Car dealers sometimes seem to speak a different language. Cut through the terminology and secure a great deal when you understand what the dealers are talking about. Here’s what you need to know to start on the front foot.
Plate Sale
Plate clearances occur at the end of the calendar year. Dealerships are eager to sell models with the old year date stamp that will be perceived as ‘old’ by customers as the new year begins.
You can check the build date on the engine plate under the bonnet of the car to find out when it was manufactured. When you know the build date, you can negotiate a better deal. We’d recommend asking for 4% off the price if the car is built in a previous year.
Here’s some more tips about how to navigate the dealer plate clearance sales.
End of Financial Year (EOFY)
In Australia, the financial year ends on 31 June. Dealerships want to maximise their income for the financial year, and you’ll often see EOFY sales on from late May.
Buying an expensive item like a car at the end of financial year could have tax benefits for small businesses and sole traders.
0% Comparison Rate
The ‘comparison rate’ is a figure that’s calculated to include interest as well as fees that apply to a car loan, so that you can accurately compare different loan options. A 0% comparison rate indicates that there’s no interest or fees being charged on the car loan. At first glance, this looks like a great deal!
Be aware that an offer like this will still include a way for the retailer to make a profit. This might include a maximum delivery charge or no discount on the sticker price.
0% comparison rate looks attractive, but sometimes you will be better off negotiating a lower sticker price and organising independent finance.
To be eligible, you will most likely need to have an excellent credit rating, and you may need to provide a large deposit or pay a large residual value at the end of a short loan term. You might also pay a small fee to register the secured car loan contract on the PPSR.
3 Years Capped Price Servicing
Capped price servicing ensures that you know how much it will cost to service your car over the set time frame. If you agree to a capped price servicing offer, find out if this includes fluids and filters, or if you will be charged extra when they are required. Some offers will also include roadside assistance.
Whether capped price servicing is a good deal for you will depend on how much you drive, and what is included in each service.
Check if the capped price servicing offer is transferable to a new owner if you sell the car – especially if you buy a car with a longer capped price period. Brands like Kia were the first to offer a 7-year capped price servicing and warranty offer, and other manufacturers are now matching this longer timeframe.
$1000 Cash Back
A cashback offer is a promotion by car dealer where you pay for the car using direct debit, and if you meet certain terms and conditions, you may redeem $1000 cash.
Cash back offers often come with terms and conditions that you need to meet to qualify for the cash payment. It’s often the manufacturer that’s behind the promotion, rather than the dealership where you purchase the car.
If you buy an asset with a cash back offer, be sure to keep all your receipts and follow the specified claim process.
It’s a way for the manufacturer to ensure a discount is available to the end consumer, taking the middle retailer or dealership out of the equation.
It also protects the value of the brand, offering more to consumers without the retailer or manufacturer getting caught in a race to the bottom price, which can result in a reduction in quality of the product.
These offers can also have positive tax implications, as you claim the invoice price for the purchase.
If you aren’t sure about a car loan contract you’re about to sign, take a copy home and make sure you understand everything before signing.
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