Whether you consider yourself a veteran negotiator at a car dealership or you have recently decided to purchase a vehicle or equipment for the first time, the excitement of the process can make it tempting to rush a decision or buy on impulse. Below are a few tips to keep in mind in order to walk away with a better outcome for you and your business.
1. Do Your Ground Work
Knowing what you actually want is crucial to walking away satisfied. Your research should not focus on price alone, but 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 doing. It is useful to have an understanding of warranties, projected running and repair costs and any servicing plans applicable to your model.
Knowing how much a particular car or other piece of equipment is worth is critical to getting a good deal. Use a comparison website to find the value of the particular make and model you are interested in. Shopping around can help 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.
2. Negotiating a Price
Using cars as an example, dealers are required to quote you with an all-inclusive, drive-away price that includes dealer fees, stamp duty and registration. Ensure that the final total is the price you have been quoted.
The purchase price can be offset if you decide to trade in your current car. If you decide to trade in your car, rather than sell it privately, it is advisable to understand your car's value. Service records are a great asset to help you secure the best trade-in price. Selling your car privately can be more lucrative if you have the time and inclination.
Once you're close to settling on a price, be aware that the dealer may offer “extras”. Most "extras" can be added afterwards, once you’ve taken the time to consider whether you actually need them. Be aware that some extras need to be factory fitted to be covered by the warranty.
Extended warranties are also worth scrutinising. Make sure you understand any caps and exclusions that apply to claim amounts.
Even if you are unable to talk down the price to a figure you are happy with, your negotiating skills may still be needed to obtain discounts on servicing, options or spare parts.
Arriving at a dealership prepared to make a purchase can put you in a better bargaining position, as the best offers are often made just before the purchase is actually finalised. However, 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 back to confirm the deal. Then they are more likely to keep in touch.
3. Arrange Your Finances
There are options available for 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 provided by the dealership and make regular repayments to cover the purchase in line with those terms. Although this option will seem convenient, it is unlikely to be the most cost-effective choice.
You will likely benefit from arranging your own financing, shopping around to 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 contribute to the purchase, which makes it easier to stick to your budget.
If your finances are not pre-approved before heading to a dealership, ensure that the Contract of Sale is conditional upon financial approval.
Additional financing options will be available if your car or equipment is for your business.
4. Consider your purchasing purpose: business or personal?
Buying equipment for 'business use' can deliver significant tax advantages.
Financing options available include a chattel mortgage, finance leasing or hire purchase. These options allow you to avoid diminishing the working capital of your business. Rather, you can structure repayments to suit the business's cash flow.
The expected lifespan of your equipment, how often it will need to be upgraded, and your normal cash flow capacity will all factor into which financing option is best for you.
If you are considering buying equipment or a small car, you may be eligible for the Australian Federal Government’s Instant Asset Write-off, which applies to both new and second-hand equipment. Under this scheme, the business may be able to claim depreciation up-front and the ongoing interest for the business-use percentage of the value of the car.
However, be aware of “car limit” provisions which apply to depreciation of passenger vehicles designed to carry less than one tonne and fewer than nine passengers. The car limit changes each financial year, and any cost over this limit cannot be claimed under other depreciation rules. Learn more about asset and equipment financing.
Contact MCP
1300 510 816 or your Finance Partner
enquiry@mcpfinancial.com.au