Car dealership finance – it seems so easy. You roll up to buy a new car and the dealership offers you a great finance deal – maybe even with 1% interest. Why not sign up? It saves you the hassle of shopping around, and it seems like a great offer.

But are you really getting the best deal?

Look at the fine print

The special rate offered by car dealerships is designed to get you in the door where their salespeople can close the deal.

While the interest rate may be low, there are often hidden factors that will increase the overall amount you pay. Check the fine print of your deal and run the numbers before you sign.

It’s advisable to read the offer carefully, asking questions like:

  • Is the vehicle purchase price as low as it can be? You may be paying a low interest rate, but if the purchase price has been inflated, you could end up shelling out more in the long run. And often the price is non-negotiable if you’re taking dealership finance.
  • How much choice do you have in vehicles? In many cases, the special interest rate is only available on certain makes and models of cars like excess stock or last year’s models.
  • Are there monthly fees? There may be monthly management fees added on which will increase the overall price. Don’t forget to include those in your calculations.
  • How long is the loan term? The loan term might be short, forcing you to make higher monthly repayments.
  • Are lump-sum payments required? You may need to pay a large deposit to get the special rate or a balloon payment at the end of the loan period.
  • Can you pay it off early? There may be extra fees involved if you decide to pay off the balance of your loan early.

Consider the options

Before you sign on the dotted line with dealership finance, consider your options. A car loan from a financial institution or a novated lease may suit your circumstances better.

Want to know more about the alternatives?

A beCarWise novated lease could be the smartest and most tax-effective way to buy your next new car. Talk to us for independent, reliable advice about the available options. We offer obligation-free quotes to ensure you get the financing option that’s right for you.