Low Rate Finance

[davocol]

I will be shopping around for a new car in the next couple of weeks and have noticed that both Renault and Nissan are offering great deals on finance 2.9% and 4.9% (Xtrail only) and it got me thinking.

This would be a great way for Ford to move some of the new territories as well as the new gas falcon once it launches. It has the added benefit of not killing resale values by deep discounting which surely Ford would not do :P

If tomorrow Ford came out with s 1.9% - 2.9% deal on a new falcon or territory would it make you consider purchasing a new one?

P.S. If you are one of those lucky people that has piles of cash and would never get a car under finance then that's great but please don't hijack the thread.

[wodahs]

i have an 02 explorer v8 5spd
and i was in ford the other day for them to change tyre size on its computer , and a rep came up to me trying to get me to trade up (which i had thought of a few times) and had to say no to him
am a die hard v8 bloke and as a told him if the terri came with an 8 id have done it by now rather than spend the money on the explorer that i could be using to upgrade
even looked in to buying a new explorer (rhd) from the states and paying import after a mate did the sums

[kypez]

Originally Posted by davocol

P.S. If you are one of those lucky people that has piles of cash and would never get a car under finance then that's great but please don't hijack the thread.

I'd still buy it under finance cause you can get a better return on that cash investing it at close to 7% or more while paying 2.9%! you're still up!

[2011G6E]

I've always wondered why interest rates are kept so high...on everything, not just car finance.

Isn't it better to have a very low interest rate, and get extra customers, who will be able to service the loan more easily because they aren't burdoned by a high interest rate? You would have more people far more likely to pay back the loan if this was done, one would think.

Or am I not greedy enough to work in finance...

[StrokedXT]

Because the cost of funding those loans are high, banks get charged interest on the money they lend you with a small margin on top.

[nstg8a]

i voted yes, but also emailed ford a while ago asking them this exact thing.

their answer, will not, and can not, ever happen, as ford no longer has their own finance company. ie ford credit. they said go into the dealers, and shop around various finance companies, some may do some. plus some finance companies cross brands as well.
i was going to finance a xr6 ute through toyota finance, their rate wasnt 2/3/4% but still better than most.

[GQ_Smooth]

Low finance rates is one of the many reasons GM went bankrupt.

[Cúl-Báire]

I wouldn't say I would certainly buy a Ford, but it would certainly get me in the door. Whilst I try not to borrow against depreciating assets, the interest rateis much lower than that of the cash rate.

While you'll never make money on it due to depreciation in value, you'll sleep easy knowing that 30k, 40k is still in the bank while you are paying the loan.



nstg8amentioned Toyota Finance, I had a loan with these guys a few years ago,during that period I went through a rough patch injuring myself and my bank balance quite badly; these guys were more than happy to dramatically reduce the loan repayments temporarily, and help me though the battle with insurance whileI got back on my feet. I would happily take finance with these guys again!

[Powdered Toast Man]

When Toyota was advertising their low interest rates I was thinking why cant a brand I'm more interested in do this (Nothing against Toyota, I just dont want white goods on wheels).

As for the poll, it would get me in the door but I'm not in the market for another large car so I doubt I'd buy a Falcon. Maybe a ute but that would be all.

[FalconXR6]

As I generally prefer the Ford branded vehicles, I voted yes.

Reason being is that when Toyota were running the 2.9% ads for the Corolla both me and missus agreed that you would genuinly have to consider the Corolla strongly - even if it wasn't your first choice - simply because of that interest rate.

[Hossy]

Something to think about people, you cannot get money from the reserve bank at 2.9% so how do you think companies can offer this?

If you purchase a Nissan ect and arrange your own finance I'm sure that you can buy the car for less money than if you did the 2.9% finance offer, it's just a diferent way of presenting a discount.

[Smoke Pursuit]

If it was a true 2% and I could buy the car with discount yes... If it was 2% and the car was at retail no.

[DJM83]

There is room to move though, my mum purchased a new Toyota, got some off the price and 1.9% finance.

[GT0132]

No because these kind of offerings are designed to get you in the door and are often fraught with onerous terms and conditions. Financially you're no better off, and often worse off, due to lack of discounting at the front end and reduced trade in allowances on offer. Ford would build the cost of offering low interest/interest free finance into their overall costingss and set the retail price accordingly to arrive at a reasonable margin.

It's easy to fall into the trap of thinking that you're better off taking a 2% loan on a $40,000 rather than using your own money obtained through either funds in the bank, redraw on a mortgage or even taking a personal loan.

At 2% on a 40k loan over 3 years means monthly payments of $1,146 over 36 months (total pay,ments $41,256). At 5.5% that increases to $1,208 per month over 36 months , an increase of $62 per month or $2,200 over the life of the loan. Even at the personal loan rate of say 9% the payments are $1,272 over 3 years, or $4,500 more in total than at the 2% rate.

So the best option is to ignore any low rate offer and see if you can get a discount of $4,500 off RRP by paying cash and obtaining finance elsewhere (shouldn't be hard in this market)

[84dau]

I said yes, I love my fords and at the right price and finance I would jump.

As per other topic, I was at holden and 0.5% interest on a SS thunder for 39k, now I have never owned a holden but was seriously tempted, I probably should have got it

[Uwish]

Toyota have/ had more $$$ than most counties.
Not sure about now. But they do still have heap of it

[DJM83]

Originally Posted by GT0132

No because these kind of offerings are designed to get you in the door and are often fraught with onerous terms and conditions. Financially you're no better off, and often worse off, due to lack of discounting at the front end and reduced trade in allowances on offer. Ford would build the cost of offering low interest/interest free finance into their overall costingss and set the retail price accordingly to arrive at a reasonable margin.

It's easy to fall into the trap of thinking that you're better off taking a 2% loan on a $40,000 rather than using your own money obtained through either funds in the bank, redraw on a mortgage or even taking a personal loan.

At 2% on a 40k loan over 3 years means monthly payments of $1,146 over 36 months (total pay,ments $41,256). At 5.5% that increases to $1,208 per month over 36 months , an increase of $62 per month or $2,200 over the life of the loan. Even at the personal loan rate of say 9% the payments are $1,272 over 3 years, or $4,500 more in total than at the 2% rate.

So the best option is to ignore any low rate offer and see if you can get a discount of $4,500 off RRP by paying cash and obtaining finance elsewhere (shouldn't be hard in this market)

Whilst i can agree with some of that, there isnt a hope in hell of getting 4.5k off a 17k Fiesta.
Im not 100% up with all this finance stuff, im just going on the repayments, and costs of the car.
I can tell you with my mums deal, she borrowed 6k less then me and her loan is 1 year less then mine and she is paying almost $300 a week less.

(Yeah i know its hard to compare them both but gives a little idea and she also didnt pay near the advertised price of the car.)

[GT0132]

Originally Posted by DJM83

Whilst i can agree with some of that, there isnt a hope in hell of getting 4.5k off a 17k Fiesta.

No you probably wouldn't , but its all relative . If you're only borrowing $17k versus $40k you'd only need a discount of $1,900 to be square.

[Ben73]

I don't want a new Falcon or Territory.
If they offered it on the Ranger I would have a look into it.
Otherwise I think Ill be buying a few year old vehicle as my next.

[xisled]

All these low rate deals are there to get people in to a new car and not in to the second hand one.

What happens a person buys a brand new car, they then need to service the car for the 3 years to keep the warranty. Most people will just take it back to the dealer they purchased the car from. That is where the money is made; it is over priced items at service that bring the most money back to the dealership.

If the same dealership sold a car that was just about out of warranty, they may get 1 service from the customer, once the warranty is up, most people tend not to go back and take it to a local mechanic.

So by the dealership being able to sell a brand new car at the same price as a 2 or 3 year old car, the dealership will end up getting more money in the long run, also a few people will be selling the car after the 3 year warrenty, this may end up back at the dealer that sold the car, and then they claim sell the car for more due to service history.

[Rodge]

These low interest rate deals are ALWAYS based on paying the full retail price for the vehicle.
I personally believe you are almost always better off negotiating a really good deal on a good low mileage one, demo or one owner and organising your own finance.

[302 XC]

Originally Posted by xisled

All these low rate deals are there to get people in to a new car and not in to the second hand one.

Not sure how the finance issues are nowadays,but my experience years ago,it was always easier to finance a newie than a 2nd hand, i never had money issues back then, but i found it better to go new
It mite be a catch ???,the dealers mite slug extra for services,but many manufacturers are doin fixed price services on new cars
Mate just got a new navara just over 40 grand ,got it at 2 % interest over 5 years,and all services are fixed for the factory service period
At the end of the day,its not what it costs over a period ,is it better to buy 2nd hand at a higher interest rate or buy new at a cheap interest rate,it all boils down to the best value for money and the damage the hip pocket faces evey month come loan payment time
Ive been toying with buying a used few year old terry for awhile now, but at the low rates being offered for new,the ball game has changed

[GQ_Smooth]

The low or zero interest rate finance on cars was one of the contributing factors to GM going bankrupt. It's always a danger for organisation to provide low finance rates if they are self funded.

[Poetic Justice]

There is some pretty silly opinions - uneducated at that - regarding this.

Let me tell you, as a sales manager with Toyota, I sell cars at the same discounts as normal with finance offers. So to suggest you'll only pay retail is ludicrous.

[graham7773]

On my income (pension) I am fairly irrelevant to this poll but re GM bankrupt, yes they did fall in a hole... IMO the hole has a rosy outlook as their cash reserves at this time are $37,000,000,000. With a little help from their Federal friends. A long way from bankrupt. Another interesting gem I found re their production cost savings was the reduction of labour hours per unit from 2096 in 2005 to 1026 in 2011. Some more billions saved

[Tucool]

At a low interest rate I would be in, I'm due for a new ute and that would sway me.

[mwhit43]

They would be ideal for a car that is cheap...and that you can upgrade in a few years