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Don’t be a monthly payment car buyer or a trade-in buyer
If you are either of these, you'll lose thousands. You should always negotiate the selling price by the value of the car, not by the monthly payments that you are
most comfortable with, and not by using your trade in as a bargaining tool, because it is not a bargaining tool for you, only for the dealer, who has to offer you
half the market value so they can resell it.
Your new car purchase and the trade in should be 2 completely separate transactions. These are the 2 most common mistakes car buyers make. If you try to buy a
car by haggling over monthly payments, you cannot easily tell which selling price combined with which interest rate is generating those monthly payments. This is one
of the most common methods that unscrupulous finance managers use to pull the veil over you eyes. If they ask you what monthly payment you are looking for, tell them
you don't deal that way. You want to focus on the actual selling price, not the monthly payments. Then you want to concentrate on the interest rate, the APR. Then
the monthly payments take care of themselves.
Never start with the monthly payments. Always start with Negotiated Selling Price of the vehicle, then end with the monthly payments.
The best time to buy a new car
There are 2 really good times during the year to buy a new car. One of these times is the last 2 weeks of December during Christmas rush when people are busy buying
gifts, and dealers are scrambling for year end sales records. The other great time to buy a car is August through November during model changeover, steep rebates,
and secret factory to dealer incentives. Lastly, anytime you can get the selling price no more than $500 over invoice, that's considered a bargain. This can happen
anytime throughout the year. You never know when it will happen, it depends on market conditions, and if car sales are slow, you'll hear on the news about the
car makers offering rebates, or lower APR.
Don't wait until your clunker is ready to die before buying a new car.
Big mistake! It takes 2 months to shop, decide, get a loan, and buy a car. If your car is dying, you'll be forced into hasty decisions and deals you should
never sign. Never let them know you need a car. Don't dump money into fixing up a clunker prior to trade. Dump all your money into the new car, not the old car.
Extended warranties
You can get great honest new car or used car 3rd party extended warranties without having to go through the middleman car dealer. Warranties are
one of the most profitable products the dealer sells you, often costing you $1500-$4000 for a warranty which they paid only $300-$600 for. I have an invoice from a
Dallas car dealer who charged a woman $3500 for the warranty! You should shop for a good well funded 3rd party warranty like
Warranty Direct, who sells directly to you, saving about 40% off the
price you would pay from the car dealer middleman. Warranty Direct
deposits part of your contract purchase price in an insured "Claims Reserve Account" to assure funds are available to cover your warranty claims. The financial
strength of the warranty administrator is crucial. They should also insure the claims reserve account to protect you in case they go belly up. This happens all the
time with cheapie no name 3rd party warranties you buy from some car dealers. When the administrator goes defunct you're left holding the empty bag. They
should reinsure the claims account, rated "A", or Superior with A.M. Best. Warranty Direct's Claims Reserves accounts are insured by National Service Contract
Insurance Corp. (A.M.
Best # is 11820. Click Here to see their A.M. Best Rating).
CarBuyingTips.com Tip:
Don’t get Upside down on a car loan!
Many car owners are upside down, where you owe the bank more than the car is worth. How does this happen? You put down too little money when you bought the car.
Cars lose 20% of their value in the first year. If you put down only 5% on the car and trade it in 1 year after buying it, the car is only worth 80% what you paid and
you have to come up with the remaining 15% in losses. This can be prevented by putting down at least 20% when you buy a car. I tell everyone not to buy a car with
under 20% down payment. This might limit which car you can afford to buy. Just because you want that $25,000 truck does not mean you should be buying it unless you
have $5,000 to put down. Avoid "No money down" deals, that is the worst thing you can do, because you are paying more interest in the end. They make it look like they
are doing you a big favor with 0 money down car financing, but they are really doing you a big disservice, because they are putting you into a negative equity deal,
where in a few months you'll owe the bank more than the car is worth.
Advertisers rely on your brain to trick you so they don't have to lie
When dealer ads say 1.9% APR*, look for the "*" (fine print). It says "with approved credit only" or "qualified buyers only". You must have perfect
credit to get 1.9% APR. Auto industry sources tell us only 20% of car buyers get 0% APR.
Avoid car dealer ads that scream at you like this:
"We'll Get You Out Of Your Current Auto Lease No Matter How Much You Still Owe!"
"We'll Payoff Your Car Loan No Matter How Much You Still Own!"
They are not doing anything at all for you, they just want your trade in so they can give you far below market value for it, while selling you a new car at a high
profit. Then they resell your trade in for a high price. Here’s how the scam works: If you are upside down on your car loan and you still owe $10,000 for it, the
dealer pays off your loan, then you owe that $10,000 to the dealer. This gets financed along with the $15,000 car you are buying, now you are financing 2 cars for
$25,000! Did you know that? Your payments are spread out over 60 or 72 months so you don’t notice what just happened. The more months they add to the loan, the
lower the payments so you don’t notice. In fact, it's possible that the payments could be less than your current loan, so you think you're saving money when you just
got shafted! Their ad made you think that trading in a car relieves you of your obligation to that car. It does not! This gets many, many, many people into trouble.
You are actually taking on double your current debt, when you thought you were dropping one debt for another and buying a new car. They lied to you in their ad.
Sure they did get you out of the lease or loan, but you are not really out of it. They dipped you out of it and then dipped you right back into it under their
umbrella of debt. Very clever trick, but now you're onto them. Next time you hear those ads, you'll know what they're up to.
CarBuyingTips.com Tip:
Trading in a car that you owe money on does not relieve you of your financial obligation to that car. You still owe that money, but now it’s to the dealer
selling you a new car. If you are upside down on a car loan, you should NOT buy a new car. Instead, send in extra principle payments until you get
caught up, and you’ll save on APR too. I paid off my 48 month loan in 36 months and saved.
Trade ins: You’ll get more money for your car by selling it privately instead
Dealers will offer you $2500-$4000 below market value for your trade in, so that they can recondition and resell it at a profit. Also, banks will not finance used
cars over 4 years old. If your trade in is over 4 years old, the dealer can’t get banks to finance it for the next buyer, so they will only offer you 30% of the
market value for it! Then they dump the car at the wholesale auctions. No matter what, you’ll always get market value for your car selling it privately, unless there
is really something bad wrong with it. Don’t be suckered in by a dealer offering you market value for your trade in, they’ll play cash flow shell games to get it
back, see below.
3 Main Ways Car Dealers Profit From You
1) The negotiating process for the price of your Trade-In.
2) The negotiating process for the price of the new car.
3) Extras in the finance office like extended warranties, credit life insurance, fabric coating, window etching.
Some car dealers like to play what I call the cash flow shell game
If you're a payment buyer, the dealer low balls your trade-in, charges you MSRP with a high interest rate, sells you tons of high profit extras, dealer prep and ad
fees, and spreads it out over 72 months to make the payment fit your "monthly payment requirements". On the other hand, if you are a trade in buyer, the dealer
offers you what you want for you trade in, but once again adds all sorts of useless extras and fees, and charges you MSRP. Somewhere in the middle you close a deal
that's mutually beneficial. If you have bad credit they'll lie and say that credit life insurance is required, they end up with a huge profit, and call you up 2
weeks later to tell you financing fell through, you need to come up with $2000 more. A similar abuse of your rights occurs if you're upside down on your current
loan, as you are desperate to get out of it. It's all part of the cash flow shell game.
When is lower monthly payments NOT cheaper?
One of the most successful tricks car dealers use to scam you is the "lower your monthly payment" trick. But they could really be charging you more money,
spread over more months, which lowers the monthly payment, but costs you more in the long run. Example: You want a car for $15,000 at 8% APR for 48 months.
The payments are $470. This car loan will cost you $16,921 in the end. You complain about the payments and ask for a lower payment so the dealer says he's
"willing to come down" to $405 and you accept, thinking he just saved you a fortune. Wrong! Here's what he did: He increased the selling price to $20,000 at 8% APR,
but now the loan is 60 months not 48 months, with payments at $405. From a monthly standpoint, this looks cheaper but long term it is not. This car loan will cost
you $24,331 in the end, nearly $8000 more than the other deal. This is why you should never negotiate by monthly payments.
The name "Finance Manager" is just a fancy name for "Salesperson"
The Finance & Insurance (F&I) Managers are the folks who actually close your deal once the salesperson has convinced you to buy. Many car buyers foolishly think that
once they are done with the salesperson they are safe and sound in the finance manager's office. This could not be more wrong. For many of you, this is where your
worst nightmares begin. Most people don't realize that "Finance Manager" is just a fancy name for "Salesperson". In fact, they are usually the most skilled
salesperson in the dealership, with tons of Jedi mind tricks up their sleeve.
Most people don't know they were "sold" anything other than the car until they get home later and take time to analyze their papers. The time to perform this
analysis is before you sign, not later when you get home. A common complaint from our visitors is the LieNance Manager lies to them and swears that they did
not add any warranty, VIN window etch, or other extras, but they buyer finds out later it was added. Be especially wary if your F&I manager is a woman. Many guys
think they can outsmart a woman. I think the FTC needs to enact a law forbidding them to call the F&I dudes anything other than "Salesman". Often I call them the
"LieNance Manager", because many of our Top 10 Car Dealer Scams are committed in the finance office. It's
their job to convince you to finance the car if you are trying to pay cash. They'll Jedi mind trick you by saying that "you need to establish credit", or "don't pay
cash for the car, you can invest that money and just pay off a loan instead". Translation: "I need my commission". Remember, car financing is just another product a
car dealer sells to you.
They'll have you believing that you need to pay $300 to have your VIN# etched on the windows or the bank will refuse your loan. It costs them $20 to do it. You
can buy the kit at auto parts stores for $20 and do it yourself. Quite often Osama will also tell you that you MUST buy the extended warranty or the incredibly
useless credit life insurance because the "bank requires it", which is a lie, and possibly a felony in your state. This one always makes me laugh. The bank is so
worried about your ability to pay back the loan that they want you to add on a few more thousands dollars to your loan with credit life insurance, warranties
and VIN# etching? Give me a break! That increase will make it more likely for you to default.
They sell you a $10 "lifetime" wax job for $400 with some useless insurance and tell you it will last forever. No wax job anywhere on the planet will last over 6
months no matter what anyone tells you. They sell you Scotch Guard on your carpets for $300, and it's the same $5 can you buy at Kmart. They sell you $50 junk car
alarms for $600. Been to the mall lately and heard some loser car alarm going off? That's a cheapie $50 alarm that the buyer was suckered into paying $600 for that
extra "peace of mind". They add $600 dealer prep charges, then add $500 advertising fees. Most people don't even realize they walked out the door paying $3500 more
than than the car, because the $3500 spread out into 60 payments is only $58 per month. You might not even notice it. The only thing you should be paying for is the
car and nothing else, unless you really want these extras. Now that you know all this, you'll be confident and ready to stop it, not paranoid confrontational when it
happens.
Financing your new car: What A Low Credit Score Means To You
Your credit score is the most important factor determining whether you'll get approved for a car loan, and what your APR will be. If your score is low, you'll pay
extremely high interest rates on a car loan, up to 23% APR.
- If your credit score is above 680, you are considered a "prime borrower" and will get a good APR on your loan.
- If your credit score is below 680, you are "sub prime", and will pay much higher APR on your loan.
- If your credit score is below 550, you can forget about a car loan. In fact, you should not be buying a car.
If your credit score is below 680, forget about getting that elusive 0% car financing we hear about once in a while. You should still try to get the low APR
deals, but always have backup car financing lined up from honorable car loan web sites such as Up2Drive, who approve you in an hour
and overnight your check to you in a day. I've sent many friends to successful car loans this way. They even work with people who have less than perfect credit.
If you got into a really bad finance deal, try to refinance your auto loan to a lower
APR with Up2Drive.
A dealer shouldn't know more up about your FICO Score than you. Get yours now.
In 2001 it became possible for you to get your own
Credit Score when you get your credit report online. Congress fought hard for your right to
get at your credit score, so you better use it. Don't just get the free annual credit report you keep hearing about, you need to pay for the information tat you
really need, which is your credit score. Previously lenders kept this beacon score secret from you, so they could charge you higher APR. Where to get your credit
score: Online from Experian,
Equifax or
TrueCredit. So what was your credit score? I hope it was over 680, otherwise, time to get to work.
CarBuyingTips.com Tip:
Car financing is not just a service that car dealers perform, it’s also a product they sell to you. Don't believe me? Then why do they jump through hoops to get you
to finance through them? Why do they offer to lower the APR to beat your bank's lower APR quote? Why didn't they just offer you the lower APR to begin with? Shell
Games. By arriving at the dealer with your own financing secured, you eliminate one of the 3 shells in their shell game, now the dealer only has two left. This is
the biggest shell too, which is why they fight tooth and nail to get you to finance through them. Unless there is a 2-5% deal from the car maker, you’ll most often
get better financing through your bank, credit union, or online loan sites. I should warn you that my top complaint from our visitors is getting suckered into a
"lower APR car loan" after the dealer says they'll beat the bank's financing. Then 2 weeks and 500 miles later the dealer calls them saying "financing fell
through", the monthly payments went up $100. This is known in the auto industry as the "spot delivery scam", because you did on the spot financing, and took the car
home before your financing was secured. There are no laws to protect you from this. The only way to protect yourself is avoid dealer financing. If you finance
through the dealer, DO NOT take that car home until the coupon book arrives, then you know your loan is final.
Other Good Sources of Financing
The easiest way to get pre approved for an auto loan is a credit union or trustworthy online auto loan sites such as Up2Drive. Before
you enter a dealership you must have your financial ducks in a row. You must know your credit score so they can't lie to you about your "bad credit rating" if none
exists. You've been pre approved by the car financing sites, now compare that to the dealer's APR. Usually the online auto loan sites offer you far lower APR than
banks. If the dealer can beat your APR, with no cash flow shell games then finance through the dealer, otherwise use the online car loans. Banks charge 2% more for
used car loans, than new car loans, so don't be alarmed when you apply for a used car loan. Once again, the most common scam complaint I get from car buyers is when
the dealer calls them weeks after the purchase to say financing fell through, or the dealer “made a mistake” on the loan papers, and gee, your monthly payments are
going up. God forbid their mistakes ever make you car payment go down.
CarBuyingTips.com Deposit Tip:
NEVER bring your checkbook to a car dealer for a deposit. Pay for deposits on a credit card, I suggest no more than $500. Leave any dealer who "only takes checks".
Ignore their stupid excuses that the credit card companies charge them fees. The credit cards charge everyone fees, even restaurants. I go to the mall stereo shop to
by a $2000 stereo, they don't turn away my credit card because MasterCard charges them a 3% fee. Car dealers want your check because once they cash it, you'll never
ever get that money back if the deal goes sour. But you cancel a credit card transaction if you got scammed by a business, they almost always side with the consumer.
I've had cancel charges a few times with other businesses that either scammed me or went out of business.
Don't Be Fooled By Lower Monthly Payments!
When shopping for your auto loan, don't focus just on monthly payments. Sneaky dealers might quote a lower monthly payment than your bank, but the dealer's auto loan
is 39 months, and your bank's loan is 36 months. Some dealers lie, telling you it's 7%, but plug their numbers into a calculator, it turns out to be much higher.
Always check their numbers, compare apples with apples! If you can’t check their numbers, you have no business taking out a loan. Use a calculator that does loan
payments.
CarBuyingTips.com Tip:
If you can't afford 20% down, then you can't afford the car and you will be upside down.TM
Try to avoid long term loans. If you can't afford to pay off your car in 48 months, you can't afford the car!TM
The Best Way You Can Save Cash On A New Car Is With Competing Quotes
Try car buying sites like InvoiceDealers,
Yahoo!Autos,
Edmunds.com,
MyRide.com and
CarsDirect to lookup how much dealers pay for cars, and get free car purchase quotes. CarsDirect shows
how much you'll pay right on the screen. These sites also list new car prices, used car prices, and dealer invoice prices for new cars. Now you'll know what the
dealer pays for new cars. Don't drive all over town and waste your time at different dealers. Do all your car pricing online first and get the quotes emailed or
phoned to you from honest dealers using these online car sites. You should get free purchase quotes from all the sites and never enter a dealership
without your quotes to compare. You must check all sites because you never know which one has the best price on your car.
Where To Find New Car Rebates & New Car Prices:
Try the Fighting Chance web site where you can find new auto rebates, new car prices, recent
selling prices for your car, and car buying guides. Use a tiny bit of the money you saved by landing here at CarBuyingTips.com to buy your
Fighting Chance Package. If you get a package for additional vehicles they are $15. They charge for
their package because they buy their data from reputable industry sources, which is more reliable and more often updated than some of the free car pricing sites.
CarBuyingTips.com Tip:Use "The Folder"
I tell everyone who is going to the car dealer to bring "THE FOLDER" with them. Countless people email me back that my advice paid off because once the dealer sees
"The Folder", they know you did your homework, and the deal will be conducted on your terms. Items that you should have in the folder are your credit report, your
warranty quote from Warranty Direct, car buying quotes from
InvoiceDealers,
Yahoo!Autos,
Edmunds.com,
MyRide.com and
CarsDirect, pre-approval from your bank, credit union, Up2Drive, with auto loan rates from your local paper. Also include the
listing of car prices and rebates from your Fighting Chance Package. Bring pricing info for your
trade-in, with trade-in value, market value, loan tables & a loan calculator like the HP10B Business Calculator, or equivalent. Better yet, a laptop PC with
my free loan spreadsheets. Many people have reported using my spreadsheets on their notebook PC to
catch the dealer's "mistakes" in calculating monthly payments, even though the dealer uses a computer. Every time, the dealer blames the computer. Computers don't
quote fraudulent monthly payments, people do. Guns don't kill people either, it's those darn bullets!
Always Negotiate from "Dealer Cost" upward, not from MSRP downward.
All about invoice price and dealer cost:
Invoice price is how much the dealer paid for the car. It is not how much the car cost the dealer. You need to look past
the invoice price and aim straight for determining the dealer's true cost of that new car. Here's 2 of my simple formulas for car buying physics:
Dealer's Actual Cost = ( Invoice Price - Factory To Dealer Incentives - Factory Holdback)
Your Offer To The Dealer = ( Dealer's Actual Cost + 5% Profit - Consumer Rebate, if any)
Use the invoice price, incentives, and holdback info that you got from the folks at
Fighting Chance. We have found that with "No Haggle" dealers it usually means "No Bargain". If
their price is over 5% more than dealer cost, it's time to either haggle or leave.
Complete The Deal Quickly
If you make an offer as spelled out here, the salesperson might only get $50-$100 for the deal. So don't play games just get the deal done and get out. The deal is
not worth it if they are haggling with you 2 hours to get it. Try to complete the deal in a half hour. You are offering them the same type of deal that is offered,
and accepted every day at other dealerships. Set your watch alarm for 30 minutes, and point out to them that if the deal is not agreed upon by that time, you'll
leave. After a half hour, get up and leave. They will always follow you out in the parking lot, where most deals are agreed upon. Every time your salesperson
disappears to "review an offer with the sales manager" (translation: check the score on the football game), inform them they just ate up 10 minutes. If you can't
convince them in a half hour, you'll never convince them, because now the salesperson has past the point where $100 is no longer worth it, and they want more, and
won't take anything less no matter what. Dress sharp, be respectful, not angry and confrontational, show them you know what you're talking about, and be professional,
and they will treat you likewise. Act like Warren Buffet, not Jimmy Buffet. Some sales people use anger as their tactic, and they get all upset over your offer,
yelling that all your internet data is wrong or old. They may insult you, tell you that you don't know what you're talking about, that your bad credit does not
entitle you to a discount, that's all part of their game of lies. Simply tell them in a calm voice the "anger act" does not work on you. You did the research, you
know better. If your deal is not done in a half hour, just leave. Don't ever haggle longer than a half hour. No half day battles. There's a reason for everything,
and it just means there's a better deal waiting for you up the street.
Just The FAX Ma'am: A Great Way To Get A Good Deal
This is one of the most successful and popular tips, which James Bragg recommends to his readers all the time as well. You have an offer from a dealer, but you may
want to bounce it off others. A good method that saves of our readers many times over is to work up a deal and fax it to 5 dealers, saying whoever accepts the deal
wins. Compare dealer responses to sites like InvoiceDealers,
Yahoo!Autos,
Edmunds.com,
MyRide.com and
CarsDirect. You might not even have to go shopping, the dealers will fax back an
acceptance letter. This works really well for many of our readers. Fighting Chance has lots of great tips and
sample cover letters on using this winning strategy of car buying.
There Is No 3 Day "Buyer's Remorse" Law!
I can't get over how many fools email and say "I know there's a 3 day law, why won't they let me out of the deal?" First of all, they are wrong. There is no 3 day
buyers remorse law. Anyone who buys a car to use a fictitious "3 day law" as a doorstop until they find a better deal, is an idiot. The time to do your research and
realize what the best price is for your car is before you buy the car, not when you get home after buying it. That's Darwinism at work there, folks.
Don't let them speed sign you through the papers
Here's another one I get a lot: "The salesman promised me he did not charge me for a warranty, but when I got home, I saw it on the paperwork. What do I do?" The
time to read the paperwork is before you sign, not when you get home after signing. I can't in a million years figure out how it is that people don't see things
written right in front of their face until they get home. So PLEASE folks, you look both ways before you cross the street, so look both ways before you sign. People
will spend more time analyzing a $2.00 watermelon in the grocery store before buying it, than they do for a $20,000 car!
Never give a deposit until you and the sales manager have signed the buyers agreement!
One of the most common sales tricks still in use is your sales "consultant" will ask you to fork over a deposit check to take to the sales manager so he will see you
are serious and earnest about buying this car. Your sales consultant tells you he can convince the manager to agree to your terms if he shows the manager your check.
That's hogwash. They come back 5 minutes later: "Sorry, I still could not convince him". Tell them to forget the check, just get the manager's butt out there to sign
the buyer's agreement or you're bailing now. There is absolutely no reason for you to give that dealer a check until you and the sales manager have agreed on a price
and have both signed the buyers order. Don't sign until you agree, don't pay until you sign.
Common sales tactic: "This car is hot, everyone pays MSRP. We don't have to sell it cheaper."
If they have even one unit of your car on the lot, you know the car is not in demand. It would have have ZERO dealer stock and long waiting lists. Since your car
is not "in demand". You should "demand" less than MSRP.
CarBuyingTips.com Tip: Wait until the demand drops before you buy cars in demand
Everyone wants that Honda Odyssey, or whatever car is the hottest one out now. Problem is, with hot cars, no dealer will budge from MSRP, so just wait a few months
and try again. Don't be so impulsive, you don't have to be the first person on the block with the latest car. Don't ever pay more than MSRP for a car, you'll never
get that money back when you resell it. A used car's fair market value is based on a depreciated percentage drop from MSRP over a few years, not (MSRP + Some hyped
up fee). Any amount that you pay for a car over MSRP goes straight to the car dealer, not to your equity in the car.
What To Look For In An Extended Warranty
Buy It Right From The Source
Don't buy an extended warranty from a dealer who charges double what they paid for it. Buy a better package direct and avoid middle man dealer markups.
You want a well funded and insured warranty administrator
The best case for you is a publicly traded well funded administrator who deposits a portion of every contract purchase price into an insured "Claims Reserve Account"
to assure sufficient funds are always available to pay a covered claim.
You want a contract that takes effect the day you buy it
Most extended warranties start the clock on the "in service" date of your car, the day you took delivery. But what if you did not buy a service contract until 6
months later? Better warranties like Warranty Direct start the clock
when you buy the warranty. Many warranties have a cooling off period on new and used cars. Make sure you get one with immediate coverage for new cars. Most have a 30
day period on used cars, so don't make any claims within 30 days.
Reinsured with a minimum "A" Rating with A.M. Best or Standard & Poor's
Anything less, and you could be left stranded. sites such as
Warranty Direct have the top rating.
$0 Deductible/One Deductible Per Visit
Some policies have sneaky deductibles, charging a deductible for every part repaired. Get a $100 deductible and you bring your car in for a new starter, alternator,
and A/C compressor, that's $300 you owe! Pay extra for a $0 deductible warranty, and avoid the issue. $0 deductibles cost $75-$200+ extra, but would pay for itself
in as few as 2 visits. It paid off for my Trans AM, I was constantly in for repairs, having the gas tank replaced twice, the rear hatch painted twice then
replaced, the fuel pump and alternator replaced, etc. I would go broke satisfying $100 deductibles.
100% Money Back Guarantee
If you are unhappy, have not made any claims, and want your money back, they should refund 100% before 60 days.
Transferable when you sell the car
Some warranties end when you sell your car. Choose one that allows you to transfer it to the buyer of your car.
This is a great selling point for prospective buyers of your used car.
Don't Have To Buy The Warranty Immediately After Buying The Car
Most warranties allow you to buy later. But don't wait too long, buy it cheaper as soon as you can after buying the car, because warranty prices increase as time
goes buy, and many warranties begin on the in service date of your car.
Coverage For ABS Brakes and Overheating
Not all cars have ABS brakes and might get by with the "entry level" contract. Most "entry level" contracts don't cover ABS brakes, so if you have ABS, upgrade to
the right contract, or you'll be sorry when your very expensive ABS electronic control module fails. Some warranties don't cover overheating. My friend's warranty
says: "This contract does not cover overheating regardless of the cause." If the radiator overheats, there goes $1000!
Warranty Direct covers overheating.
Benefits: Car Rental, Towing, Travel Reimbursement
If your car is in the shop overnight, you want car rental reimbursement, and towing. Make sure this is covered during the Standard Warranty Period as well.
GM weaseled out on me, that's how I lost $650 in car rental expenses the first year I owned my Pontiac, so don't listen to car salesman lies. If it's not in
writing that you will be reimbursed during the standard warranty period, it means you are in trouble. Minimum towing should be $50.
Coverage For Breakdown AND Wear & Tear
Many warranties just give you mechanical breakdown insurance, which only covers parts that break, and not wear and tear. For example, piston rings and suspension
parts wear down, they don't just break. Some warranties use weasel clauses to get out of paying. My friend found this on his Mazda RX7 with the LED in the AC
switch. They refused to pay for a new switch module, claiming "the LED burned out due to wear and tear, the switch did not break."
Repairs That Can Be Done At Any ASE Certified Repair Shop
Some warranties force you to get repairs done at the dealership where you bought them, or at limited shops. This clause will bite you in the butt when you take the
family to Disney World and your car dies. Make sure your warranty allows repairs to be done at any ASE certified shop. Some companies have arrangements with chains
like Pep Boys.
No Cash Layout
Some warranties require you to pay the bill, then send in the receipt and wait months for payment. This allows them to weasel out of paying, since you already paid
the bill. They can invent an excuse why your repair is not covered. Choose a warranty that pays the repair shop directly with a credit card, so you
don't have to lay out any money up front.
How to get bad credit auto loans
If your Credit Score is < 600 don't submit loan applications that keep getting rejected, dropping your credit score even further. Apply
to
myAutoLoan.com, they find "bad credit car loans" for you. They get you new car financing from
high risk lenders, with decent online auto loan rates, even with a bankruptcy. If your score
is > 550, no bad credit for 6 months,
myAutoLoan.com can help you establish credit with lower online auto loan rates than dealers. If you had bad credit in the
past, but now you make more money, you'll find you are cash rich, and credit poor. Then a bad credit auto loan might be your only hope.
The car dealer credit score scam.
This one happens all the time. One guy emailed me to say his score was 780 from 3 credit bureaus. He negotiated the deal, filled out the paperwork
including a credit application. Four people came out of the finance office with concerned looks on their faces. They had a piece of paper that said credit score
on it with the number 580 circled in red. That's all that was written on it. They stated they could get him financed at 10.9% but not at the special interest
rate. When asked how they calculated that score and where they received it from they just mumbled but and said he would get financed at 10.9%. He pulled out his
credit reports and asked them why they were different from theirs. Three out of the four scattered immediately, the last guy lied and stated that credit
agencies like to give better credit scores to consumers than to business that actually lend money. He just started laughing and got up and left, and got
bought another car elsewhere with the low advertised APR.
How to increase your chances on getting approval on a car loan
- If you're a recent college grad, don't apply until you're at your new job at least 6 months.
- Don't apply if you have moved in the last 6 months. Lenders verify address and income.
- A previous car loan or home mortgage on your record helps.
- Pay off your credit card balances as low as possible.
- Have a reasonably stable occupation like engineer, architect, finance, etc. No self employment.
- Other examples of credit extended to you should appear on your credit report.
- Don't apply for a car loan for at least 3 years after a bankruptcy.
- Don't keep a high debt load or credit card balances.
- No charge off's on your credit report.
Credit card companies say it takes 60 days for a change (such as paying off your credit cards) to show up on your
credit report/score, but who wants to wait 2 months before buying a car? One of our visitors file a request for investigation of her report stating
that the balances on these cards were incorrect, and the investigator looks up your correct balances and changes it.
She checked 2 weeks later and it was changed. Also, by paying off 2 credit cards from 70% max credit level down to 0%, increased her
credit score 100 points. That's the difference between paying 6% APR for a
car loan, and 21%.
These are the steps to take before you apply for a car loan:
- Get your Credit Score so dealers can't lie to you about your score.
- Close old accounts, they are excess luggage dragging down your credit score.
- Remove erroneous previous addresses and other errors off your credit report.
- Try to get any "Charge Offs" removed by negotiating with your creditors.
- Wait until your score goes up to 680 if you're applying for a prime car loan.
Beware Of The Straw Purchase! Don't do a co-sign!
I've received several complaints about this. A straw purchase usually refers to handgun sales. When one person buys a handgun for a person who is ineligible to
own one, it's called a straw purchase, carrying stiff penalties. That's how the Columbine High School students got their guns. With car buying,
the dealer tells you that you can't qualify for the loan so you need to get a co-signer, plus they tell you that it will help build your credit.
No problem, Grandma will do it for you. But Grandma is easily duped by the dealer and 2 weeks later you find out that the dealer did not process
a co-sign loan, they made the entire loan in Grandma's name! This does not help your credit. Her name is on the title, and it's illegal for you to buy insurance
on a car that is not titled to you. Other legalities are vague, and I hear some states like Texas have laws against Straw Purchases on cars.
How To Avoid The Scam:
Have both signers there at the same time, also, your contract should have both signatures on the same contract, never sign separate contracts. A notice
to the cosigner is required by the Federal Trade Commission's Trade Regulation Rule on Credit Practices. The cosigner should ask for a copy of that after they
sign it. This is why I keep telling you, get your car financing anywhere but the dealer.
People With Bad Credit Or No Credit
How does bad credit hurt you? Dealers charge you 18% interest or more, while the rest of us enjoy 2% to 8%. Bad credit keeps you from opening a checking account!
Banks run a credit check because they know people with bad credit bounce checks. The fact that you shafted all of your creditors is coming back to get you. Most
cases of bad debt are from pure ignorance. Don't live beyond your means! Plan your life with a budget that has a reasonable and sustainable car payment built
into it. If you have bad credit, please don't email me asking what to do, I am not a credit consultant.
Go check out the free consumer credit info site DebtWizards.Com instead.
Restoring Your Credit
There's only one way to restore your tainted credit: Pay back what you owe. If you have credit card balances, transfer them to your lowest APR card. Pay off debt
before you buy a new car, high balances hurt your chances of qualifying. Stop spending. Pay more to cards with high APR, send more than the minimum payment,
or it will take 10 years to pay it off. If you have cash in the bank earning 2%, it's losing you more to income taxes, so be smart and use it to pay off 18% debt. If
you have equity in your home, consider a home equity loan to pay off credit cards, close the accounts, and write off the interest on your taxes.
In Summation:
In general, the best way to get a great deal on a new car is knowing your credit score, applying for a car loan and securing pre-approval, comparing car loan rates
to the dealer, knowing what the dealer paid for that car and offering a fair profit over that dealer cost, avoiding the needless extras in the business office. As I
mentioned before, this chapter is enough to give you some quick facts on car buying, but there is so much more that you need to know before venturing off, so please
read these other chapters mentioned below, and happy car buying!
Read the full story here:
How To Use The Rest Of This Free Car Buying Tips Site:
Jump Right In By Reading Any Of the Guides Below
You'll save $2000-$4000 off MSRP after reading these guides:
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Jump to any chapter. I suggest you read each chapter in order.
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Chapter 1
Get your credit report, how to get car loan, scams, online car loans, first time car loans, budget & loan excel spreadsheets, credit repair. |
Chapter 2
Reviews of internet discount car buying sites, new car prices, find dealer's invoice cost. Get a new car quote. |
Chapter 3
What to bring to a dealership, what to say, how to act, what not to do, what to look for at the dealership, and a glossary of all dealer fees. |
Chapter 4
How to read dealer invoices, finding dealer's cost, how much to offer the dealer, buyers offer spreadsheet, examples, trade-ins. |
Chapter 5
Negotiating tips, dealer scams & tricks to watch out for, dealing with aggressive salespeople, choosing between rebates or low APR loans. |
Chapter 6
Close the deal, avoid needless extras, scams in the business office, extended warranty scams, options, buying warranties online. |
Chapter 7
Actual misleading dealer ads, and what to do when you've been ripped off, customer satisfaction surveys, how I bought my Lexus. |
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CarBuyingTips.com
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