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Vehicle finance - dealer vs directly with bank?

Gazza_P

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I've heard many different opinions about this.

We going to be trading in one of our cars for a something different,
What is the best for the re finance, In house Dealer finance or directly at bank ?
 
Get quotes from all of them and see who gives you the best deal and interest rate.
I've had good interest rates from in-house dealers and banks on different cars.
 
When I got my last vehicle, the dealer applied to all the banks and my bank came back with the best rates.
 
Did this whole song and dance two weeks ago.

My bank got me the prime rate. The dealer was prime + 1.5%

Your mileage may vary. Pun intended
 
If you're with a company or institution also check if they have any arrangements. My wife has guaranteed prime via her office so we knew what our starting point would be. Dealer actually said didn't believe they could beat it.

@StangV2_0 do the dealers get a fee/commission for arranging finance?
 
If you have an access bond type facility & the credit available in the access bond AND are disciplined enough to pay it off, it is often more cost effective to use the cash from the access bond as that generally has a lower interest rate than car finance.
 
I've heard many different opinions about this.

We going to be trading in one of our cars for a something different,
What is the best for the re finance, In house Dealer finance or directly at bank ?

@StangV2_0 do the dealers get a fee/commission for arranging finance?

Not really but they may get a bigger kickback from the bank by signing a deal higher than what the bank offered the dealership.

Let the Dealership Business Manager (F&I) shop around for you while you do your own application.

Also, don't just assume that your own bank who you have been with for 20 years is going to give you the best interest rate. They dont give a shit. The bank that will give a shit is the bank that doesn't already have your business.

Get quotes from banks you haven't dealt with before. You may just be surprised. More often than not you will get a better rate from the bank you don't already bank with since they want your business to move over to them.
 
I believe that in-house/in-dealer finance people are often incentivised by the banks to push their products. They'll obviously seek to line their own pockets at your expense. They should apply to all the banks on your behalf but I doubt that they would unless pushed. It's unnecessary work for them

As everyone else has said, get the in-house people to do their work while you do your own. If they get a rate higher than the rate you get from the same finance house, ask why and watch them squirm.
 
Its well known that car dealerships get commission for placing deals with certain banks. Just compare rates with various banks and choose the lowest - no favoritisms with any of them they are all kak
 
ABSA has always given me really good interest rates - When my own bank used to be way higher.

It's just a pain dealing with absa though
 
Also, don't just assume that your own bank who you have been with for 20 years is going to give you the best interest rate. They dont give a shit. The bank that will give a shit is the bank that doesn't already have your business.

Yeah 100% this my mom got a new car and she is a private banker as well as 20+ years etc as said above with Absa, she asked them what they can do for her and in the end she went with Nedbank as they gave the best offer. Such a joke.
 
Yeah 100% this my mom got a new car and she is a private banker as well as 20+ years etc as said above with Absa, she asked them what they can do for her and in the end she went with Nedbank as they gave the best offer. Such a joke.

Yup. I stood laughing one day in front of a client who got a better rate from the bank he had never dealt with in his life compared to the bank he had been with for 20 years. He got on the phone to his banker, and he swore that banker's mother, aunty, cousin, his dog, his cat, and just when I though flip, ok, that's enough now, he took it up another gear! He eventually managed to get his bank to give him 0.25% less.

Don't just assume your own bank will give you the best interest rate.
 
A friend just bought a brand-new Everest. He is in DBN and eventually went with a deal offered by (Motus?) Ford JHB. Ford in DBN could not compete.

What the dealer is doing is they get a kick-back from the finance house for signing up clients with "in-house" finance. They use some of this kick-back to discount the price of the vehicle below what other dealers are offering.

Moral of the story, don't just trust the price you see on the manufacturers website/autotrader. Phone around to all the dealerships and get them to compete on pricing. Tell them you plan to finance the vehicle, and they will factor this into the final price.
 
A friend just bought a brand-new Everest. He is in DBN and eventually went with a deal offered by (Motus?) Ford JHB. Ford in DBN could not compete.

What the dealer is doing is they get a kick-back from the finance house for signing up clients with "in-house" finance. They use some of this kick-back to discount the price of the vehicle below what other dealers are offering.

Moral of the story, don't just trust the price you see on the manufacturers website/autotrader. Phone around to all the dealerships and get them to compete on pricing. Tell them you plan to finance the vehicle, and they will factor this into the final price.

There are so many things that come into play when it comes to getting the best price on a vehicle from the dealerships.

On new vehicles the dealership may have a vehicle that has been in stock for 6 months and has had 2 price increases of 3% in the last 6 months. So if the vehicle is on their floor with a retail of price of R 641,000.00, and it has a 10% margin, that means they stocked the vehicle for a price in the region of R 550,000.00. If they keep R20k they can give a discount on the vehicle of R70k!

Most if not all large dealerships also have what's called a floorplan with the banks. This will apply to new and used vehicles. They don't buy the vehicles in cash. Imagine a dealership with 80 new vehicles in stock. Thats a lot of money to pay cash for cars! They don't do that.

The floorplan can also be to your advantage.

The floorplan is a revolving credit plan with the banks. There may also be an agreement where if a vehicle is sold within 30 days of it being stocked the dealership will not pay interest on the vehicle. However, vehicles that have been in stock longer than 30 days will then gather interest and the dealership must pay x amount per month. The longer it's in stock, the more interest the dealership pays.

What's better? Try close the deal and keep R20k on the vehicle or rather sell it for cost to avoid paying another R10k next month for the interest?

If I was a DP in that situation, I would cut my losses. Give it to the client at cost provided we do the finance through our dealership. That way we will get maybe R15k incentive from the bank and avoid further interest on the vehicle while its in stock. You then also take smash n grab, tracker, towbar, VPS. So we make a little incentive, some profit, and report an extra vehicle sold to the board. We happy. My boss is happy. And the client is happy they got a good deal.

Bottom line, shop around!!!! I have said this many times and I will keep saying it. Dont just assume the offer in front of you is the best offer. Always keep yourself open to the idea that there will be a better deal somewhere.

It is the same with the finance. Shop around.
 
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