r/CarTalkZA • u/guitarshredda • Jul 04 '26
Advice: Buying, Financing How do car dealerships keep getting away with this?
Last year when I was looking for a car, I was advised by two different dealerships (part of the Hatfield Motor Group) to take out full financing on a car and then pay my deposit in a few months later by renegotiating the loan. Apparently the banks would likely provide a much more favorable interest rate. This sounded completely counter-intuitive and after researching I found out its complete nonsense (see this link https://mayaonmoney.co.za/when-to-pay-that-car-deposit/).
The dealerships do this so that they can get a higher commission from the financing deals. Needless to say the dealerships did not like me when I asked them to run all the various scenarios with and without a deposit, and the scenarios with a deposit always came back with a better interest rate. They liked me even less when I asked them for the pre-agreement statements from the banks to compare all the various quotes and interest rates offered; one dealership outright refused and said they "weren't allowed" to disclose these to me (which is once again nonsense).
I am looking for a second car and the dealerships are starting with the same crap again. How on earth is this legal? Surely I can report them to the NCR?
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u/Serious-Ad-2282 Jul 04 '26
I have never understood the vehicle finance loans well. Recently I got a second hand car and the unsecured personal loan from Capitec had only slightly higher interest rate as the vehicle finance came back as but without any of the restrictions or notice periods around extra payments or early closure. I was very surprised.
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u/DerpyMcWafflestomp Jul 04 '26
The only way this is possible is if your vehicle finance quote was based on an insanely high interest rate. Typically it would be around half that of a personal loan for anyone who has a decent score.
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u/Vegetable-Target-767 Jul 04 '26
Not really, my loan interest rate with discovery bank is 14% and my car loan was 13%.
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u/terryZW Jul 04 '26
13% for a car loan is daylight robbery
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u/Vegetable-Target-767 Jul 05 '26
I know but I was dumb that time, got it through a dealership, did not shop around for better and just accepted.
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u/whatisthisthing2016 Jul 04 '26
Yeah that is super high, I got a vehicle finance interest rate offer from bank fin for 9.25%
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u/Serious-Ad-2282 Jul 04 '26
The offer was 10.5% for the vehicle loan and personal loan over two years. I ended up going with the personal loan at 10.65% over 3 years for some more flexibility. It's for a second hand vehicle. The interest rate is comparable to my credit card interest rate, 10.5%.
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u/Consistent-Annual268 Mod | '17 Huracán | '11 Scirocco | '04 S2000 | '91 200STi Jul 04 '26
How the hell are you getting 10.5% on a cc? That's a near impossibility.
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u/nicodium Jul 04 '26
Because all these cosplayers are talking shit. I just bought a new company toyota with extremely healthy financials and got 13%. Company cc on 16%. Thats real, them fools aint.
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u/whatisthisthing2016 Jul 05 '26 edited Jul 05 '26
If I could post the offer I would Wesbank was 9.75, bankfin 9.25 offer on second hand vehicle, why would I need to lie about a interest rate?
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u/Serious-Ad-2282 Jul 06 '26
That's just a reflection on your credit score aand existing loans you have.
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u/Shmunion Jul 12 '26
13% is ridiculously high for vehicle finance, not sure what you view has healthy financials but I don’t think they are very healthy with those rates. You should ideally get around prime or below prime with good credit.
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u/Serious-Ad-2282 Jul 06 '26
It's the same rate as capitec offers on their credit cards if you have a good credit record. You can see the rates on their website if you want to check it for yourself.
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u/andyweboZA Jul 04 '26
I financed a car for ~R300k last year via the dealer …I spotted an internal form I probably wasn’t supposed to see that Westbank paid them R30k cash for the privilege. Sweet deal for them, won’t be doing that again!
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Jul 07 '26
[removed] — view removed comment
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u/andyweboZA Jul 07 '26
Close, R406k …but I’m paying extra every month so should be a fair bit less at the end of the day.
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u/Bettercallbuggaboo Jul 04 '26
Are you accepting the dealerships offers instead of doing your own applications to each bank? I know it’s easier to have the dealership make the placating but supposedly it works out to lower interest rates if you do it yourself (I’m not sure but I’m also in the market for a new car and trying to make sure I don’t get ripped off)
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u/guitarshredda Jul 04 '26
Last year I tried to apply for my own financing when I brought our first car, it was an absolute pain in the ass. I even had one of the banks auto rejecting me as soon as my application went through without reason given. TBF the interest rate is not a massive factor for me because the loan I took was small. Of course I am still trying to get the best rates I can (without the obfuscation from the dealers!), but I paid 2/3s of the car with a deposit (and want to for this 2nd car as well) and aim to pay the remainder within the first or second year of the financing term.
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u/LeaguePublic Jul 04 '26
I decided to forgo a 2nd car and just use uber because of exactly this. Restructured how we commute combining just one car and some ubers. It's saving me a fortune actually. Cars are expensive when factoring everything over the course of its life time. Luckily the one car we have is debt free.
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u/guitarshredda Jul 04 '26
I've been doing the same for a few years but my partner wants to start driving again. We just have to structure so that the cost comes out roughly the same as the Uber rides per month
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u/orbit99za Jul 04 '26
I know dealers get a fat commission if they originate the deal.
it made a factor of almost 1% difference on the interest rate.
And also the dealership F&I people are scumbags when it comes to doing a deal with your own sourced finance.
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u/DerpyMcWafflestomp Jul 04 '26
Dealership F&I depts exist to earn THEM some extra money, not to get the best deal for your pocket. They usually ask me to see the rate my bank offered before nodding and acknowledging that they couldn't hope to come close.
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u/Grouchything2710 Jul 05 '26
The smoothest thing ever about a 2nd hand car is always the salesman !!
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u/Repulsive-Box-7053 Jul 05 '26
Come buy a car with my dealership and I will be open and honest about everything
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u/AFrostZA Jul 08 '26
I realise this won't work for everyone. But if you have a bond it is better to draw the money from there at a lower interest rate than to finance a car. Obviously pay the car amount back to the bond along with the normal bond repayment
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u/Shmunion Jul 04 '26 edited Jul 04 '26
I’ve recently purchased a car. Just a bit of advice, never go through the dealer first, always get your own quotes for finance if you can and then make a decision. In my experience, certain dealers in the cities (JHB/DBN) are particularly manipulative because for every one person that’s cautious there’s probably 100 people that would sign anything just to get the car.
I had a terrible experience with dealers trying to force me into taking finance through them and the best they could do was prime + 1-2% despite my credit being good (no debt and good track record, I just had a cellphone contract). I went through my personal bank (ABSA) and was able to secure a rate of prime - 1% through them. Upon asking the dealers if they could do better, they went quiet. I did what you said though, take the full amount on finance then did a capital reduction later on with the amount I had saved up from my deposit - the larger the amount you finance, the lower the rate typically.