Are you paying commission to a car dealer to get your finance?
Peter Steel, owner of New Zealand owned finance provider, Yes! Finance, says people purchasing vehicles from a dealership may not know they have options about where to get their finance – and the dealership usually isn’t the best choice.
“People often don’t realise that when you finance a car loan through a dealership, you’re not actually borrowing the money from the dealership.
“Dealerships simply act as middlemen, arranging your vehicle financing through banks. As with any service where a middleman is involved, the customer is expected to pay a commission.”
Mr Steel explains that car dealerships will be looking to make as much profit from the customer as they can, including charging extra interest on your loan. That is, there is a difference between the interest rate the dealer gets from the bank and the rate the dealer charges the customer. This difference is where the dealer makes a commission on the loan.
“Unfortunately this is a huge problem within the industry with brokers and dealers taking margins,” he says.
Another problem is dealerships talking customers into buying insurance that are not in the customer’s best interest.
“When you buy a car, are you being offered the right insurances, or just insurances that make the car dealer a profit?”
“If you come straight to Yes! Finance for your car loan,” says Mr Steel, “there will be no hidden charges. We care about our people and want them to succeed. We strive to put our customers in a better position after the borrowing.
“At Yes! Finance we understand budget and will not over commit our clients, tailoring the finance for their best outcome.
“Car dealerships are car experts, not financial experts,” says Mr Steel. “Don’t pay a third party. Come straight to the experts.”