Question: On your website you say not to let the car dealer arrange car financing, but what if they can get me a lower interest rate?
November 21, 2005
Hello Tony
My husband and I are going tonight to finalize a car deal (hopefully), and to see what they will offer us for our trade-in that they don't know we have yet!
I have prearranged my car financing ahead of time. However, the car dealer got us a lower interest rate by 1.5%. I know you said never let them arrange financing but in this case, wouldn't it make more since to go through them? I should just make sure they are not tacking on any add-ons that that you discuss on your website - unless it's something I want - correct?
Thanks,
D. S.
Answer:
Hi D.S.,
Listen, if the car dealer can get you a lower interest rate that's great. Just read all the numbers carefully on the loan contract before you sign it. The things to watch out for are:
The addition of any credit life or disability insurance that you don't want.
The addition of an extended auto warranty that you don't want.
The addition of GAP Insurance that you don't want.
Check the Interest Rate on the car loan contract, and make sure it's what they promised you.
Check the "Amount Financed" and make sure it's accurate.
Check the payment and the Term (in months) to make sure it's what you were promised.
Believe me, you can't be too careful when it comes to the car financing. There are numerous ways for the car dealer to make extra money off of you. Most of it can be avoided if you are careful.
Don't forget . . . every time the car dealer makes extra profit on your car deal or financing it's coming out of your pocket!
Three other very important points to remember:
When you spring the trade on the car dealer they might act betrayed and even get ticked off at you. Don't worry about it. If they get too belligerent you can always walk out and go some place where you are treated professionally by a car dealer who will appreciate your business.
Assuming you owe more on your trade-in than what it's worth your "Amount Financed" will be higher, because the difference will be added on to the new loan.
Make sure that you ask them to give you a written, signed statement that your loan is actually approved by whatever bank they're going through. If it's not actually approved yet don't take delivery of the car until it is.
If you do and the loan is not actually approved then they can come back to you and say there was a problem with the car financing, and they have to charge you a higher rate or whatever. Then you will have to sign a whole new stack of papers, and the odds of them sticking it to you go up significantly.
Finally, if you agree with them on your trade-in make them give you a written statement - signed by the Sales Manager . . . not the salesman or the Finance Manager - stating that they will in fact pay off your trade-in loan promptly. Have them include a date as to when the payoff will be made.
Remember, you have to cover yourself. This car dealer might be perfectly honest, but you can't just assume that. You have to cover all the bases if you don't want any problems or misunderstandings later on.
All my very best...
Tony Iorio
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