360 Financial Services Warns Consumers about Car Franchise Marketing Hype

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Matt Burgess, CEO of 360 Financial Services, has 10 tips to help consumers protect themselves from car franchise marketing hype, and instead get the smart deal they want and need.

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In the Internet age where consumers wield more power and information than ever before, franchise motor dealers are using a marketing gimmick to turn the tables back in their favour and get maximum profit from each vehicle sold.

Matt Burgess, CEO of 360 Financial Services (http://www.360financial.com.au), is warning consumers against being lulled into a false sense of security by car franchise marketing hype.

“In the Internet age where consumers wield more power and information than ever before, franchise motor dealers are using a marketing gimmick to turn the tables back in their favour and get maximum profit from each vehicle sold, which they have not enjoyed for many years,” commented Burgess. “Buyers must beware these offers are not offered on the entire range of new vehicles. These special deals are generally only offered on vehicles where the dealer is overstocked, or the model is soon to be replaced. Plus, a deposit of 20% is usually required, which is not a viable option for consumers who don’t have cash lying around. Unfortunately, dealers get consumers in their doors through misleading advertising, only to tell them they don’t qualify for the special offer, but they have other great car loan packages for them.”

To help protect consumers against being taken advantage of, Burgess suggests that they keep in mind the following 10 points:

1.    Compare car finance rates from different lenders, instead of just one.
2.    Ensure that any rate comparison is an “apples to apples” comparison – often, the actual rate is much higher than the rate used in the marketing. Plus as a commercial loan, the finance company is not required by law to show the interest rate, and in some cases there is no mention of ongoing fees and charges.
3.    Understand that a comparison rate is calculated by taking the annual percentage rate inclusive of all fees and charges, and determining a consistent loan and term as prescribed by law.
4.    Be aware that, for motor vehicle loans, the consistent scenario is a loan of $30,000 over a five-year term.
5.    Pay very close attention to the small print in car loans, as that is where problems typically lie and have a major impact on how attractive an offer truly is – or isn’t.
6.    Avoid paying for a car through a mortgage, since mortgage interest must be paid immediately at a home loan rate that is typically higher than car loan rates. Plus, consumers should avoid using equity on their property to purchase a short-term, depreciating asset.
7.    Avoid paying for some or all of the car deposit on credit cards, as the punitive interest rates can easily and quickly add up.
8.    Consumers who don’t have a trade-in vehicle with a value equivalent to 20% of the required deposit might be better off financing the full 100%, or limiting the deposit and obtaining something more comfortable through mainstream motor vehicle financiers.
9.    Keep in mind that to take advantage of a special offer, consumers must often pay full retail price for the vehicle - no discount, no negotiation, no arm-wrestle, no haggle, no free floor mats, no full tank of fuel - just full retail price.
10.    A finance broker can compare a number of different loans and put buyers in touch with a broker to source a new car at a discounted price.

“When people become excited about purchasing their dream car, they often forget the old adage that if a deal sounds too good to be true, it probably is,” added Burgess. “Unfortunately, that means many car buyers fall for so-called special low interest rate contracts, which are well-hidden financial disasters waiting to happen. An independent car broker is a good way to take the emotion out of the buying process. Consumers should let the broker use their experience and industry connections to source the vehicle their customer wants, at the absolute best price. Ultimately, consumers must take the power away from the dealer, and put the money back in their pockets.”

Consumers who want to learn more about getting the financial protection, support and solutions they need when they purchase a new car or any other major item can visit http://www.360financial.com.au.

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