If you’re buying a car and need to borrow money to pay for it, you may enter into a car finance agreement. Some big car brands have their own financing divisions. Most other dealers offer loans through finance companies such as AA Money, Hamoney, Marac or MTF Finance. The more you compare, the better chance you have of finding the right car finance for your needs. For example, if you are planning on making early repayments, you would look out for high break fees.
When the loan is arranged through a finance company, you may be charged a “broker fee”. This is what the dealer gets paid for arranging the loan. For example, Marac loans arranged through a dealer can include a broker fee of up to $500 on top of an establishment fee. However if you set up the loan directly with Marac, you will be charged an establishment fee but not a broker fee.
Some car finance agreements can require you to have an immobiliser in your car. An immobiliser is a device that can be switched on by the lender that disables your car. The contract could require that you pay for the immobiliser to be installed and if you miss any payments they have the right to disable your car until you catch up on payments. It’s important to research your car finance options before you enter into any agreement.
Note: If the lender complied with the Responsible Lending Code when they charged a fee, this will be evidence that the fee is reasonable.