With the cost of living and inflation increasing more Australians are looking for ways to save money.
We’ve all heard the stories about stores offering to beat a price by 10 per cent if you can provide proof that the item costs less elsewhere. Most of us haven’t taken up the offer with a 2021 Finder survey revealing that over half of participants prefer not to haggle for a better price, even on more expensive purchases such as a vehicle or home loan.
Consumer Group Choice spoke to Money Mag and said that negotiating a better price is more common in European and Asian countries. The organisation said that Australians may be hesitant because there are fewer suppliers to choose from meaning it’s harder to walk away from a deal.
Asking for a better deal can also feel like we’re undervaluing the goods and services that someone else is offering but overcoming that hesitancy could save us significant money, that we could either put into savings or other investments.
So what types of things can you haggle on?
Your home loan
The thought of asking your bank for a better deal might seem intimidating but you won’t know if it was worth the risk until you try.
Before you approach your bank or another lender you should do your research. Check comparison sites like Canstar, Compare the Market, Finder and Rate City to see what the best interest rates in the market are. When you’re checking the sites be sure you look at comparable deals and then look at your own financial position by asking yourself questions about how much equity you have in your home and what your credit score is looking like. Review your repayment history. You are more likely to get a good deal if you go in with strong supporting evidence for what you’re trying to go after.
The best mortgage rate on a $400,000 loan over 30 years on Finder is with loans.com.au. Their interest rate if you have a deposit of 20 per cent is just $2.60 p.a. with monthly repayments of $1611. That compares with Macquarie Bank’s Basic Fixed Home Loan which offers a rate of 6.09 per cent p.a. with monthly repayments of $2424.
Don’t just take their advertised rate though. See if you can get the rate down even further. If you negotiated the rate down to 2.10% your monthly repayments would drop to $1499 per month.
You would save a total of $925 per month, which you could either use to pay down your mortgage even faster or for other investments.
Similar to mortgages, you should compare different options available on comparison sites. If you don’t particularly want to change insurance providers then arm yourself with quotes before you go into any negotiations and be prepared to switch providers if your current one won’t come to the party and offer you a lower price.
The average cost of home insurance is $137 per month based on research from Finder, however, it can vary majorly depending on where you live, the value of your home and contents and whether or not you have made any claims.
It pays to compare insurance providers using a comparison site.
If your current insurance provider was charging you $137 and you asked them for a reduction of 10 per cent then you would save $13.70 per month.
Car insurance varies a lot as well but the average car insurance price is $101.70 based on studies from Compare the Market. Again, if you asked for a reduction of 10 per cent, you would save $10.17 per month.
Health insurance costs an average of $160 per month for a single person so if you asked for a 10 per cent discount you could keep an extra $16 in your pocket.
Life insurance is significantly cheaper with the average rate being $27 per month so a 10 per cent discount would save you $2.70.
Buying a car
When you’re car shopping you should research prices for comparable cars and then see what the average is. Knowing the average car price can give you the knowledge you need to negotiate a better deal so compare prices at different car dealerships.
Car dealers generally have a margin of 3 per cent on cars based on studies from Budget Direct, so if a car is advertised for $30,000 the margin is $900 so you could potentially get it for only $29,100.
During negotiations do not volunteer any information that could lead the dealer to believe that they have the power. Remain tight-lipped and again, be prepared to walk away.
If you follow these tips you could save $1867.57 in just one month, which would potentially cover a month’s worth of mortgage repayments.