Whether you consider yourself a veteran negotiator at a car dealership, or you have recently decided to purchase a brand new vehicle (or other equipment) for the first time, the excitement of the process can make it tempting to rush or buy on impulse. We have complied a list of things to keep in mind in order to walk away with a better outcome for you and your business.
Do Your Homework
Knowing what you actually want is crucial to walking away satisfied. Your research should not focus on price alone. For example, new equipment purchasers may wish to also consider running costs, safety ratings and other factors.
Think about the core features that you require from your vehicle or equipment and what type of work or driving you'll be using it for. It is also useful to have an understanding of warranties, projected running and repair costs and any servicing plants applicable to your model.
Knowing how much a particular car or other piece of equipment is worth is critical to getting a good deal. Look up the value of the particular make and model you are interested in. Shopping around can held you get a better feel for the market. Knowledge is power when it comes to being in the best position to negotiate a good deal.
Negotiating a Price
Firstly, using cars as an example, dealers are required to quote you with an all-inclusive, drive-away price that includes things such as dealer fees, stamp duty and registration. Ensure that this is the price you have been quoted.
This price can be offset if you decide to "trade in" your old car. Deciding to trade in your old car, rather than sell it privately, can be convenient and straightforward. It is advisable to accurately understand your car's value. Service records and/or receipts are a great asset to help you secure the best trade-in price. Selling your car privately can be more lucrative, but there's an opportunity cost of your time.
Once you've mostly settled on a price, be aware that you may be offered “extras”. Most "extras" can be added afterwards, once you’ve had some time to consider whether you actually need them. However, be aware that some may need to be factory fitted to be covered by the warranty.
Extended warranties that may be offered are also worth scrutinising. Make sure you understand any caps and exclusions that apply to claim amounts.
Remember that even if you are unable to talk down the price of new equipment to a figure you are happy with, your negotiating skills may still go to use to obtain possible discounts on servicing, options or spares.
Coming to the dealership prepared to make a purchase can put you in a better bargaining position - often the best offers are made just before the purchase is actually finalised. But there is also no need to rush the process. If you decide that you are not ready, let the dealer know when you think you will be. This can adjust their perception of you and alert them that you are worth keeping in touch with.
Arrange Your Finances
For most buyers, there are many options when it comes to financing your car or equipment. You may be able to fund your car directly through the dealer, who will secure finance on your behalf. You will accept the terms of the dealership and make regular repayments to cover the purchase in line with such terms. Although this is convenient, it is unlikely to be the most cost-effective choice.
You will likely benefit from arranging your own finances and hence be able to shop around and compare rates and fees offered by banks and other finance providers. Getting pre-approval before you buy your equipment can give you a better idea of the costs and any other details or conditions, which in turn can assist with the negotiation stage. Additionally, it helps you know how much money you have to spend, which makes it easier to stick to your budget.
If your finances are not pre-approved before heading to the dealership, ensure that the contract of sale is conditional upon financial approval.
Additional options will be available if your car or equipment is for your business.
Consider your purchasing purpose; business or personal?
Buying equipment for 'business use' can deliver significant tax advantages.
There are a range of financing options available such as a chattel mortgage, finance leasing or hire purchases. These options allow you to avoid diminishing the working capital of your business. Rather, you can structure repayments to suit your business' cash flow and scenario.
The expected lifespan of your equipment, how often it will need to be upgraded and your business' normal cash flow capacity will all factor into which financing option is best for you.
If you are considering buying equipment or a smaller car, you may be eligible for the Australian Federal Government’s instant asset write-off, which applies to both new and second-hand equipment. The benefits of such a scheme mean that the business may be able to claim depreciation and interest for the business-use percentage of the value of the car.
However, take note of the “car limit” provisions which exclude the purchase of expensive vehicles from these arrangements. The car limit applies to passenger vehicles designed to carry less than one tonne and fewer than nine passengers. For the 2020-21 financial year, the car limit is $59,136. Any cost over this limit cannot be claimed under any other depreciation rules. Learn more about asset financing.
The Team at MCP
www.mcpfinancial.com.au
enquiry@mcpgroup.com.au