly enough not to pay it out completely they hit you with a squillion percent interest back dated to the day of purchace.
Read the tiny writing on your contract.

There is no such thing as a free lunch...........

What fees are you talking about? I get charged $2.99 a month account keeping fee for my GE card (which banks do anyway). Where is this magical $500 fee coming from? Assumedly the other guy also has a similar fee charged to his account. Works out about $35 a year... the commonwealth charges me a lot more than that in fees for money I actually have...

Quote:

Originally Posted by snappy84

second that. My aunty's brother owns a harvey norman and he told me to stay away he said that they make more from it then a cash sale . An also said in a nutshell the interest was included in the price.

What harvey normans do you shop at? I've used the card several times (not just at harvey norman) and never once have I seen 'interest added to the price' or other nonsense. Besides which, most places will give you a 'lower' price if you pay cash, but usually it ain't much, especially at harvey norman.

The only real catch with these cards is getting done up the khyber on interest if you don't pay it off in time, which a lot of people don't... If you are silly enough to let that happen then that's the way it is... but the fees are as expected from financial institutes and GE are far from the worst. I recall being charged $160 in fees for 3 months' worth of banking with the commonwealth once.

:

BFXR8Silhouette · 24-07-2008, 02:04 PM

Yep. Brokers get "Introducers Commission" from banks. Generally going through brokers you will end up with your finance through the company that pays the best commission not the one that provides the best rates/service. Generally you should stay away from brokers unless as previously mentioned, the banks themselves wont touch you. In which case you should probably ask if more debt is really what you need.

Do a bit of research on the internet and you'll find a better deal than most brokers anyway. Remember there are more options than the big 4 banks.

**janddbone** · 24-07-2008, 04:00 PM

I do a bit of car and finance brokerage! If you can call it that!

Basically for a flat $150 I:
- work out what you can afford
- find appropriate finance if needed
- work out what you want form a vehicle and narrow down the suitable models etc.
- will find the car you want,
- at the price you want
- work out ongoing service.maintenance deals etc. if needed.

I am no one special, no special training or anything like that...

But I do have heaps of contacts, knowledge and interest in the vehicle and now the finance market too!

I specialise in cars from $500 upwards with the dearest one so far being 120K Rolls Royce... That one was fun...
It is not hard to find good deals, as usual you just need to know the right people...

For example...

Last year was one of my best deals that I have ever done...

- Last of the Nissan Pulsars, TI, with auto and all the power options etc with 8000km.
- Extended three years warranty,
- 12 months rego
- Three years free servicing,
- One set of new tyres when needed,
- Three years comprehensive insurance and roadside assistance,

$16,000 drive away!

Kryton · 24-07-2008, 06:55 PM

i actually just sent away for my credit file and it arrived today in the mail.
interesting to see that RAPID FINANCE who i originally was going to go through (stay away from them) had not only agreed to give me credit but on the file it had the sum of $25700.
thing is i only asked and applied for $20000 yet they went ahead and got me approved for $25000 without my knowledge or permission.
doesnt matter though as i told them to get stuffed as they come back with an interest rate of 24%pa!!!
i reapplied through another firm who got me credit through Liberty Finance (the same place that Rapid finance got me credit) and they came back with an interest rate of 18%pa.
still high i know but it gives you an insight on how it all works.
one company was going to pocket 6% of the interest each year for doing stuff all.
greedy bastards.

HUNTER8 · 24-07-2008, 08:28 PM

[QUOTE=davway]
thing is i only asked and applied for $20000 yet they went ahead and got me approved for $25000 without my knowledge or permission.

Generally the personal loan amount on your credit file includes the interest charged on your loan so even though you applied for $20000 with interest its around $25000

an interest rate of 18%pa.

This is still too high. Unless you are financing through one of the major yards then you generally are better off getting a personal loan (secured) from your current Bank. If the car is acceptable to the Bank for security you should be able to get a rate at worse in the low 10%'s

[Tonko] · 24-07-2008, 07:08 PM

Haha i know a chick that bought a rough EF futura at a place like that, after 5 years it will have cost her $15,000!

BIGJB · 24-07-2008, 08:09 PM

As I stated chippitydip if the yard reputable.... This is the key thing guys. If you don't deal with a reputable yard you are in their hands.
I cant stress this enough guys, there is alot of sharks out there.

snappy · 24-07-2008, 09:46 PM

i won't lie i was young when i was told and still don't understand completly. But when a family member that owns a harvey norman tells you are stupid to buy interest free . You be smart to listen .

zx10 · 24-07-2008, 11:59 PM

I think some of you guys watch too much ACA/today tonight.

Interest free is not a rort. The only people who complain about interest free are the dumb s who don't know what they are talking about.

Case: I purchase $5000 worth of goods on interest free. The interest free period was 36 months. The total profit from the sale was 14% (due to the goods being in a catalogue sale). The interest free period cost the retailer 12%. Even if I was able to negotiate a 5% discount (pretty pointless for the retailer as they would be losing money) I would have only saved $250.

Now I agree that $250 is more money than I would want to throw away. But by me using the interest free offer I was able to put my $5000 into a bank account which pays 8% pa for the 3 years.

Result: I earn $1200 over the 3 years (would be more when you consider that the interest is paid monthly and would compound). If I had paid cash I "may" have saved myself $250 + monthly account fee of 2.99 per month, which over 3 years is $107.65.

End result is I am up over $800. I don't see anything wrong with that.

zx10 · 25-07-2008, 12:09 AM

On original topic. Some car brokers are criminals, so are some homeloan brokers.

Just look at what has happened in the US. The whole reason the housing market is rooted over there is due to greedy finance companies writing loans to sub prime mortgage candidates with adjusting interest rates.

Bottom line is that so long as you read what your signing everyone should be AOK.

azaxr8 · 25-07-2008, 01:51 AM

no you don't get it. clearly.

If a TV is ticketed at $3000 then thats what you will pay for it on hoc.
but that tv is really worth $2500 so if u pay cash thats what ull get it for. Therefore if u bargain ofcourse the sales assistant is gonna knock $500 off it and the store is going to still break even and profit. WORK IT OUT?

The prices are risen when interest free applies and only the dumbs*its who pay $3000 for it with cash should not buy anything.

therefore $500 of that 3000 is profited which interms is what? 24 months interest free on a certain interest rating.

i hope u, understand that? far out.

Hidden fees apply, even to the people that are braindead and cant work it out

Hunter · 25-07-2008, 11:12 AM

Quote:

Originally Posted by azaxr8

no you don't get it. clearly.

If a TV is ticketed at $3000 then thats what you will pay for it on hoc.
but that tv is really worth $2500 so if u pay cash thats what ull get it for. Therefore if u bargain ofcourse the sales assistant is gonna knock $500 off it and the store is going to still break even and profit. WORK IT OUT?

The prices are risen when interest free applies and only the dumbs*its who pay $3000 for it with cash should not buy anything.

therefore $500 of that 3000 is profited which interms is what? 24 months interest free on a certain interest rating.

i hope u, understand that? far out.

Hidden fees apply, even to the people that are braindead and cant work it out

Wait, let's see, I already paid less for the item than anywhere else... how much less do you think they're going to cut off when they're already $200 cheaper for the same item than everywhere else???? I'm not talking about several thousand dollar items here... I'm talking about small items which don't already have a lot of margin built into them.

Besides which, you're trying to convince us of something we already know: you pay more when you buy using a means other cash... I thought this was already well known and applied to a lot of different payment methods...

What I am saying is that if you use the credit at the RIGHT TIME then you will get a cheaper price - in this instance the xboxes were being sold cheaper than everywhere else so HN could MOVE the stock. Using credit during sales is how you maximise its value. Of course in some sales they won't let you use anything other than cash.

I think you lot think I don't get what you're saying: I do, I'm just pointing out that what you're saying is already well known and not some hidden fee that only the high elders of the church of the dollar know about...

EDIT: Oh and how do you explain a colleague of mine here who bought a big screen plasma for $500 less than the advertised price... and used his GE card? Maybe the store made a loss who knows but he did get it cheaper and I did see him do it (I helped him move it to his house in fact).

flappist · 25-07-2008, 11:33 AM

It is quite amusing to read back over this.

Those who have done the selling or work in the industry all agree that the interest free thing is a scam.

Those who have bought interest free all have about a zillion reasons why what they did was far better that paying cash because they could not have made a mistake.

It is also interesting to note that HN et al are extending the interest free period and giving advertising an absolute flogging at the moment.

It appears that even those who never have any money and never pay their bills on time are not buying anymore which is a sure sign of a slowing economy....

The Yeti · 25-07-2008, 04:31 PM

Quote:

Originally Posted by flappist

Those who have bought interest free all have about a zillion reasons why what they did was far better that paying cash because they could not have made a mistake.

Thats because the Retailers and the finance companys are just real good guys and do this as a service to help their customers out LMFAO