Finding a good used car to buy is only part of the used car buying process. Next comes the financing part. This is tricky as most finance companies will not entertain walk in customers as this way the finance officers cannot request for their ‘football’ fees. Yes, their commissions are easily delivered by used car dealers and so they will insist you need a used car dealer to do the documents. Why do you need this?
If you are already a customer of the bank of finance company then you can ‘persuade’ them to take your car loan personally, grudgingly and with unfavourable margins. 70-80% loan margin is the best possible if you do the loan directly with the finance officer. Go through the ‘middle man’, the used car dealer and your loan margin moves up to 90-95 to even 100% depending on the model, age and type of car. This has been the case for the longest time and this is why used car dealers have been thriving.
Now all this is changing as finance companies are feeling the pinch with rising defaulters and high depreciations. To reduce the number of defaulting car loans, finance companies are meeting with defaulters and ‘reworking’ their car loans to reduce their monthly payments whilst maintaining the agreed interest rate. This will result in less new car purchasing as existing car owners will now have to keep their cars for an even longer period before being able to clear their car loans.
Some finance companies have even issued letters informing used car dealers that they will not be providing financing for certain car brands and cars more than 8 years old. Belt tightening is running up and more finance companies will be issuing these letters in the coming months.
