Car finance

MagicDude4Eva said:
Didn't want to create a new thread - has anyone taken out finance recently and who has offered you less than prime (currently 8.5%). Wife is trying to take out a loan on a 290K car (90K deposit, no balloon, 54 months, no risk profile) and offers coming in at prime (variable) or 10% fixed - both are a joke IMO.

So any suggestions for more favourable rates would be great - seems that banks are full of non-sense and it does not seem to be a buyers market at the moment, judging from their arrogance.
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I am constantly amazed at the hubris of certain consumers who think that they, and they alone should be paying less than prime!!!

A linked prime deal or a fixed 10% deal is bloody good whatever way you look at it. :rolleyes:

Excuse me if I now suffer from a total sense of humour failure! :mad:
 
Fazda said:
I am constantly amazed at the hubris of certain consumers who think that they, and they alone should be paying less than prime!!!

A linked prime deal or a fixed 10% deal is bloody good whatever way you look at it. :rolleyes:

Excuse me if I now suffer from a total sense of humour failure! :mad:
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Well, repo is 5%, prime is 8,5% and both (considering the state of our economy are high). A fixed deal is (and has always been non-sense) and I am puzzled why consumers take it. To be honest the rest of the world is suffering recession and spending is down and interest rates drop. Fixing a deal at 10% is crazy as you will probably not be able to afford anything else if interest rates increase by 2%.

I managed to get my homeloan at prime minus 2% 3 years ago and do think that prime minus is totally acceptable for a consumer. It is also non-sense loading an interest rate for risk-avoidance - it's has just become an acceptable means for banks to improve profit margins.

Fazda, as far as I understand you work in the car industry and as such I think your view as a consumer is a bit washed out.
 
160k Deposit 300k car 23 years old

= Prime over 60 months.

:P
 
Fazda, as far as I understand you work in the car industry and as such I think your view as a consumer is a bit washed out.
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Yes I do, and my reply is "Bollocks"

Buying a car and buying a house are two totally different scenarios from a bank's point if view - one is an appreciating asset and the other is depreciating by the month.

Do you HONESTLY think that the bank is going to look after the car owner over the home owner?????? Think it through FFS!

Buying a car at Prime, is a bloody good deal from a Bank's point of view - and don't forget - you are going to THEM on bended knees and asking for money, NOT the other way around. They owe you zip, and please don't try and bring the dealership or the car salesman into this equation as we have as much influence over it as trying to stop the sun rising on a daily basis.
 
MagicDude4Eva said:
Fixing a deal at 10% is crazy as you will probably not be able to afford anything else if interest rates increase by 2%.
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Well no, because the rate is fixed. If prime goes up your rate doesn't.
 
Fazda said:
Yes I do, and my reply is "Bollocks"

Buying a car and buying a house are two totally different scenarios from a bank's point if view - one is an appreciating asset and the other is depreciating by the month.

Do you HONESTLY think that the bank is going to look after the car owner over the home owner?????? Think it through FFS!

Buying a car at Prime, is a bloody good deal from a Bank's point of view - and don't forget - you are going to THEM on bended knees and asking for money, NOT the other way around. They owe you zip, and please don't try and bring the dealership or the car salesman into this equation as we have as much influence over it as trying to stop the sun rising on a daily basis.
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True as that may be, competition between lenders pushes the interest rate down. Fazda needs to provide better service for less commission and the Dealership needs to accept lower margins to keep the stock moving.

The reality is this: If I went to buy a Mazda MPS and I was treated like THEY were doing ME a favour, I would call the dealer principal and explain very comprehensively why I was walking out and would never darken his or her doorstep again.
 
Fazda said:
Do you HONESTLY think that the bank is going to look after the car owner over the home owner?????? Think it through FFS!
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TBH, if you have worked in a bank and in the lending business you would know that a bank could care less for what a loan is used. It is all about the risk profile of the borrower and to a certain degree the collateral - both house and car are secured loans and the bank has some recourse if the borrower defaults (unlike unsecured loans such as credit cards/overdrafts). I am not sure why people think that banks do them a favour by providing them with a loan - it is a business and not a charity. The higher the banks can drive interest rates above repo the more profit they will make and they would obviously be reluctant to drop loans below prime.

With regards to the "poor car dealerships" - anyone working in the industry will know how big the difference between wholesale and retail price is and car dealerships make nice profits (especially in the aftermarket sale and servicing of cars). Certain car franchises have very well favourable agreements with a specific bank for pushing financing through them.

FWITW - managed to get pre-approval on car finance at prime - 1.2% - so yes, with a bit of effort you can negotiate better rates and not just accept the status quo.
 
MagicDude4Eva said:
Well, repo is 5%, prime is 8,5% and both (considering the state of our economy are high). A fixed deal is (and has always been non-sense) and I am puzzled why consumers take it. To be honest the rest of the world is suffering recession and spending is down and interest rates drop. Fixing a deal at 10% is crazy as you will probably not be able to afford anything else if interest rates increase by 2%.

I managed to get my homeloan at prime minus 2% 3 years ago and do think that prime minus is totally acceptable for a consumer. It is also non-sense loading an interest rate for risk-avoidance - it's has just become an acceptable means for banks to improve profit margins.

Fazda, as far as I understand you work in the car industry and as such I think your view as a consumer is a bit washed out.
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/facepalm
It's not risk avoidance, it's compensation
 
Was offered prime - 0.5% for a new vehicle financing Is it okay, good, bad?
 
In other words, 8% on a R 250 000 car is good. I am putting down a good deposit though. But that is the advantage of having my car paid off for 3 years.
 
Recently I've found a fixed rate to be lower than a linked rate...quite strange.

So worth asking for the alternative of whatever you got.


But getting a deal at Prime is pretty good.
 
Hmmm... I have spoken to a number of people who have bought cars from Audi, BMW, Mini, Merc, Jeep and Landrover and in all instances they managed to get finance of prime minus (varied between -0.5% to -1.53%) in the last 6 months. From the looks of it the financing option through the car companies (especially BMW and Jeep) seems to be quite aggressive when it comes to interest. Private banking customers (especially SBSA and Investec) also managed to get prime -1%. Car finance was between 300K to 700K. Interest was variable, no residual, loan-term 54 months (in one case 60) and in all cases deposit over 15%.

I guess my point is that shopping around for better finance options does show a significant saving. Despite what some people make you believe, a car is a liability and a good car is a paid off car ;-). When looking at various finance quotes it was quite surprising how companies structure deals (i.e. load monthly admin fees and other hidden costs).
 
@MagicDude4Eva, you have to consider how much people earn and their monthly expenses. I tried getting a Polo Vivo for R118000 but got a 12% interest rate. That was when I had to pay only my student loan and edgars account. So there is no magic formula and anyway the bank is out to make money not lose it.
 
creeper said:
You're not my salesperson by any chance ;)
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No. ;)

Those people getting deals below prime from Land Rover etc, is because the manufacturer has a scheme running with the bank.

Basically the bank is getting the discount, and not the buyer, but he scores on the lower interest rate - the car will be sold at full price - no discount.

In many cases, you would actually be better off taking a discount and getting interest at prime.
 
Fazda said:
No. ;)

Those people getting deals below prime from Land Rover etc, is because the manufacturer has a scheme running with the bank.

Basically the bank is getting the discount, and not the buyer, but he scores on the lower interest rate - the car will be sold at full price - no discount.

In many cases, you would actually be better off taking a discount and getting interest at prime.
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And that is why I have a nice spreadsheet that determines the best combo of deposit, discount and rate. Interesting thing is that discount is not given on the car I'm buying. Seems like it is a command from HQ. I tried 4 different dealerships.
 
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