June 20, 2018
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Car Dealer Tricks Part 1

Not all car dealers are out to rip off their customers; most are just interested in making a living. However, don’t lose sight of the fact that they can still be aggressive salespeople trying hard to close a deal.

If you’re in the market for a new or used car, make sure you go in with your eyes wide open. After all, a vehicle purchase is probably the most expensive thing you have next to your home. As with any purchase, your number one goal should be to obtain a fair deal. The best strategy to avoid being taken advantage of is education. Do your homework before going near the car lot. Being well educated can give you the necessary tools to accurately evaluate the offer and, therefore, make the best decision for yourself to avoid credit problems. No one likes to be misled and pushed into buying something that is too expensive or just not the right vehicle. Be prepared for misleading sales techniques and come-ons, although not illegal, that can suck you right in and may lead to a bad credit score.

It’s important to realize that buying a car isn’t just one business deal or transaction. Its three separate transactions rolled into one:

 1) The price of the vehicle

 2) Trade in value

3) Financing. Because of this multi-faceted deal, the tricks are multi-faceted and, unfortunately, can get you from every angle.

Sticker Price: Forget the manufacturer’s suggested retail price, or MSRP. Find out the invoice price—what the dealer paid for it, and then you can determine what a fair offer would be, including a fair profit for the salesperson. In addition, knowing what others are paying for the same vehicle can give you an advantage. A number of websites provide information on the actual selling prices of many vehicles. If a salesperson won’t budge from the sticker price, take your business elsewhere.

Payment Plot: Many car dealers advertise a low monthly payment just to entice customers, but the loan terms aren’t going to be the best for you. A lower monthly payment can be obtained in two ways, i.e. by a large down payment and by extending the length of the loan, even up to six years. In the past, 24 or 36 month loans were common, and with good reason. With longer loans, it takes longer to reach a positive equity position and owe less than it’s worth. With a shorter loan term, after paying for a year or two, the value of the vehicle will be more than what is owed, which is where you want to be if you decide to sell or need to sell.

Of course, salespeople don’t care about that; they just want to close a deal and bad debt. If you owe more money than what your car is worth, you’re known as “upside-down” in the auto business. Just contact a certified credit counselor, who can give you the correct advice to get out of your credit problems. The bottom line is: don’t believe everything you hear or read in the newspaper. Low monthly payments come at a price and are dependent on the total price of the vehicle, down payment, length of loan, and annual percentage rate. If you’re being pushed into a long loan just to get the payment down, the car is probably too expensive for your budget.


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