In the past couple of decades, it has become quite commonplace for car dealers to offer financing along with their vehicles. Sometimes they can even arrange quite complex loans such as hire purchases or a novated lease. Despite the convenience of being able to get your new vehicle and your loan in the same place, there are some very potent arguments against doing so. Most of them revolve around the fact that your interest rate, terms and conditions will usually be worse under dealer financing than when you go through a broker for car finance in Malaysia. We look at why!
1. When you have decided on a vehicle, you have little negotiating power for the loan
Most people don't realize that their car loan is a product they are buying, just as the car is. You should shop around for this product just as you would for the best price on your usual brand of toilet paper. If you have already decided on a car and made that emotional investment, you are much less likely to make an objective decision about whether the dealer's loan is a good product for you.
2. Having a loan already in place could help you cut down the actual car price
When you already have a loan in place, and you don't have to 'ask' the dealer for anything, you have much greater negotiating power. This extends to the price of the vehicle itself .. so you could save thousands not only on your finance, but the price of the car itself.
3. Dealers always mark up the interest rate
Or, almost always! This is standard practice. The dealer calls the lender they are affiliated with, obtains your lowest approved interest rate, and then puts their markup on it. You can hardly get the best deal this way.
4. Dealers generally only have one lender to obtain finance from
It is not actually the dealership that is lending you the money for the car. It is a bank or other institution that they have an arrangement with. By contrast, when you obtain your used car finance through a broker, you have access to almost every loan product in the market, as well as the software and expertise to choose the one that is best for you. Also, as finance brokers are professionals in their field of finance they provide you with the absolute best and accurate information on which options are best for you.
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