We have a client, Roger Ng (not entirely his real name), who refers all of his business to us.
Roger Ng was recently in the market to replace two cars and had settled on a Mercedes-Benz A250 for himself and a GLC250d as his family’s conveyance. Roger was very happy with the deals he had struck. That is, he had negotiated a great purchase price for the cars.
He had come to us for the car leases. We took one look at the interest rate that he had been given by Mercedes-Benz Finance (MBF), which was 6.9% and thought this is going to be easy – and it was. Except that’s not where the story ends otherwise this article would be the shortest article I’ve ever written. Because the GLC had an eight month waiting list we focused on the A250. We achieved a rate of 4.4% without trying too hard. Then we contacted MBF and dug a little deeper.
It turns out that by going with the lease offered to him by MBF Roger Ng gets three years of free servicing (that’s valued at around $4,300). He also gets a guaranteed buy back on his vehicle. We further learned that MBF was very negotiable on the rate (which, as discussed last week, makes very little difference to monthly lease repayments – within reason). So we told Roger to renegotiate the rate and seriously consider going with MBF even though his repayments would be slightly higher. We couldn’t match the benefits that he was getting from MBF.
Now fortunately, for us, this deal that MBF is offering runs out at the end of this year so we will be very competitive when Mrs Ng takes delivery of her GLC in June 2017.
Next year, one of Roger’s fixed rate home loans expires (in April). He has already appointed us to ensure that we find a new lender for him as his current lender managed to completely mismanage something that should’ve been locked into the system and forgotten about. You see, Roger had a split loan with a very popular lender. His fixed rate portion of $260k was meant to be interest only. For some reason, the bank was deducting principal and interest from his account. Half way through his 3 year fixed rate period, they wrote to Roger and informed him of the error – which he had highlighted to them on day one. They switched him back to interest only.
Further, during the course of his engagement with this bank, Roger Ng had some luck on an options trade on the ASX. He had an amount of $250,000 to apply against his variable rate loan. Again, the lender in question (the same one that he has his fixed rate loan with) had set the variable rate loan up incorrectly as a fixed rate loan (even though Roger had documentation saying that this was a variable rate loan). They tried to charge him break-costs. What a disastrous way to treat a customer.
This is why we have a business. If you think the above scenarios are unique to Roger Ng, you’d be wrong. We see this kind of ineptitude by lenders every day. Sometimes it’s the lenders’ fault sometimes it’s the clients’ lack of expertise in understanding bank jargon but mostly it’s sheer laziness by one party (usually the client) that leads to them being overcharged. Roger is wise enough to know that he needs an independent comparison and has come to trust us to do the right thing by him. He was blown away when we explained the benefits of paying a slightly higher monthly lease repayment and has referred a few of his friends and family to us.
It’s not difficult to act in the best interests of your clients, even if it costs you in the short term. Our experience has been overwhelmingly positive when we turn away business so that clients can benefit with a better offer elsewhere. They never forget and will try and make it up to us by referring friends and family. Everybody wins. You would think that some of our lenders would’ve woken up to this strategy by now.