Car Shopping

[kelleigh1]

My husband and I went car shopping yesterday. Boy was that an adventure.

I thought I'd done my research, but apparently not enough because they sure do try to (bleep) you on the financing.

The sticker price was $24,000. After rebates, etc., we get it down to $20,600. Ok. Then factore in my trade which has a Kelly Blue Book value of $3100. So that brings us down to $17,500. The salesman goes off to talk to his manager and comes back saying we're way off. He doesn't believe the blue book value. So he asks if I'm sure I checked the trade in value. Yes, because I checked it more than once. He says we're really off and we're talking thousands, not hundreds. Well how many thousands off are we talking because there are only 3 thousands in my figure.

He tells me that they're at a monthly pyament of $437 for 72 months. Are you kidding me??? That's $31,000 when I finish paying. Why would I want to pay over 50% more for the car? And what the heck are you using for an interest rate?

Before we left, he had it down to $323 a month, but then he tossed out the "if you walk away now, that deal is off the table". I don't like that, so we walked away.

So I get home and I'm playing online at Edmunds.com and I play with the figures. At $437 a month with an interest rate of 5.35%, I'd be borrowing over $26,000. (Note: the dealer told me that his interest rate was low single digits, but he wouldn't give me the exact figure - so 5.35 is middle, not low single digit.)

WHAT??? The sticker price was only $24k and with the rebates and incentives we were down near $20k before my trade, so why is the principal on the loan $26k?

And even at $323 a month the principal was $22k. What the heck is happening to my trade in value? Why is that washed out? If we got the price down below $20k, shouldn't I only be borrowing on that $20k???

My BIL is a car dealer in NJ. He kept telling me not to do anything until I talked to him. Now I understand why. I may just have to take a drive to NJ and go to the dealer with him.

 

[Traumawolves]

Wow! We're curious as to what your BIL has to say. Keep us updated!

 

[pjshaff]

What kind of vehicke were you looking at? And what was your trade in?

Do keep us informed after you go to a dealer with your BIL.

 

[kelleigh1]

I just pulled out the agreement on my current car...the one I was trying to trade in.

I financed $17,749 at a rate of 12.5% and my monthly payments over 60 months were $399.

There is no way that a payment of $437 over 72 months is an interest rate in the low single digits. NO WAY!

 

[kelleigh1]

My trade is a 1995 Explorer Limited. And I was looking at a Hyundai Sante Fe. My trade has all the extras, but the Sante Fe has none of them. I was just getting the standard equipment.

Mileage when I bought the explorer 66000. Mileage now, 128000. I've only put 62000 miles on it in the 6 years I've had it.

 

[RadioNate]

this is exactly why I despise car shopping. DH wants to get a new car because we are gonna need the extra room w/2 kids but I know they always screw you and I just don't want to deal with it.

It just really stinks.

Car dealers have such a bad reputation. I guess they can pull all these tricks since people will still buy the cars.

What has always helped us is getting preapproved on financing though another lender.

I'll never buy another Dogde (actually we've forgone all Chrystler) product after the screw over they tried on me a few years ago.

We also make sure that the dealership also know what DH's job is. Somehow dealing with someone who has 3 radio stations under his control and a very close relationship with a TV station keeps them inline.

 

[cepmom]

ughh...we will be car shopping in the next fw months. I am not looking forward to this!! Nothing worse than dealing with unscrupulous car salesmen. Let us know what you BIL says....I'll take any advice I can!

 

[kelleigh1]

I am definitely considering financing elsewhere. I'm sure I could take out a $25k loan elsewhere and pay less than $400 over 5 years...nevermind their 6 years.

First piece of advice he gave me was to price everything without a trade...because they really do jack up the price if you have a trade. Doesn't make sense to me, but they do.

 

[TTFN]

I've never heard of a dealer refusing to disclose the interest rate...is that standard practice? We just bought a car and used our credit union to finance(it was all handled at the dealer that day) and paid 4.25% on a used car. We found what we wanted, drove it, liked it, waited for the dealer price (he even pulled up the Kelly Blue Book site to show us), told them what we would pay, they said okay, paperwork, drive away. I thought that was just how it was done!

 

[Dan Murphy]

Think all components individually. First, agreed cash purchase price of the new car, delivered to you. Then, if a trade, what is the cash trade value. Lastly, after the cash trade value is subtracted from the cash price of new car, what financing. Also, anything over 48 months is dangerous for getting upside down. Good wishes, Kelleigh.

 

[kelleigh1]

I've never heard of a dealer refusing to disclose the interest rate...is that standard practice? We just bought a car and used our credit union to finance(it was all handled at the dealer that day) and paid 4.25% on a used car. We found what we wanted, drove it, liked it, waited for the dealer price (he even pulled up the Kelly Blue Book site to show us), told them what we would pay, they said okay, paperwork, drive away. I thought that was just how it was done!

I don't think they'd actually run my credit and everything to find out what interest rate I would qualify for. He asked how my credit was and I told him it was excellent (which it is) and when he came back he just said "that's low single digits which is what it would be if your credit is good".

I think I'm going to call my local AAA office and see what I might qualify for through them and then go from there.

 

[sweet angel]

When I bought my 2004 Tribute at the end of 2003, I had a 1998 Pontiac Sunfire to trade in. I did my research on Edmunds, Kelly, etc., but the guy at the dealership told me they don't use those figures; they use some other guideline to figure trade-in value. All told, I got a decent deal and not too much lower for my trade. I was totally ready to walk though, since I didn't NEED a new car, just wanted to go look.

 

[christineann]

I worked for a car dealership many years ago, and I have a good friend who owns two dealerships.

First, ask to see the factory invoice on the car you want to buy. There is no reason whatsoever that the dealership should not show it to you. Do not pay
for rustproofing, upholstery protection or any other dealer add-on. They are a racket. Many dealerships don't even do that anymore because it has been exposed as a way to jack up the price. If they won't sell you the car at invoice, pay no more than $200 over. With the dealer incentives and rewards from the automotive manufacturers, they will make a profit anyhow. If they won't show you the invoice, find a dealer who will.

After you have settled on a price, only then does the trade-in get factored in. It is a separate transaction from the purchase of the new vehicle. You know what the car is worth, and if they won't give you that price, go elsewhere or sell your old car yourself.

Then the financing comes in. I just bought a used Trailblazer from a dealer (the one owned by a friend), and he shopped around and got me the best interest rate.

If a dealership relies on return customers (some don't - they just want to make a big profit off of a customer the first time and don't care if they ever see you again), they will work with you. Good luck!

 

[goofyfatherof2]

I work at a group of car dealerships. While most people know what the costs of a car are, rebates, incentives, etc. most people don't know any of the costs of financing. The financing rate is a variable just like the purcahse price of the car. Even when the car is sold "at cost" the dealerships get some money back, but they can also make much more money in financing. You may be approved from a bank for 4% financing, but the finance manager says he got you a deal at 5%. You don't know what rate you're approved for and the dealership gets the 1% difference! On a typical loan that can be alot of money. You must shop financing the same way you shop car prices. This is the way the finance department makes money. Just be sure that you don't let them make too much money st your expense. Most times the manufacturer offers specail rates, take those if you can qualify. If not go with AAA or a credit union. If you can't trust ALL the people in the dealership you need to try another dealer. If your not well informed there are people that will take advantage of you. Rememeber not all dealerships are bad, just be well informed, and don't be afraid to walk away from any deal you don't like.

 

[NeverlandClub23]

I just bought a new Mercury Mariner about two weeks ago and I hate buying new cars (or any car for that matter). The most irritating thing about buying a car is dealing with them on the trade in. I had a Jeep Wrangler that I owed $12000 on and that was my trade in value. They kept telling me it was $9000. I'm not paying $3000 for a car I'm no longer going to be driving! And then the Mariner MSRP was $28000 and we got it down to $23000 and they finally gave me pay off but somehow the final total came to $25500 and why do they make it sem like YOU are the one that's getting such a good deal?!?! And another thing, if that stupid car salesman told me one more time "Be sure to give me all excellent scores when you get your survey card in the mail" I would have told him where he could put that survey card!! What's the point of even sending out a survey if you're going to tell me how to mark it!!! Ok I'm done I completely sympathize with you and good luck!!

 

[wdw4us2]

All these problems with the financing are why we don't finance through the dealership anymore.

We've had a home equity line of creditset up just in case we decided to purchase a new vehicle. With the GM Employee Plan benefit, we purchased a 2005 Avalanche two weeks ago and used the equity line to finance it with a down payment. Plus, you get to use the rebates GM is offering, too. We saved $10,000 on the purchase. Aside from the lack of hassle, we can also deduct the interest payments on the equity line since it is like a mortage. Something you can't do with regular auto financing.

Just a thought if you're in a position to do it.

 

[mudnuri]

This is the way the finance department makes money.

A good friend of mine is a finance manager at a big multi dealership here, and he makes an incredible amount of money per year. Close to 200K....and your 100% correct on how they make money. He actually told me flat out to never finance from the dealer, always use a bank or credit union that you use with the rest of your banking.

Brandy

 

[mudnuri]

All these problems with the financing are why we don't finance through the dealership anymore.

We've had a home equity line of creditset up just in case we decided to purchase a new vehicle. With the GM Employee Plan benefit, we purchased a 2005 Avalanche two weeks ago and used the equity line to finance it with a down payment. Plus, you get to use the rebates GM is offering, too. We saved $10,000 on the purchase. Aside from the lack of hassle, we can also deduct the interest payments on the equity line since it is like a mortage. Something you can't do with regular auto financing.

Just a thought if you're in a position to do it.

Only problem with doing this is your risking your house for a truck payment....if something dire happens financially you wont lose your truck, you'll lose your house

Brandy

 

[wdw4us2]

Believe me, we wouldn't put our house in jeopardy for a vehicle.

We own three others and have 18 years of equity in the house, so it's not a problem.

 

[Saphire]

Car shopping....HELP ME!!!! I posted last week on this very topic. This week I have all these salesmen 'checking in' with me to see 'where we are at'. I am sorry to offend any in the business, but they are not honest people!!!! If they don't get a great deal from the sale of the new car, they will get you in the trade-in. If not the trade-in, then they will get you on the financing. They are unscrupulous. Our plan is to go in and say we are paying cash (bank loan) and no trade-in (will sell ourselves). This way, we are negotiating car price only, and that is headache enough. We've got our Kelly Blue book figures and Edmonds.com printout ready, now the only fight we have as we go back for round two is with the car cost. I think it is downright appalling that they make up the cost on the 'great deal' they give you through shady financing and low trade-in values!!!