[Editor’s note: This article has been updated with new information and for comprehensiveness since its original posting date.]
Lots of people will be entering the finance office of a car dealership in the coming days, since we are here at the end of the month and year, also the busiest week of the year. The finance office can be a scary place for many people, but there really is nothing to fear if you take your time and pay attention.
Many Buyers Like The Convenience Of Dealerships
More people are using dealerships to finance these days due to aggressive incentives and very low interest rates, and also the ease of getting everything done at one time. Dealerships like you to finance with them for the obvious reason of making a profit, but equally as important, it takes you out of the market. Dealerships can often save you money on a loan.
Most People Have Had a Bad Finance Experience
The finance department seems to be a source of irritation for many buyers, and people who have bought a lot of cars have likely had a bad finance experience. Like every profession, there are good dealers and bad dealers. Many people are taken advantage of in the finance department of dealerships. Over the years, I have seen it all, high-pressure tactics to purchase extended warranties, credit life, and disability insurance, GAP insurance, etc. I have also witnessed downright fraud.
The finance experience does not have to be a trying experience. This seems basic and simple, but it is critical that you understand you are signing a contract-a legal and binding document that obligates you to make monthly payments on a timely basis. READ WHAT YOU SIGN.
Signing Papers Is The Most Important Factor in Purchasing
People never ceased to amaze me when I was in the car business. People would negotiate for five hours on a car, then when the most important part came…going over the final numbers and signing papers, they would almost always want to rush through this part. They would sign everything you put in front of them without asking any questions.
Do Your Homework In Advance
It is no secret that a dealer makes money on almost every product they sell in the finance department, but remember every product is optional, nothing has to be purchased in the way of optional policies or products. There are worthwhile products offered, like extended warranties and GAP insurance just to name a couple, but they are totally up to you. Nobody will hold a gun to your head and force you to buy anything.
Doing your homework is always a good idea! As far as interest rates go, know what you can get before you go to a dealership. Talk to your banker or credit union to know for sure, don’t leave it to chance. Know how many miles you drive per year to know which extended service policy to buy. Get online and calculate about what your payment should be. Buying a car and committing to five or six years worth of payments should rank right up there with buying a home, and taken as seriously, especially when it comes to reading and signing paperwork.
Pay Special Attention To The Finance Contract
One good rule of thumb is to spend the most time looking over the installment loan contract. Make sure the amount at the top is what you agreed to. Then as you go from top to bottom, look at any line that has a dollar amount next to it. If a finance person is going to “slide” a product in on you, like an extended warranty or something else, there will be a dollar amount associated with it. Question anything you are unsure of.
By the time you get to the finance department of a dealership, you are ready to get out of there and get behind the wheel of your new ride. Some dealers prey on that, and too often consumers sign everything someone puts in front of them. Take a deep breath, consider the products you are offered and remember that these are optional purchases. Some of them will be right for you, others may not. Make a good financial decision for you and your family.
Reprinted from Car Pro.