Freaky Good Man

There are a couple of things I would like to pass on to those of you that are in the car buying market. We all eventually end up having to buy a car so these are some tips for everybody. Hopefully these tips and definitions will be beneficial to you or anyone you know that is purchasing a vehicle. If you have any other questions about the car buying process leave a comment and I will try to answer to the best of my ability.

1. Educate yourself about the car you are buying. If you want to get a good deal on a car that’s the first step. Utilize the internet. Go to sites like cars.com and do a search of the area for the vehicle you are interested in purchasing. The site will pull up cars in the area and you can get a good idea of what the market is asking.

2. If you are trading a vehicle do the same, research it. See what people are selling the vehicle for so you can get an idea of what to expect for your trade. However, please keep in mind that you will not get retail value for your trade. Why? Dealerships are in business to make money. If they buy your car for the retail price they won’t be able to make money. So they can’t buy your car for retail and make a profit. If you want to get the most for your trade sell it yourself.

3. If you do the research on a vehicle and you see one or two cars that are priced a few thousand dollars below what most of the other cars are listed, it is a good chance that something is wrong with the car. Because of the internet, most cars are priced within a few thousand dollars of each other. The ones that have been reduced typically have been reduced to sell without repairs done to it.

4. When buying a luxury car do not buy the cheapest / lowest cost car. Most luxury cars hold their value pretty well. When you see one that is priced very low, again it probably has something wrong with it. Now, that doesn’t mean the car doesn’t work. But, the price of the car will reflect the condition of it. Cars are not arbitrarily priced by dealerships. Private owners however, will price cars based on other factors.

5. Because of the competitiveness of the car industry. Internet sales are very big. Most dealerships will have the price of a car discounted on the internet. If you walk on the lot, the same car will be a lot higher. So always find out what the car is selling for on the internet. Be sure to print out the internet price. Some dealerships are assholes and will not honor the internet price unless you bring the ad with you.

6. If you are buying from a reputable dealership there is NO discount for paying cash. I have heard people come into the dealership repeatedly asking what the cash price is for a vehicle. The cash price is the same as the finance price. Hell if anything a dealer may give you a deal for financing. Why? The dealer makes money on financing by getting money from the lender for selling certain deals. Also, dealerships are dealing with reputable lenders so there checks are as good as cash. They are getting the same amount for the car regardless of if its cash or a loan check. Now, if you buy from one of those buy here pay here places, they typically have a discount for cash. Why? Because the buy here pay here dealerships incorporate their own interest in the deal. So if they don’t have to give you their vehicle without you paying for it in full, they will give you a discount for the cash price.

7. Always, Always, Always check the carfax on a vehicle. All reputable dealerships will pull the carfax for their customers at no cost. If the car is a brand new car, that’s not an issue. But, if it was a Demo or a used car, get the carfax. The carfax will tell you whether the car was in an accident, how many times it was taken in for service and a few other important things. Now, carfax is not a 100% situation. If a person takes a car to a shade tree mechanic the work done on the vehicle will not be reported to carfax. But, if any work or repairs were done on a car and it was done at a reputable mechanic it will show up on carfax. If for some reason the dealership won’t provide a carfax, you can purchase it yourself at a reasonable cost.

8. If you are financing through a credit union, understand that in most cases you will get a better interest rate, but not in all situations. You also need to understand that a credit union is not going to be as lenient on loaning money for cars as other lenders. They have to answer to the union members if profit is not being made. Which means most credit unions will limit the mileage and year on the vehicle they will finance. If you have good credit, leverage your credit union against the dealerships lender. If your credit union will give you 6.9% tell the dealership. While the dealership is ultimately trying to sell the car, if they can make a few extra bucks by getting the deal done through one of their lenders they will do it. Even if it takes them matching the credit union’s rate.

9. Profit. There is nothing wrong with getting a good deal on a car. Keep in mind that the dealership is in business to make money. However, in most cases there is not a ton of money in most cars like people think. In new cars especially there is not a lot of money to be made. Now if the manufacturer is giving rebates and things of that nature that’s another story. Most dealerships don’t have control of that. That’s strictly comes from the manufacturer. Used cars have more profit in them, however its not thousands and thousands of dollars in every situation. Every time a salesman says he doesn’t have any room on the sales price he could be telling the truth. Could be.

10. Credit score. If you have bad credit you can still purchase a car. Credit scores are not the end all be all. If you have a stable job history and have good income you can get approved. There are lenders that are in business just for people with bad credit. You will pay more for your interest to get into the car, but you can get it. I have gotten people with as low as a 402 credit score into a car. The lender will typically require you to have a higher equity stake into the car if you have bad credit. There theory is that if you have more to lose in the car you will be more willing to keep up the payments.

11. Leasing. Leasing has historically been for those with good credit and like to drive a new car every 3 years or so. You tend to see a lot of business owners and business in general leasing their vehicles. What is leasing? Leasing is simply renting a vehicle. You are paying for the time that you use the car with a little depreciation added in. Why is Leasing a vehicle a good idea? Because you are only paying for the amount of time you are using the car, your payments will be lower than if you were purchasing the car. The payments can be substantially lower in some cases. What is the downside of leasing? The big issue with leasing use to be going over the miles listed in the leasing contract. Typically with your lease you have a length of time to lease as well as a limit in the amount of miles you can drive. However, lease contracts have become a lot more flexible now and you can adjust the mileage you choose. The more mileage you choose the monthly note will be. The other reason most people were against leasing is the thought of paying that money and not having ownership in the vehicle. Which is a valid point. However, right now, I see over and over and over again people trading in their vehicles and having negative equity in the vehicle. So, what happens? That negative equity is rolled over to your new payment.

12. Negative equity is simply the value of your vehicle minus what you have left on the loan for the vehicle. I see this all the time. In fact, to get a person that is in a good position on their trade is rare. What happens to the negative equity? The difference between the loan and the value of your car is rolled over to loan of your new car. Which will ultimately create a vicious cycle of people not being able to be in a positive equity position on their vehicles.

13. Gap insurance. Gap insurance is something that is usually added to your car loan when you sit down with the Business / Finance manager. Most people at this point in the sales process don’t want to add another penny to the cost of their car so they usually decline to get GAP insurance. Listen to me everybody. Get GAP insurance. It is inexpensive and is a very good investment. GAP insurance usually costs anywhere from $200 to $500 dollars and is added into your loan. If you are ever in an accident and your insurance company totals your car GAP insurance pays the difference between what the insurance company pays and any difference left on the loan of the car. This happens all the time when people’s cars get totaled. Protect yourself with GAP.