Understanding The Fine Print
1 Jun 2017
There has been a considerable amount of advertising lately around getting vehicles on interest free or low interest rate terms, or buy now, pay later finance options.
Some of the vehicle dealerships are making statements like pay one third now, one third in a year, and then the final third the following year - at a low interest rate. While others are stating you can drive away today and then just pay as you go!
So what are the pitfalls?
When you look at the fine print closer you may see initially that there is an interest free period with low repayments - but this is because there is a large deferred payment built in at the end (a final payment to be paid on an agreed future date). This can be confusing as the agreement may also state the vehicle is to be returned if the deferred payment is not repaid in full. And if the vehicle is returned, that the vehicle mileage must not have exceeded a maximum amount of kilometres - for example 60,000 kms over four years.
So, here are a few things to keep in mind before you commit to buying your vehicle:
- Read the Terms and Conditions – When does interest kick in? & What is the interest rate?
- Take a look at the establishment and administration fees – sometimes, they can be more than you think!
- Double check any fees that can be charged – Is there a monthly fee? & Is there a fee to pay it o? earlier?
Once you have figured out if it is in fact a genuine interest free o?er or when the interest is to be charged, along with if there are any additional fees, such as an establishment fee or ongoing monthly fee - you can then make an informed decision if this is the best option for you.
It can take a little bit of time, but there is a definite advantage to making sure you get the finance o?er you were expecting – you just need to make sure that you completely understand the finer details.
Stay safe out there!
Talk soon . . .