Pitfalls to Avoid When Shopping for an Auto Loan on a Budget
6 Ways to Make The Process of Buying a Car Less Risky, & Less Remorseful.
At some point you will be looking for another new or used car. Here are a few tips that will provide you with a guide to moving forward with a remorse-free purchase. Be careful and don’t make the same mistakes so many have in the past.
Paying For Add-Ons
Seriously consider what you can live without. Let’s start with the extended warranty, a nice little profit center for the dealer. Many new cars have a terrific warranty already included with the vehicle as do certified, pre-owned “used” cars. If you are a light driver you certainly would be at less risk of needing additional coverage so perhaps you’ll pass. “Fancy options”, GAP insurance, leather seats and other items can substantially drive the price of a vehicle up and when you’re on a real budget, you need to bare serious scrutiny before buying.
Know Your Credit Score, Payment History, and Payment Options
Get on the web and do some research regarding available rates and options for someone with your credit score. Credit scores on the average have gone down but understand that some dealers will try and get away with higher interest rates if they can. Very little profit is in the selling price, much of it is in the backend…just where you don’t want to take it when considering a car purchase.
Shopping At a Buy Here Pay Here Dealer
The good news is that if you’re a credit-challenged buyer for whatever reason, these lots are not required to report your payment record to the credit agencies. This works both ways in that your late payments won’t affect your credit score but neither will your timely payments. Although they may carry the vehicle you just gotta have, it may also carry a sticker price slightly or way above market value when all is paid and done.
Read The Agreement From Top to Bottom in Your Own Time, and Ask Questions
Your quick walk-in to check out a used car you’re interested in just became a 3 hour test-drive and now you’re sitting in the salesman’s cubicle or a sales manager’s office. His “Salesman of the Year” awards add to your stress level, but said awards are not nearly as foreboding as the huge contract you are being guided to sign. Read every word. Make sure you are the primary buyer if there is a co-signer, make sure the terms of the contract are according to the conversations you had and that tax has been factored into the $299 a month cost. Be empowered to walk out and think about it overnight or over the week.
Put it on Paper!
On one occasion, I’d negotiated terms with both the sales manager and the F & I officer that didn’t appear on the contract as discussed. I had taken their word regarding a number of minor details such as mileage allotment and length of contract only to be shocked to learn when it was time to turn in the vehicle that our conversations meant nothing. This oversight kept me in a Ford Thunderbird for a year longer than expected at a rate slightly higher than expected.
Finalize your financing and don’t drive home in the car before you do.
As a tactic to further cement a deal, some dealerships will offer you financing “based on final approval,” and will let you drive off the lot before your financing is actually finalized. This happened to me during an aborted van purchase. I drove the vehicle for 5 days before finding out the financing needed to be adjusted and that I’d be paying an additional $20 a month for 3 years on a van I was already stretching to buy. I took the vehicle back, jumped in my old used car and never looked back. The good news was that I drove a van for 5 days gratis. Do not drive off the lot until the deal has wheels, literally and figuratively. Buying a car almost always starts out as a fun thing to do yet oft-times ends up becoming a fight or flight exercise. If you follow the basic tips listed above you won’t feel the need to take a shower when the deal is completed and you’re driving off the lot.