What’s the Smart Way to Pay for Large Purchases over $2,000?
Some purchases are too big for a single pay cheque, or they can’t wait for payday.
You can’t always control when you see a great bargain or when you need a new bed or a car, but you CAN control how you pay for it. There are Smart Ways and Dumb Ways to pay.
Let’s say you need to buy a car. We’ve looked at the options from Cash to Buy Now Pay Later, Car Loans, Credit Cards and Payday Loans.
Below you can see what the cost of each option is, and what the worst case scenario is after a year if you incur the maximum amount of late fees and/or interest.
NUMBER-CRUNCH: SMART WAYS TO PAY FOR A $20,000 SUZUKI SWIFT GL NAVI (VOTED BEST CAR UNDER $20,000 BY CARSGUIDE)
|WAYS TO PAY||VERDICT||BEST CASE*||WORST CASE*||HOW IT WORKS|
|BUY NOW PAY LATER|
|SMART||$20,106||$20,930||6-60 monthly instalments, up to $90 est fee, monthly fee up to $8, late fee $6|
CommBank Secured Loan
|OK||$20,535||$26,380||8% p.a. over 5yrs + $250 upfront + $10/mth|
|DUMB||$20,781||$27,870||10% p.a. interest + 0.5%-2% merchant fee + annual fee $50|
|DUMB||$21,216||$39,304||20% p.a. interest + 0.5%-2% merchant fee + annual fee $150|
|DUMB||$25,600||$72,000||20% of the purchase + 4% a mth|
* ‘Best case’ is the cost to you if the car is paid off after 2 months. ‘Worst case’ is the total cost if the car is still not paid off after 5 years, and you’ve incurred the maximum amount of fees and/or interest.
👉 PRO TIP: PICK THE RIGHT ZERO-INTEREST OPTION
Most ‘Buy Now Pay Later’ platforms have a limit of $1000 or $1500 but there are two that specialise in larger purchases: Humm (up to $30,000) and Zip Money (up to $3000).
There’s never been more info available about the car you want. Check the main car-selling websites for examples to get a sense of the price range. Sign up, create a shortlist and get notifications. You can also check car valuation websites such as Red Book to get a price range based on the make, model and year of a car:
For a used car, use the other examples you’ve seen to make your case for what you’re prepared to pay. For a new car, car broker John Cadogan from Auto Expert says: “Take a look at the recommended, undiscounted, drive-away price on the carmaker’s website and then offer about 10 per cent to 15 per cent less than that to begin with – except during peak sale periods when that discount is likely already being applied.”
Even if you negotiate a bottom-dollar price for a car, which is a low-margin product, the dealer can make good money out of you through upselling. Say no to heavily marked-up extended warranties, window tinting, “ceramic surface coating” paint protection (tested on planes and used by Boeing!), and $800 a year pre-paid minor damage repair plans that you get offered at the point of sale. Also, don’t just accept their trade-in price or insurance or finance quote without shopping around.
👉 PRO TIP: BUY IN MAY/JUNE OR DECEMBER IF YOU CAN
May/June is the car industry’s end of financial year sale. Not only are dealers trying to hit their annual targets, but buyers are trying to get in before June 30 to claim the tax benefit on a car. In December, that year’s model is about to become last year’s model, so there can also be some red hot deals available.
Most major retailers – both the ‘bricks and mortar’ and online types – have dedicated deals pages you can check in minutes.
If you’re on the hunt for an appliance deal, you can also sign up to their email databases and social media profiles to receive notifications.
Some also promise to match certain competitor prices if you find something cheaper. Here are a few examples:
The Good Guys: Door Buster Deals
👉 PRO TIP: PLAY HARD-TO-GET
If you join an online retailer such as the ones below and view a product, they will often send you follow-up emails with a lower price on that item and similar products
Kogan.com: Hot Deals
eBay: Daily Deals
Amazon: Today’s Deals
Keep an eye out for deals sales via online bargain-hunting forums and price comparison websites. Here are some of the best:
Ozbargain – Australia’s biggest online forum for bargain hunters. Members post the best deals they’ve seen and others can vote them up or down. You can also search for whatever it is you’re interested in, eg ‘Toyota Corolla’ or ‘Sleepmaker Bed’
getprice.com.au – A price comparison site that lists more than 3.5 million products from over 1,200 retailers nationwide and shows you the some of cheapest advertised prices online.
Google Shopping – just type what you’re looking for and Google shows you the range of retailers and prices advertised:
There are now several big online sales events each year – most of them in the lead-up to Christmas – where retailers offer big discounts.
Some are run by a single online retailer such as Kogan or Amazon, while others occur across ALL online retailers.
It’s worth diarising these and subscribing for notifications if you’re in the market for a good deal on a particular product. You might get it half price!
|Amazon Prime Day||Usually July|
|Kogan First Day||Usually Oct|
|Click Frenzy||2nd Tuesday in Nov, plus other events|
|Singles Day – all online retailers||Nov|
|Black Friday – all online retailers||Nov (the day after Thanksgiving)|
|Cyber Monday – all online retailers||Nov (the Monday after Thanksgiving)|
👉 PRO TIP: USE THE FREE TRIALS
Both Kogan First and Amazon Prime require membership BUT they offer 30-day FREE trials so you can look at the deals and cancel before the fee kicks in.
Some state governments or energy retailers will contribute hundreds or even thousands of dollars towards certain household appliances or upgrades.
Usually these grants are to help pensioners and low-income households, or to promote energy efficiency targets. See if you qualify. Here are a few examples:
NEW SOUTH WALES
Appliance replacement offer: up to 50% off fridges and TVs
Get a discount when you upgrade your 10y.o. television or fridge. Offer applies to selected models only. Must be a NSW resident, over 18y.o. And hold one of:
- Pensioner Concession Card
- Health Care Card or Low-Income Health Care Card from Centrelink
- Veterans’ Affairs Gold Card
Claim up to 5 rebates for purchasing and installing PeakSmart air conditioners or converting an existing air conditioner to PeakSmart:
- $400 for purchasing and installing a PeakSmart air conditioner with 10kW or more cooling capacity
- $200 purchasing and installing a PeakSmart air conditioner with 4kW to less than10kW cooling capacity
Victorian Energy Upgrades program: Up to $2771 back on energy-saving appliances Discounts and special offers are only available from accredited providers. Examples include:
- Up to $238 rebate on weather-proofing strips, double-glazed windows, chimney dampers and vent covers
- Up to $102 rebate on recycling your old fridge
- Up to $2771 rebate for replacing your heater – e.g. a central electric heater with efficient ducted gas
- Up to $799 rebate for hot water system upgrades – e.g. replacing electric with gas-boosted solar
- $17 rebate for energy and water-saving showerheads
- Over $100 rebate for replacing (for example) 8 halogen downlights with LEDs
- $17 rebate for energy-efficient TVs
- $17 rebate for energy-efficient clothes dryers
- $85 rebate for energy-saving pool pumps
Any information is general advice, it does not take into account your individual circumstances, objectives, financial situation or needs.
Check KILL BILLS for more helpful tips about saving.