How to Avoid Getting Ripped Off On Your Next Car Loan
Buying a car can be a daunting and intimidating task with tricks and traps at every turn. Car buyers often spend countless hours researching the best vehicles, comparing key features, and ultimately finding the best deals. But when it comes to financing their new vehicle, car buyers are often left in the dark as to what constitutes a good car loan and what abusive practices to avoid.
To help car buyers navigate the murky waters of a new car loan, we have come up with the following quick tips that should help you secure a more affordable car loan next time you step on a car dealer’s lot.
What happens when you go into a car dealership? The first thing you hear is:
“Congratulations. You’ve successfully negotiated the purchase price of your new or used car. You’ve made a great deal!”
Next you’re ushered into the dealership’s “Business Managers Office” where you’re introduced to a pleasant, well-groomed man or woman who congratulates you on your purchase. They reassure you that you made a wise decision and that the tough part is over so now you can relax. You sit and breathe a welcome sigh of relief.
The Business Manager will go through the formalities of the various forms relating to the vehicle purchase and some financing terms. Along the way they will offer several ‘extras such as an extended warranty, car insurance, gap insurance, perhaps even disability insurance. What you had in mind to spend at this point can reach new heights within minutes of taking a seat.
If you’ve ever bought a car from a dealership yourself, this probably sounds all too familiar!
You’re relaxed, the negotiating is over and your guard is down making it easy to be swayed into purchasing the next add on.
Meanwhile you’ve been told that you’re getting a ‘really low rate’ and that the finance has been approved before you’ve even stepped out of the dealership!
Car dealerships make more gross profit from the extras than they make in the actual sale of the car. And they’re experts in denying you the opportunity to shop around for a loan to make sure you’re getting the best deal.
This is where I come in. I can help you combat the dealers by setting up pre-approved financing even before you start shopping, helping to keep the finance away from the dealership.
I can educate you about some of the strategies Business Managers use. Remember Business Managers at car dealerships are not governed by ASIC, giving them freedom to say and do whatever they like to close the sale even if it means pushing the boundaries of what’s ethical. They are experts at earning your trust and applying subtle pressure.
Here are some tips:
- Try to setup a pre-approval prior to purchasing your car –it’s very important to keep the transactions separate. We’re the professional in the finance space, they’re the professionals in selling cars..
- Do not let your guard down in the Business Manager’s office – no matter how friendly they may come across, they are in that job for one purpose and one purpose only – to empty your pockets!
- If you get told ‘a rate’, it’s likely that it isn’t accurate. Make sure you have the actual repayment amount– dealers are very good at ‘saying what people want to hear’ because these will probably not represent a true rate when it comes to doing the math.
- Make sure that you understand all of the additional fees and charges that are going to be part of the dealership finance. Business Managers can conveniently ‘forget’ to tell you about the establishment fees or account keeping fees, or worse still simply lie about it.
Want more information? I will be happy to assist you in understanding how dealership financing works and how Farley Financial can help with your car loan.