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Zero Percent Interest? Sounds Too Good To Be True.
There are some great interest rates around for new car buyers right now- even as low as zero percent. Are they the real deal or is there a catch?
Too often you hear the consumer watchdogs say ‘If it sounds too good to be true, then it probably is”
So does that apply to these fabulous interest rate offers?
Well, yes and no.
When a manufacturer offers a great rate it will be honoured (unlike some sharks), but it will be on their terms-not yours. Often that means the deal isn’t so good for you after all.
Let’s explain.
Suppose you see a great 2.9 percent interest rate on the car of your dreams.
Should you rush in and buy?
Mmm, maybe, but there are a few questions to ask first before you sign up
Q1- Is the offer on the exact car I want?
You may find the dealer has a special offer only on a special spec car that they want to move quickly. Maybe the manual (but you want the auto- or vice versa), maybe it’s a run out model that could cost you thousands in depreciation when the new model is announced a few weeks later.
If it is the right car, right colour and right spec go on to Q2.
Q2- Do I get a discount?
Almost certainly the answer is ‘NO’.
The interest rate is usually only available if you pay the full manufacturer’s recommended price.
So you have to weigh the interest rate saving against the discount you don’t get- we’ll show you how later.
Q3- Can I delay delivery?
You may want your car right now, and that will be fine. But what if you aren’t quite ready and want to wait a few weeks before taking delivery? That could be a problem, the salesman wants his commission now and will almost certainly insist you sign up today- tomorrow may be too late and next month is a definite no-no.
Q4- Can I change the interest terms?
These ‘specials’ usually have restrictive and narrow terms. For example, they may be for a no deposit, no residual fixed term of three years. If you want a four year term with a residual payment, then – no deal. Similarly the deal may be for a high residual, but you want to pay the lot off with no residual. So-again, no deal.
Q5- Can I do a trade in?
Yes, they will usually accept trade ins, but you may not get the best trade in price.
Q6- I was going to pay cash but I can’t resist such a good interest rate.
Many feel like you- but think again. This ain’t a free lunch, so if you have cash, then use it to negotiate a discount that you otherwise wouldn’t get.
The Golden Rule is to check ALL the figures first!
Be careful, do the figures then check again to see if it’s still worthwhile.
Here’s what we mean.
You want to buy a new car that is $40,000. You have no trade in and you are happy with the 2.9 per cent interest over five years that’s on offer, and you’re ready to sign up.
Hold on! Wait! Check it out first!
Let’s suppose Private Fleet can negotiate a discount on the car of $3000, and you can get an interest rate from your own sources of 5.6 percent.
Now let’s look at the actual cost to you.
Example 1. Pay $40,000 and get 2.9% interest over 5 years. Your total cost will be $43,018.20.
Example 2. Private Fleet has negotiated a buy price of $37,000 and you are paying 5.6%. Now your total cost is $42,507.12. That, then, is a saving of a cool $501.08-straight into your pocket.
Not such a good deal after all, is it?
So to conclude, what really matters is your total cost not the enticement special.
Sometimes it can work for you, but so often you can do better-with our help of course!
What's In A Name?
As T.S. Eliot nearly said, the naming of cars is a difficult matter.* They say that having the wrong name for a car can make or break it, so the marketing team probably spend a fair amount of time picking the name for a new model. Or at least you would hope so.
We wonder why, therefore, General Motors have eschewed the Holden name in favour of Opel. That’s what they’ve done with the launch of the Opel brand in Australia this month, marketing four models.
Opel is a German brand owned by General Motors, so really it’s a Holden. In fact Holden have sold Opels before as Holdens. They’ve also re-branded Chevrolets, Vauxhall, Isuzu and Daewoo as Holdens for the home market.
Is it because they think that the ‘German’ name is synonymous with quality, and they can therefore get a premium price? Mmm, perhaps, and their Oz slogan ‘Wir lieben Autos” (we love cars) suggests that’s the case (to say nothing of the German accent in the TV ads!). But then the Astra is made in China, Poland and the UK as well as Germany, so there’s no guarantee ‘our’ Opel is made in Germany. I wonder if GM, Holden or Opel would care to comment?
The intoduction of the Opel name to the Australian motorist makes me wonder how the marketing guys come up with some of these names.
Some car marques, especially the European ones, make things easy on the marketing team and simply stick to a series of numbers and letters. BMW and Mercedes are particularly good at this, and once you’ve figured out how the code works, you know exactly what’s what with the car. For example, in the BMW 320D, the 3 indicates the series (3-series) while the other numbers indicate the engine size. The D on the end means that it runs on diesel. And if you have an M and just one number such as M3, you know, as Edward Cullen informs Bella Swann in the first Twilight book, that it’s a fast, luxurious and powerful car (incidentally, the Twilight books – not sure about the movies – devote a fair amount of time to cars for a soppy romance story aimed at teenage girls. A new target market, maybe?). Other manufacturers who have cottoned onto the numbers and letters idea include Volvo, Audi, Jaguar and (a departure from Europe) Lexus. Mazda has also recently got on board the letters and numbers bandwagon, probably after some of the clangers mentioned below.
And that’s all very well and it does avoid problems and embarrassment by giving your brand new car a name that sounds silly or can’t be pronounced. However, for a lot of people, buying a car is an emotional decision and there’s nothing like a name or a word to stimulate the imagination. And actual names have another advantage for marketers: they’re easy to remember and get into the public’s heads via ads.
Successful car names that actually mean something tend to fall into several major categories. The first, popular with sports cars, is the “fast, dangerous animals” category. The winner here is Jaguar, which has an entire marque named after a big cat. Other worthy contenders include the Ford Falcon, Hyundai Tiburon (Shark in Spanish) and the Porsche Cayman (a caiman is a crocodile sort of thing). Or they have adventurous sorts of names like the VW Touareg (named after the desert nomads), Nissan Safari and Land Rover Discovery. Or they go for something that sounds upmarket (Holden Statesman) or like something to aspire to (Mitsubishi Aspire). Or they try to make you smile, like the Honda Jazz or the Fiat Panda.
Often, however, the people dreaming up the names tend to come up with things that sound a bit like real words or real words put together. Examples of this sort include Toyota’s Presara and Hiace. I’m not sure how they come up with these things. Apparently the marketing folk come up with screeds of suggestions that get slowly whittled down by the Powers That Be to a final solution. I sometimes wonder if they write down a list of suitable and appropriate words while sober, then get drunk and attempt to re-write the list with one person reading them out and the other person writing them down.
And the process does seem to come up with some odd results. We’ve probably all heard the story about the poor old Mitsubishi Pajero and how it’s supposed to mean “wanker” in Spanish. This didn’t stop it selling reasonably well in Spanish-speaking Bolivia, which is where this writer was living when the Pajero came out. After all, a good car is still a good car in spite of the name – the HSV is still popular, probably even with doctors, even though these initials being standard medical speak for the Herpes Simplex Virus. But the theory about the naming team getting drunk seems to be the only explanation for things like the Suzuki Kizashi, the Nissan Qashqai (that’s its overseas name – but is “Dualis” really that much better, sounding very close to Cialis?), Hyundai Getz, Ssangyong Kyron and the Toyota Yaris. Either that or someone was trying to get rid of high-scoring Scrabble letters.
The oddest car names are, like the ugliest cars, a matter for debate. And some really peculiar ones never make it out of Asia (e.g. the Honda Life Dunk or the Mitsubishi Mini Active Urban Sandal). But the following certainly deserve some (dis)honourable mention in this category (incidentally, I have owned at least two of the cars on this list at some stage):
- AMC Gremlin
- Mazda Bongo Friendee
- Mazda Marvie Proceed
- Isuzu Mysterious Utility Wizard (and MU isn’t much better than Mysterious Utility)
- Dodge Swinger
- Toyota Cressida (Cressida being a Shakespeare gal known for being unreliable and faithless)
- Isuzu Giga 20 Light Dump
- Daihatsu Naked
- Ford Pinto (a bean, a horse, Spanish for pint or “I paint” or Portugese for penis).
- Nissan Homy (yes, that is an M for Mike, not an R and an N close together)
More exist. Send us your suggestions, along with your ugly cars!
- Daihatsu Naked – We all know sex sells, but this is ridiculous.
*What the poet actually said was “the naming of cats is a difficult matter”.
Ugly is in the eye of the beholder
Beauty is in the eye of the beholder. So is ugliness. Some cars rated as being horribly hideous by one reviewer might have a certain quirkiness that endears the vehicle to other people. So it’s always a little bit iffy when people come up with the lists of the ugliest cars.
The following were ranked as being the ugliest cars of 2012 by Forbes magazine and website. In other words, if your favourite set of wheels is in this list, or if you actually quite like the looks of a particular vehicle, don’t blame me. A few of these had me scratching my head and wondering what on earth these guys were on about. Some I did agree with, of course. But the practical side of me says that there’s more to a car than the way it looks, and if it gets you from A to B comfortably and efficiently, then looks can be irrelevant. And is it really a big deal that you have a car so hideous that it stands out from all the rest of the computer-designed blandness?
So here’s the list of the ugliest cars of 2012, as Forbes magazine and website calls it.
• Acura ZDX: we don’t have this one over here, so don’t go looking for it in our car reviews page
• Ford Transit Connect (actually, it looks better than some fridge-on-wheels vans I’ve seen)
• GMC Terrain: another one that we don’t have here, so you’ll be spared the variation on squareness the designers played with
• Honda Crosstour (are these reviewers nuts?)
• Lexus CT 200h hybrid (see above – who’s paying them?)
• Lincoln MKT (again, one we don’t have over in Australia)
• Mercedes Benz R-Class: OK, so it looks like a hearse… which is a good thing if you actually are an undertaker. But is it really that ugly?
• Mini Coupe: well, it certainly isn’t the classic Mini as we know it.
• Mitsubishi i MieV: yes, this one does look a bit weird. The overall silhouette isn’t bad, so maybe the designers will be able to improve on it as the years go by.
• Nissan Murano Crosscabriolet: not that ugly in my books, as you can expect an interesting crossover vehicle to look different
• Porsche Panamera: hey, I think this one looks quite nice!
• Smart Pure Coupe: Another oddball one, but that’s expected with Smart.
• Toyota Prius V: I now have a very low opinion of the reviewers of the Forbes magazine.
OK, that was one list. And it was rather limited in that it only considered cars that came out this year (and 2012 isn’t even over yet, so who knows what’s coming?). Other lists, such as the one put out by the Discovery channel, have older and uglier ones, many of which were unsafe into the bargain… now that’s ugly.
The list was:
10 Ford Edsel
9 Studebaker Avanti (yes, that’s the front of the car)
8 Chevrolet Corvair
7 Fiat Yugo
6 Ford Pinto (and an absolute deathtrap into the bargain)
5 Chevrolet Vega
4 AMC Gremlin
3 Fiat Multipla
2 Pontiac Aztek
1 AMC Pacer.
It would be fun to develop a list of the ugliest cars in Australia. Personally, that Fiat Multipla ought to be in there. Any other suggestions?
The World's Priciest Car Wash!
The Death of the Car Dealer article last month evoked much comment, including that of ‘Jerry’ who bitterly complained about the ‘farcical dealer delivery charges’, in Australia. This is the item on the invoice usually labeled “Pre-Delivery Charges”.
Cynics call this just an ‘expensive car wash’, so let’s look at what it means and how much we are asked to pay.
Dealer delivery is a real cost and imposition on the new car dealer, as there is work to be done and money to pay out after the car arrives at the dealers, but before you collect your shiny new car.
Work and costs involved include:-
1. Freight charges from the manufacturer or importer to the dealer.
2. Time taken to register the vehicle
3. Affixing the number plates
4. Completing the paperwork.
5. Inspecting the vehicle for faults and imperfections,and doing a full mechanical check.
6. Downloading software and programming electronic equipment.
7. Car wash and detail.
8. Filling it with fuel..
So how much do you think this would cost the dealer?
Let’s see if we can make a fair estimate.
Delivery to the dealer is possibly as much as $500, an hour or two getting the car registered and doing the paperwork, a couple of hours in the workshop, then the body shop and car wash bay for another couple of hours, and that’s about it.
Dealers like to talk about holding costs, showroom expenses, fitting extras, costs of arranging finance and the like, but then we reckon these are covered by the profit margin and commission given to the dealer from the suppliers.
So let’s be generous and say that a reasonable cost recovery (with a bit of profit) could be up to $2000.
However, most new car dealers around the world will incur similar costs, but their charges to the purchaser amount to far less. In the USA the customer is imposed a pre delivery charge of about $750 to $950. It’s slightly less in the UK, and stays around this mark throughout Europe. But it’s a very different matter in Australia…
We made a few phone calls asking the delivery charges from separate dealers in different states for exactly the same car, with exactly the same specifications.
You don’t need to second guess us, as you can expect a wide variation, but even we were surprised to get quotes varying from a very acceptable $1995 to a serious request to pay and extra $5000! And this dealer was not alone in asking for more than 150 percent more than some of his counterparts, as one also quoted $4995.
Is this a disgraceful rip off from the unsuspecting purchaser, especially when some salesmen claim that this is ‘non negotiable’. So is this just another case of buyer beware?
Well, yes and no.
Clearly the car dealer has to make a profit to stay in business, but an exorbitant profit is certainly not justified. Yet it’s a free market, so virtually anything goes, huh? Yes, and that goes back to negotiating the final deal. It really doesn’t matter where the dealer makes his profit. It’s the bottom line that really counts.
Let us explain:
Suppose you want to trade your trusty family car for a brand new four wheel drive.
The recommended retail price (excluding dealer delivery and statutory costs, as they say) of the new vehicle is $40,000, but, by the time you’ve paid the dealer delivery fee and on-road costs, dealer A quotes $47000, including pre-delivery charges of $3450. But dealer B only charges $2250 for pre-delivery (so the total cost is only $45,800).
So you’d go to Dealer B, wouldn’t you?
Of course you would – unless…..suppose dealer A wants to pay you $10,000 for your trade in, but dealer B reckons the best he can give you is $6,000.
Now what? Well, to hand in your old car for the new one from dealer B will cost you $39,800 (dealer quote of $45,800 less $6,000 trade in).
Dealer A, however, quoted you $47,000 for your new car, but will give you $10,000 for your trade in. That means you’ll pay less, $37,000 versus $39,800, so dealer A should get your business.
The moral of the story is that it is the changeover price that matters. Clearly Private Fleet is well aware of all these dealer tricks, so it’s second nature to us. But it’s a minefield for the private buyer that is unnecessary and unwarranted, and makes what should be a pleasurable and exciting task, frustrating confusing and, all too often, unrewarding.
In fact, it is clearly such an issue to the buyer that regulatory authorities have tried to impose drive-away pricing throughout Australia. But that has its own problems as there are substantial variations in state taxes throughout Australia that make a uniform ‘National Price’ impossible.
‘Drive away- no more to pay’ is another example which can erase the pre-delivery rort, and this is where the manufacturer imposes a final drive away price for a particular car in each state. But, sadly, this only applies to selected cars on the dealer lot. As we said, at Private Fleet we are very aware of these cost impositions, but that really doesn’t matter to us, as it’s always the final cost that matters, no matter how it’s arrived at. But for the unwary it can be an extra under-the-table revenue maker that just shouldn’t happen.
Do you think that these charges should be controlled, contained and specified by the maker, or should it be a free market?
Have you paid the pre delivery as a ‘non-negotiable charge’? Have your say below.
Level 2, 9 Help Street