Buying a car can offer several layers of stress and anxiety. First there is the process of actually finding a car that you like. You search the Internet or scour the local newspapers to find the make, model, color and year you are looking for. Some used car ads use the old bait and switch to get people into the dealership. That means that the car you want to look at is not on the lot and it may have never been there in the first place.
Once you do find a used car that you like, the next step is making sure that the car is in good mechanical condition. You could take the salesman’s word for it, but that would not be very prudent. Your mechanic looks the car over, tells you what is wrong with it, you negotiate to have the repairs done before you take ownership and now you are ready for financing.
Used car financing offers a lot of traps that the unsuspecting buyer may not be aware of. Just because you and the salesman have agreed on a price does not mean that you can let your guard down. The dealership finance officer asks you how much you want to pay per month, and then the trap begins
The worst thing a car buyer can do is allow the dealership finance officer to dictate the terms of the agreement. It is your money and you should have a major say in how it is spent. The dealership can search for deals with multiple lenders to find you the best deal, but then you have to watch for any extra charges the dealership may try to throw into the loan. You also have no idea if the dealership tacked on a point or two in interest to make the deal sweeter for them.
There are tactics a buyer can use in negotiating a car loan that can help save money and prevent you from getting ripped off by the dealership.
Know What You Want to Pay
Before you set out to buy a used car, use a car loan calculator to determine what you can realistically expect to pay. Obviously, you will not know exactly what interest rate you qualify for when the loan comes through, but you can develop a ballpark figure in your head. For example, if you know that your research tells you that your payments should be no more than $350 a month and the dealer keeps coming back with payments of $400 a month, then you know something is not right.
Be Prepared to Walk Away
There is absolutely nothing wrong with you walking away from a deal that you feel is not fair. If you try to negotiate with the dealership and it feels to you like the dealership is trying to take advantage of you, then just get up and walk away. Unless you have signed the sales agreement, there is nothing to bind you to the sale. The salesman will try a lot of hard sell tactics such as convincing you that you have to buy the vehicle and the salesman may even call your house repeatedly to get you to agree to the sale. Be prepared to stand your ground and let the dealership know that you will not sign an unfair deal.
Take it to Your Lawyer
Until you sign the deal, you are not obliged to pay it. Once the deal is completely written up, tell the salesman that you want your lawyer to look it over before you sign it. Asking to have your attorney look over an agreement before signing it is a completely reasonable request. If the salesman tries to hard sell you or refuses to let the agreement leave unsigned, then walk away.
The safest way to shop for a car is to get pre-approved for your car loan by a lender you trust and eliminate the need for dealer financing altogether. At that point, all you need to concern yourself with is getting the best price possible.
Dealer financing on a vehicle purchase is full of traps and bad deals for the buyer. Before you go in to talk to a dealer, have a strategy in mind and make sure you get the best deal possible.
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Categories: Car Loans
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