car finance brokers are a rort!!

[The Mighty Red]

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]

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

[Smoke Pursuit]

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+

[Plugg3r]

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]

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]

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.

[BIGJB]

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]

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.

[XR06T]

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

[BFXR8Silhouette]

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.

[flappist]

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]

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]

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]

Originally Posted by flappist

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

a bit, why?

[janddbone]

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!

[Chippar]

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.

[Kryton]

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.

[flappist]

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]

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.

[[Tonko]]

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]

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.

[HUNTER8]

[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

[Hunter]

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...

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. :

[flappist]

Originally Posted by Hunter

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...

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. :

The fee is the difference in price between your card and cash. It is not added you just don't get it deducted.
If you are not getting between 10 and 20 percent discount for cash then you need to learn how to negotiate.

So which HNs? Bundaberg, Hervey Bay, Noosa and Kawana are the ones I have bought from.
Clive Peeters, Goodguys, Retravision, Chandlers and just about everyone else are exactly the same.

Try it yourself. Go and pretend to buy a $3000 TV on the never never, get your best price then get someone else to try and buy it cash. You will probably be very annoyed with the result.

[snappy]

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 .

[Hunter]

Originally Posted by flappist

The fee is the difference in price between your card and cash. It is not added you just don't get it deducted.
If you are not getting between 10 and 20 percent discount for cash then you need to learn how to negotiate.

So which HNs? Bundaberg, Hervey Bay, Noosa and Kawana are the ones I have bought from.
Clive Peeters, Goodguys, Retravision, Chandlers and just about everyone else are exactly the same.

Try it yourself. Go and pretend to buy a $3000 TV on the never never, get your best price then get someone else to try and buy it cash. You will probably be very annoyed with the result.

Its always been less for cash at most places - for much longer than 'interest free' stuff has been around. HN don't give a toss where the money comes from - when you buy something on the GE and don't pay it back, its not HN who loses its GE. HN could care less. They only offer discounts on cash because it means less processing fees, etc. They do not 'factor' in "fees" just for credit card purchases - to them its a sale no matter what, there's no potential loss involved because if it all goes belly up its GEs debt, not HNs.

And yes I have bargained before, and yes I get stuff off for cash. Using interest free is useful if your immediate cash flow isn't high enough to buy the object. There's been plenty of things I needed/wanted to buy but didn't have the money then and there (but would have it in the future). Credit is not a bad thing and has existed since money itself existed.

As I said, the only problem is with people who forget to pay and end up severely in debt...

Besides, explain why I can 'negotiate' a deal on a financed car but cannot do so for a financed TV for instance... this is especially interesting since there is no vested interest in either item for the dealer/seller.

[flappist]

Originally Posted by Hunter

Its always been less for cash at most places - for much longer than 'interest free' stuff has been around. HN don't give a toss where the money comes from - when you buy something on the GE and don't pay it back, its not HN who loses its GE. HN could care less. They only offer discounts on cash because it means less processing fees, etc. They do not 'factor' in "fees" just for credit card purchases - to them its a sale no matter what, there's no potential loss involved because if it all goes belly up its GEs debt, not HNs.

And yes I have bargained before, and yes I get stuff off for cash. Using interest free is useful if your immediate cash flow isn't high enough to buy the object. There's been plenty of things I needed/wanted to buy but didn't have the money then and there (but would have it in the future). Credit is not a bad thing and has existed since money itself existed.

As I said, the only problem is with people who forget to pay and end up severely in debt...

Besides, explain why I can 'negotiate' a deal on a financed car but cannot do so for a financed TV for instance... this is especially interesting since there is no vested interest in either item for the dealer/seller.

No you don't get it. If it goes on a card the the card provider takes the fees from HN or whomever the provider is. How do I know? I own a company that sell things on various finance deals. Visa and MC can be from 2 to 6% Amex is about 10% GE and HSBC can be between 8 and 14%. This is the merchant fee NOT your interest rate.
Several people here have stated from personal knowlege of how the system works.
If you choose to not believe us and really do think that companies like GE run on $3.99 per month and not by ripping you that is your business and come to think of it, you thinking that is their business too and they are doing VERY well out of it.

[Hunter]

Originally Posted by flappist

No you don't get it. If it goes on a card the the card provider takes the fees from HN or whomever the provider is. How do I know? I own a company that sell things on various finance deals. Visa and MC can be from 2 to 6% Amex is about 10% GE and HSBC can be between 8 and 14%. This is the merchant fee NOT your interest rate.
Several people here have stated from personal knowlege of how the system works.

I know they pass the fee onto the merchant... I don't see what your point is? Usually they tell you what the CC surcharge is and that you will pay it...

If you choose to not believe us and really do think that companies like GE run on $3.99 per month and not by ripping you that is your business and come to think of it, you thinking that is their business too and they are doing VERY well out of it.

They don't run off that, they run off people paying stupidly high interest because they don't pay it out on time. In fact they probably make an absolute fortune off that... They also bank on the fact that people are more likely to buy if there is a line of credit available...

Its a tool that can be very powerful but also very destructive. If you misuse a credit card you will get bitten but if you use it properly you can purchase things that you need now. For example, if our washer blew up tomorrow we would not have any money to buy a new one AT THIS TIME because we're saving like mad for a wedding and paying for the car. But we could buy one on a credit or store card and then pay it back in the coming weeks (and save a little less this month). But we'd get the item, get it going and then pay it back as soon as we get time. You pay more for the ability to have it now. That's how loans and credit work...

[cycle myth]

Do you think just car finance brokers have the monopoly in this?

Think about what a broker does for a living (they need to make money too) and you can see that if you want to do the leg work then you could do better.

Ultimately you pay for convenience and ease.

Is $770 too much to pay for a service? - a plumber cost me $85 just to turn up the other day yet alone fix the problem.

Not that plumbers are unskilled - they are - however many finance professionals are pretty well qualified as well so advice has a value.

[stang65]

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.

Guys,
Lets face the facts and cut the crap(sorry but its true)
Cash will always get you a better price than hire purchase.

If you go to a Harvey Norman store and pay full price for something you have no one to blame but yourself. HN staff get paid commission and have flexibility to move on price.

They however will not discount on interest free as it means more time tied up with you when they could be selling something else to another customer therefore they need to maximise profit.

Interest free is interest free to the customer not the store, the store will put anthother 5 to 10% on the price depending on what the rate is.The store wears this cost.


eg if cost was $700 and sell was $800 there would be $100 gp
on interst free cost $700 and sell was $800 + 5% $40 there would be $60 gp


I worked for a HN store for 9 years. The only people that purchased interest free were the ones that didn`t have the money to buy outright.

Interest free as mentioned earlier as so long as you pay the amount within the interest free period there are no charges.

Please be aware some interest free contracts have a minimun payment this just means that so long as you make the minimum payment you have not defaulted on your, HP but be aware if you have not paid off the full amount by the 24 or however many months the term is then you will be charged at whatever the interest rate you have agreed too.

I hope this clears things up.