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| Car Buying: Salesman Scams |
An uneducated consumer that steps onto a car lot will be eaten alive by the
salesmen. Take heed of this information and you just may save yourself a
lot of money and headache. There are many pitfalls when buying a car.
The following are only from the monetary point of view.
Never Finance Through the Dealer
If at all possible, never get financing through the dealer. Instead, get a
car loan directly from the bank. The dealer may be charging you 10%, but
the financing company, or bank, is only charging the dealer 8%. It is
typical for a dealership to have an "arrangement" with a financing company.
How Much Can You Afford?
This seems to be a reasonable question to be asked by a salesman. Keep in
mind that this is a ploy to maximize the sale. Once a number is on the table,
you will be steered towards vehicle that is slightly less than your quoted figure.
However, once all of the "extras" are added, you will end paying a lot more
than you planned. Always know what your bottom line is and do not be
persuaded to cross it.
Loaded Payments
This is an extremely deceptive scheme used by salesmen. When you ask how much
the monthly payments are, the salesman will knowingly quote you a figure that
is higher. For example, if the monthly payments are actually $300, the salesman
will quote $335. Over a 5-year term, this is an extra $2100. If you agree,
the salesman will add in extra features at little or no extra cost.
Never Buy A New Car
It is simply not worth the money to buy a new car. If you have your heart set
on a brand new car, think again. The average cost of a used car is approximately
$11,000 which is half the price of a new car. A new car will depreciate up to
35% from the base price in the first two years. The repairs that you may have
to make on a used car will be less than the depreciation that you are definite
to experience with a new car. Just be sure to buy your car from a reputable dealer.
Car Buying Tips
- Get a copy of your credit report before you start car financing.
- Always negotiate the price of the car - Not the monthly payments.
- The dealer invoice is never the same as the dealer cost.
- Always know what the going price is for the car you want.
- Research loan and lease rates before you visit the dealer.
- Get a pre-approved loan at a good rate before you shop for your car.
- Never buy a service contract from the dealer at the quoted price.
- Review the Used Vehicle History Report.
- If possible, do not finance for more than 36 months.
- Never take out credit life insurance on your loan.
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