You’ve probably felt it somewhere in your life – the global semiconductor shortage coupled with soaring freight prices. Importing anything seems like there’s another zero added to the end of your bill – and if you’re buying anything electronic or dependent on them, you’re paying through the nose.
Cars are not immune to either effect – which means wait times for vehicles have stretched out to as long as twelve months as the screws are tightened on supply.
Despite downturns in the past, Australia’s appetite for cars has remained healthy throughout the pandemic. World car sales have decreased by 14%; they’ve slumped by 15.8% (2019 vs 2020) in the US, and 27% in the UK (2019 vs 2020.) Australia, by contrast, is up by 33% (October 2020 vs 2021.)
What can you do? We have some tips for you to effectively compare car loans, so you can get a decent deal in a seller’s market.
A seller’s market means fewer bargains
Import delays are making it difficult to drive a bargain with dealers – and they know they have the upper hand. If you aren’t willing to buy on the spot or prepared to wait months until your car arrives, there’s plenty of people who will.
On the flip side, if you are prepared to take a car that’s already on the lot off the hands of a dealer, they’ll probably be grateful (although they won’t show it) Savvy managing director Bill Tsouvalas explains.
“Any car that’s on the lot, ready to drive away, is already bought and paid for by the dealership. In fact, it is costing them money to keep it there,” he says. “If you are prepared to take a car that isn’t quite what you want, you could have a bit more wiggle room when it comes to negotiating a better price.”
You could get a second-hand car, but demand – and prices – are higher than normal.
Buying second hand means due diligence
Buying from a dealer is more convenient, but you’ll have to wait for your car to arrive first. Buying second hand might be a bit more hassle, but you can get a relatively new car if you scour classifieds hard enough.
“You need to do your homework. Make sure you can see the car and test it out, if you feel comfortable to do so. Get an independent evaluation. Make sure the car you’re eying off isn’t a write-off or stolen using the Personal Property Security Register. If your seller is cagey or sketchy, take it as a big red flag and walk away.
“Dot every ‘I’ and cross every ‘t’, because you’re on your own if you buy a lemon.”
Finance is where you save the most
In a seller’s market, the one place you will save money is on finance.
“Getting a good car loan from a trusted broker can save you in interest, which is the most significant saving grace at the moment,” Tsouvalas says. “A cheap car loan can save you hundreds, if not thousands in interest. Even if your car price is a little inflated, you save on the back end compared with just taking whatever your bank throws at you or even worse, signing up for dealer finance.”
You should also be wary of “zero percent” deals, as it can inflate the total cost of your purchase even more as dealers usually prohibit negotiation.
Remember to consult a financial professional before making any decision about loans and major purchases.
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