The Finance Department
When it comes to car buying you want to work with people you can trust. In an ongoing series on transparency at TriState Auto Champs we are going to be digging deep and giving you the customers the inside scoop on how dealerships make their money. Today we will be talking about the dark side of auto financing, including what to look out for and the common ways a dealership will trick customers into making a better profit at the expense of their customers.
By the time you are walking into the Business Manager’s office, formerly known, as the Finance and Insurance office, don’t be fooled, you’re probably already pretty relaxed. At this point you’ve made a deal and ready to hop in your new car for the drive home, however, this is often the time the business manager takes advantage. You’re guard might be down and this is the time to not let good judgment fall to the wayside. Below are the top 5 price grabs and dealership will attempt on wary buyers.
- Interest rate, loan terms, down and monthly payments:
The number one thing people tend to forget is that you can negotiate your interest rate. It is important to understand the terms, and that every element of your contract is spelled out to you. Don’t sign anything until you are at a rate you feel comfortable with and make sure your rate doesn’t change during the life of the loan. This is also an important time to ask what if any prepayment penalties exist. The bottom line is how much you are paying for the car, not your monthly payments.
A lot of dealerships will try to upsell you on rust protection, undercoating, fabric protection and paint protection. What they don’t tell you during their additional protections speech is that rust protection and undercoating are usually already included in the factory warranty. Make sure the factory warranty has rust perforation warranty and not simple rust protection, if need be get this in writing from your dealership. When it comes to any protections from your dealership, do not accept any guarantee unless it is in writing.
As far as fabric protection and paint protection, these are things you can easily apply yourself on a lazy Sunday. You can buy fabric protectant at the hardware store or online that is going to be on the same level as what the dealership can provide. The paint protection the dealer applies has to be reapplied every six months; you’re better off going with a polymer sealant car wax. In some cases these protections will have already been applied by the dealership and added to the car costs. If this is the case negotiate the additional price down to something more reasonable since there is usually a 100% markup.
If you have ever bought a big ticket electronic you might be familiar with extended warranties already, however, it’s a little different when it comes to buying a car. Every business manager will offer the extended warranty and it is almost always an unnecessary expense. Most auto experts agree that the warranties that come with new cars offer more than enough coverage to ensure you feel comfortable without the extended warranties. For those who feel more comfortable with a warranty you will be able to get a better price online, about 50% less than the dealer charges. These online offers also give more variety when it comes to picking a warranty allowing you to pick the one that fits your needs best.
- Pre-Paid Maintenance Packages:
Dealerships will always, always offer pre-paid maintenance packages out of their dealership. This is how dealers get you to continuous return to the dealership and possibly spend more money with them. The logic of a pre-paid maintenance plan is simple; you pay the dealer in advance to take care of the everyday issues your car might face. This deal might sound like a good idea if you are a new car owner and don’t have a relationship with a mechanic or auto body shop, but realistically these packages often leave out most general car care. Thinking about the package, it doesn’t make sense for the dealership, if you were saving money, they are losing it and a good dealership will never make a deal that costs them money. These deals exist solely to keep a steady stream of customers in the service department of a dealership. For those who prefer dealership mechanics, an expensive option we will detail in the future, make sure you are at least getting what your paying for. Modern cars don’t require too much upkeep aside from regular oil changes, if you are pre-paying service don’t pay for things your car doesn’t need. Don’t forget to check their options for these services either, most dealership plans will only change a car’s oil every 10,000 miles even if your car’s manufacturer suggests every 7,500 miles.
You love your new car, so it’s obvious you’d want to protect it from theft and burglary but, don’t let your euphoria over a new car cloud your judgment and buy the dealers alarm system. Paying a guard to watch your car would be cheaper than the system from the dealer. If you really feel like you absolutely must have an alarm set up, stop buy the nearest auto parts shop, pick out the best alarm for your needs and go to your regular mechanic. Avoiding the markup at the dealership will easily save you between $400-$600 at the least.
An additional security measure the dealership will offer is window etching, the dealer will etch the Vehicle Identification Number (VIN) on all of the cars windows. This extra step often deters would-be car thieves and can even save you money on your insurance. Etching the windows is a great idea, however there is no reason to pay a dealer hundreds to do it when you can buy the supplies to do it yourself in minutes for less than 30 bucks. Again if this was already done, you now know how easy the process is and you have more negotiating power. Check the etching is actually already done and not promised, no use paying for something only to be let down in the end.
Of course the best advice we can give anyone is to come to TriState Auto Champs, and let us do the legwork for you. However if you insist of traveling these rough waters alone make sure to pay attention and go through your contract with a fine tooth comb, don’t be afraid if you feel like your meeting is taking a long time, these finance managers are paid to close the deal with you, it’s your job to avoid being taken advantage of.