See my first post if you have not done so already.
Now that you have test driven your new car.
Had your trade appraised.
Reached an agreement on your New Car Value, Trade-in Value, Terms of Loan, it is now time to see Mr Finance.
Tip 1: KNOW THY ENEMY!
Forget the smushy lovey dovey salesman, this is a whole new ball game! The finance guy is just as much a salesman/woman as the guys on the lot.
This is what us salesmen call "The last attempt!"
Why do we call it this? Because this is the last attempt to make a little more commission off of our customer with upsales.
( We will talk about the other commissions for the salesmen and women below.)
For now we will concentrate on the dealerships earning through shifty tactics. If you had not set in on a interest rate previously, this is the point where the finance man/woman will try to bump your rate. They may have done it already! After they ran your credit and got a call back from the bank.
Well what do you mean?
EXAMPLE: The bank approves your loan of $25,000 @ 3.99% interest, but old Mr Finance gets you to sign up at 4.99% or 5.99%.
"You said you would buy today,,,,,if I got your note to $250 a month!"
Well at 5.99% for 7yrs we are at $249.72. CONGRATS Mr and Mrs Smith. You got your car at the note you can afford,,,,,,,,,,,,Sign HERE!
See what I just did? You were approved at 3.99% but unknowingly signed for your car at 5.99% because you were focused on the note, and not the term and interest rate. It happens WAY MORE than one would think.
Now the dealership gets a check for 2-3-4k from the bank for half of those 2% bonus points they tagged onto your purchase. CHA-CHING!
Unfortunately your salesman/woman see's none of this payout. It is strictly a perk for finance and the dealership.
Sneaky huh? I know! Good stuff here fellow steemers.
ALWAYS look over your contract! Things to look for are
Interest Rate
Monthly Note
Any suspicious add on's
Term of Payments
ASK TO SEE THE CALL BACK LETTER FROM THE BANK THAT IS GOING TO LEND YOU THE MONEY!
(Make sure the interest amount on the contract matches the interest on the "Call Back Letter"!)
If they refuse to show, or it is not the same,,,,,,,WALK AWAY!
If you do not look out for these things in your contract,,,,and you sign it,,,,,your stuck paying it!
But before your even to this point,,,,let's back up to Tip 2.
Tip 2: DO NOT AGREE TO THE EXTRA WARRANTY!
The warranty is normally CRAP! It will never cover anything that is going to break on your car.
(TECHNICAL TERM FOR REJECTION OF CLAIM) Wear and Tear Item!<-----Gotta Love It!
Most cars now days come with a 5yrs 60,000 mile warranty. Most consumers trade in their car within 4yrs. Not to mention, you have to carry full coverage insurance on any leased or financed vehicle.
Full coverage,,,with most insurance companies,,, comes with free towing. So your already covered.
The dealerships pay $250 for the added warranty and sell them to the customer (You) for $1200 up to $1600. WOW!
If you just "Have To Have" this scam,,,you can negotiate the price of the warranty down a little bit, but I would not pay $5 for the paper it is printed on.
The salesman/ woman "will get" 10-15% of the "Profit" on any extended warranty sold to their customers. Last chance for the sales person to make a couple bucks to feed the family.
Especially if you followed my (Part 1) guide.
He or she is sitting on a WHOPPING $50 mini commission for however long it takes to help you ride off in your new car, truck, or SUV!
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Tip 3: GAP INSURANCE! Sign Me UP!
If you are financing more than 70% of your purchase (Including Tax, Title, Registration Fees), then this is a MUST!
What is GAP?
Gap is a added insurance on your car that will protect you in a "Total Loss" situation. See cars depreciate in value BIG TIME as soon as your front tires hit the road.
"Let's say, 2yrs into owning this car, you get into a "At Fault" accident and your car is totaled."
You owe $15,820 on the car, but it is only valued at $12,371. Without GAP you would be responsible for paying the remaining balance of $3449 to the bank.
See people fail to realize, a insurance company will pay out the "Fair Market Value" of your car at the time of the accident. They DO NOT pay you based on what YOU OWE for the car. This could leave you holding the bag for a car that can no longer be used.
Scary Stuff!
So unless your putting down 50% towards the "Total" purchase price of your car, I would advise you to get the GAP coverage.
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Tip 4: ALWAYS LOOK OVER THE CAR BEFORE YOU DRIVE OFF IN IT
You are ready to ride! Your sales person slaps the temp tag in the rear glass. You shake his/her hand and ROLL OUT!
The next day your wife walks around the passenger side of the vehicle and say "Hunny,,,,,was this scratch already here?"
_The detail guy could have scratched it when cleaning it for delivery.
_The scratch could have been their, but no one could see it before cleaning.
_The sales man could have backed into a pole and chipped the rear tail light.
No matter what,,,,it is now YOUR ISSUE! You may get a nice dealership that will take care of the issue to save face, but most times this is not the case.
Understandably! You could have done it after leaving the dealership?
So, save yourself the grief by looking over the "Whole Car" before leaving in it! If it is dark,,,ask to have it moved into a "Well Light" area so you can see EVERYTHING!
Your looking at,
Paint (Chips-Scratches)
Rims (Same)
Carpet (Stains-Discoloration)
Floor Mats (Make sure you got them!)
Just a all over inspection before leaving the lot. I hope these two tips post helps remove the fear from potential car shoppers that read these posts.
At the same time save you guys some money!
Until next post,,,,,,,,,,,STEEM ON!