Confessions of an Auto Finance Manager (You have to read this!)

[Txturbo]

Originally Posted by MontyCarlo

1. Don't agree to be a monthly payment buyer. If you do, you'll quickly lose control of negotiations as they pack payments and hide the real cost of the car.

Could someone explain to me what I should do instead? This will be my first new car since college, when I had the luxury of letting Colonel Dad handle all the negotiating.

This is a repost. It was posted about 6 months ago. Anyway, what it means is, don't walk into a dealership and tell them how much you want your monthly payment to be or what kind of payment you can afford. They can shuffle the numbers around so much you will lose track and end up paying more for the car, but your payment will be what you were looking for. Figure out what amount you can afford and then figure out what the payment will be before you go to the dealership.

[manimsoblack]

I've found that if you find the car you like for cheap really far away and print out the paper and bring it to a dealer near you and say if you can match this price out the door i'll leave with this car tonight. They are more than willing to work with you to get a guaranteed sale.

[rmyers]

When I bought the Z, I bought the gap coverage cause it was relatively inexpensive. However I spent well over 20-30 minutes explaining to the Finance guy that "I DO NOT BUY EXTENDED WARRANTIES". Another thing you can look out for is if you are offered a cheaper interest rate if you buy the extended warranty. Take the deal in exchange for the lower rate, then wait a couple of weeks, call and cancel the insurance. The purchase is immediately applied to your principle so you will pay off the car a little early. The bottom line is if they are offering you the lower rate with the insurance, you qualify without it.

[NAHURRY]

Good stuff there!

[Scott@Bjorn3D]

Originally Posted by MontyCarlo

1. Don't agree to be a monthly payment buyer. If you do, you'll quickly lose control of negotiations as they pack payments and hide the real cost of the car.

Could someone explain to me what I should do instead? This will be my first new car since college, when I had the luxury of letting Colonel Dad handle all the negotiating.

Don't go in saying I can only afford to pay XXX a month. Go to your local bank and tell them how much the car is. How much you are willing to put down and they will tell you payments and interest rate.

Better yet check a credit union. You can usually join one for as little as 50.00 opening an account.

Here is what I am doing. Opened Zac's saving account with 1225.00. 25.00 is the becoming a member fee. Then I told them to see if I could get a loan for 35,000 and spread it out as long as they can. They did it for 76 months. Payment 560.00 with 5.75 % interest. Now they calculate interest on outstanding balance monthly. I am approved for the loan. FICA score 806

Now the plan is going to really borrow around 33,000. Any month I have extra cash I am going to pay more than the payment. May have it paid off in 4 years but wanted low payments since I do not know what medical situation and bills will be with Stephanie.

Check around bro before walking into the dealer.

[Rogue Leader]

This article reminds me of when my ex was buying her Toyota Rav-4. It was a new car on the lot already and when we got to the F&I guy his original interest rate was insulting, and he kept talking payment, meanwhile the loan was for 6 years! Then he mentions the warranty and he tells me "its part of the options selected when this car was ordered, this car was packaged with the extended warranty". I'm like "how can you BUILD a car with an extended warranty, its not a mechanical part, are you kidding me? Take it off!"

I then hammered him a bit more got her down to a 5 year loan, lower interest rate, and obviously lower payments. I'm glad she called me to go with her or she would have gotten really ripped off.

[carfansince73]

Originally Posted by Scott@Bjorn3D

Don't go in saying I can only afford to pay XXX a month. Go to your local bank and tell them how much the car is. How much you are willing to put down and they will tell you payments and interest rate.

Better yet check a credit union. You can usually join one for as little as 50.00 opening an account.

Here is what I am doing. Opened Zac's saving account with 1225.00. 25.00 is the becoming a member fee. Then I told them to see if I could get a loan for 35,000 and spread it out as long as they can. They did it for 76 months. Payment 560.00 with 5.75 % interest. Now they calculate interest on outstanding balance monthly. I am approved for the loan. FICA score 806

Now the plan is going to really borrow around 33,000. Any month I have extra cash I am going to pay more than the payment. May have it paid off in 4 years but wanted low payments since I do not know what medical situation and bills will be with Stephanie.

Check around bro before walking into the dealer.

Keep in mind they front load the interest so you pay most of it in the first part of the loan. The difference in paying off a 76 month loan in 48 months versus just a 48 month loan is almost $1,500 in interest. If you take out a 60 month loan and pay it off in 48, the difference drops to $800. It still gives you the five year flexibility if you need it, but you save in interest payments.

Not to mention you can usually get a lower interest rate with shorter terms, and I just used 5.75% for all the different terms. My CU has 4.5% for 48 months, 5.0% for 60, and 5.5% for 72.

Using my CU rates, you'd save almost $2K in interest if you just took out a 48 month loan. Anyway, just trying to help you enjoy the car even more, if that's possible.

Looking forward to pics with your daughter in the driver's seat.

[Txturbo]

Originally Posted by Rogue Leader

This article reminds me of when my ex was buying her Toyota Rav-4. It was a new car on the lot already and when we got to the F&I guy his original interest rate was insulting, and he kept talking payment, meanwhile the loan was for 6 years! Then he mentions the warranty and he tells me "its part of the options selected when this car was ordered, this car was packaged with the extended warranty". I'm like "how can you BUILD a car with an extended warranty, its not a mechanical part, are you kidding me? Take it off!"

I then hammered him a bit more got her down to a 5 year loan, lower interest rate, and obviously lower payments. I'm glad she called me to go with her or she would have gotten really ripped off.

Yep.....it amazes me how many people walk into a dealership and all they are concerned with is how much the monthly payment is.That is one of the biggest mistakes you can make...there use to be a dealership here in Houston that thrived on people like that. First question the salesmen would ask you is " what kind of payment are you looking for?" My answer was always, " I've already found the payment I'm looking for, I just need to find a car to go with it.Whats your best price on this one?"

[MontyCarlo]

Originally Posted by Scott@Bjorn3D

Don't go in saying I can only afford to pay XXX a month. Go to your local bank and tell them how much the car is. How much you are willing to put down and they will tell you payments and interest rate.

Better yet check a credit union. You can usually join one for as little as 50.00 opening an account.

Here is what I am doing. Opened Zac's saving account with 1225.00. 25.00 is the becoming a member fee. Then I told them to see if I could get a loan for 35,000 and spread it out as long as they can. They did it for 76 months. Payment 560.00 with 5.75 % interest. Now they calculate interest on outstanding balance monthly. I am approved for the loan. FICA score 806

Now the plan is going to really borrow around 33,000. Any month I have extra cash I am going to pay more than the payment. May have it paid off in 4 years but wanted low payments since I do not know what medical situation and bills will be with Stephanie.

Check around bro before walking into the dealer.

Thanks for the advice! I'm in a credit union already, so this shouldn't be hard at all. It's generally best to go for the largest practical down payment and a small loan to cover the rest, right? I've got almost enough cash for what I want, but not quite all.

[John68and10]

There is a guy here at work thats a little "slow" and the dealer was working with him on WEEKLY payments - he refused to tell him the selling price of the car - so my guy was smart enough to walk away.

[2Muchmark]

Originally Posted by Txturbo

Yep.....it amazes me how many people walk into a dealership and all they are concerned with is how much the monthly payment is.That is one of the biggest mistakes you can make..."

TELL ME ABOUT IT...

When I was in my early 20's I didn't understand anything about money or interest - I just wanted my car. I had bad credit because I was always late on everything and got suckered into a 4 year LEASE at 18%, plus I "had" to buy the extended warranty, etc etc.

Not only was it the worst deal I ever made, but the car was my first with manual transmission. I had never driven one before. I stalled several times just trying to drive it off the lot. Needless to say, I destroyed the clutch and the transmission only 2 years into the lease, which, surprise, were not guaranteed. In the end, "My" $40,000 car cost well over $33,000 and I didn't even get to keep it in the end because it still belonged to GMAC. What a dumb ass deal...

Today I have learned that the very best way to buy a new car is with CASH. Know the car you want, and save your money up to buy it. (When you really want something it doesn't take that long to save - it took me less than a year and a half to save up for the 2SS I ordered last month). You will save a fortune, and you can tell the "loader" to go jump off a bridge. And best of all, you can call your Camaro YOURS and YOURS ALONE.

Cheers!

[2Muchmark]

Oh, and you're welcome!! I loved the article too and thought everyone here at Camaro5 could really use it.

[Rodrunner]

Never heard the "tactics" explained like that. Very informative and useful by all. Thanks, 2Muchmark!

[HTWLSS]

More good info regarding the "four square".

Print our own worksheet from: http://www.edmunds.com/advice/financ...7/article.html