How to Buy a Car while not falling for sales and
financing tricks at the dealership.  (continued
from Part 1)    

The next point to be wary is in the financing stage of
an auto purchase. Rule number one is not to finance
with the dealership unless you cannot get credit
anywhere else and you must have a car.  First, you
should always separate the purchase price
negotiation from the financing terms negotiation.
Otherwise, you can be promised a good deal on the
car, only to get stuck with a bad deal on the financing
terms, or vice versa.  Each aspect must be judged
and possibly negotiated on its own.

Your best bet for financing will likely be from a credit
union if you belong to one, or a bank with which you
have previously done business. Whoever it is, the
terms may be better from the start than a dealership,
or you may be able to negotiate better terms. The key
is to determine your market rate terms first. That is,
know the interest rate and terms that you qualify for
from an unbiased institution. Gain approval from the
other source first and have that in hand before going
to the dealership if possible. You’ll then know that
value before it gets tangled with the value of the
purchase price transaction. If you have bad credit, you
may get hit with higher interest rates. It’s best to know
this beforehand. If it comes up after you are already in
the dealership, it can be used as leverage against
you. It’s better to deal with it before you get there.   

With any financing option, always make sure you are
comparing like terms. By this I mean interest rate,
term, and amount borrowed. Don’t be fooled by
claims that they can get a monthly payment down to a
certain amount. If you have already priced a loan for a
borrowed amount, interest rate and term, you’ll know
what the monthly payment should be – for that term
(3,4,5 years, etc.). Someone may throw a monthly
payment claim out there, but they may be playing with
a different down payment or term to get to that
payment. It’s easy to be confused if these numbers
are thrown at you at the last minute at the dealership,
with pressure to sign on the dotted line. Iron out the
terms before then and demand they stick to them.

Last but not least, it is usually best not to combine
trading in your old car with the purchase of a new car.  
Why? First, the dealer will only give you the wholesale
value for your car, opposed to a retail price you might
get if you sold to a private party. Second, it makes the
transaction more complex, and provides yet another
avenue where the dealer may be able to squeeze
more profit out of you because you find it difficult to
keep track of all the moving parts of the deal. You may
have negotiated a good deal on your purchase price.
You’ve invested time in that negotiation. At the last
minute your trade-in comes up, the dealer low-balls
the trade-in, explaining it away because of the market,
the cars condition, or the preparation for sale he must
do. Exhausted at the eleventh hour, you let it go, giving
back all value you’ve previously negotiated for
yourself. Don’t let this happen to you.

Enjoy your new car!  

Go Back to Part One.

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Buying a Car – Don’t Fall for these Sales
and Financing Tricks. Part Two.
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