Motor Vehicle Finance at 4.99%?

Buying a new or used car or truck can involve a significant investment of your or your company’s time and money. When it comes to financing motor vehicles, the dealerships are always keen to win your business that way, too. And, they can appear to offer rates that are much lower than any of the traditional sources of finance. But, more times than not, they’ve simply withheld discount on the purchase price to subsidise an artificially low interest rate.

So, when my wife ordered her new car recently, our strategy was to give the impression that we would pay cash so that we could get the maximum discount. (I had found a credit union offering finance for cars at home loan rates, which was about 200 points better than normal lenders.) The dealer’s final price was much better than anything available from buying agents, despite their ‘guarantees’, so we proceeded with the paperwork, which included the usual post-sale pitch for paint and rust protection. We declined, but then she asked if we would be interested in finance, indicating that the rate was under 5%!!!

Sure enough, the finance guy came around and confirmed that the rate for a three-year term was indeed 4.99%. I got a weak response to my question about how and began to think that we must have left a lot of money on the table.

But, last week I got the answer. A fellow counselor of the NSW branch of the FBAA advised me that the dealer must have access to money from the U.S., where interest rates for motor vehicles are near zero. It appears that GM is encouraging its dealers here to offer funding at about half that of traditional, local sources.

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