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Why Don’t Car Dealers Tell Me These Things?
Car dealers will tell you that the sticker price is the cost of the vehicle. They will tell you that special deals like zero down, zero interest, and zero payments for a year are designed to help the consumer. Car dealers will tell you that they have easy in-house financing that can save you time and money. They will tell you how awesome all the upgrades like fabric and rust protection are for your car. Car dealers will also tell you about how important it is to get an extended warranty on your vehicle.
What car dealers won’t tell you is that all these things can add to the car dealer invoice price that you pay. Now, let’s learn about the five things car dealers don’t want you to know, so when it comes to buying a new car, you can get it as close to actual car dealer invoice prices as possible.
The Sticker Price Is Not Actual Car Dealer Invoice Price
As a consumer, you should never pay the sticker price. Car dealers increase the car dealer invoice price published, so they have wiggle room when car buyers come onto the lot. Car dealer invoice prices may include potential rebates, costs factored in for advertising, and operating the dealership. The car dealer invoice prices, or what they paid wholesale, are likely a lot lower, which gives you, as the consumer, room to haggle and deal to get the best price possible.
Car Loans And Financing Issues
Zero Down Financing Can Cost You More In The Long Run
It seems like a great bargain, right? Zero down, zero interest, and zero payments for an entire year promotions are awesome aren’t they? You’re thinking to yourself that now is the time to buy your car. However, think again. Your first year will be free, but often there is language in the contract that says if you don’t pay off the financing in full by the end of that twelve month period, you will incur interest charges on the full balance of the loan, therefore voiding that free period. Additionally, you will likely have a higher interest rate on your loan than financing which offers a straight forward percentage rate with no window to pay off the car in full in the first year. The loan officers who design these promotion packages know that consumers will be lulled by all the zeros in their favor into thinking they can pay off the loan in the specified time frame. In reality, most people don’t. They use the money elsewhere and then have higher loan payments that cost them more money over the life of the loan. It is in your best interest to negotiate a good interest rate with the car dealer right off the bat, or better yet seek financing elsewhere.
Find Your Own Loan Financing
Checking with your local credit union or bank can also offer you financing options, where you are rewarded with lower percentage rates based on your years of service with them, or other loans and accounts you may have with the financial institution. If the car dealership is offering what seems like excellent financing, it’s true that if your credit is golden, you might actually qualify for a good deal. However, those packages are designed with an elite few in mind, and the savings they incur are usually passed on to the rest of the consumers who often fall into the medium to low credit rating bracket and pay higher interest rates. The other nice thing about finding your own financing through your local credit union or banking institution is that you have another bargaining chip to get your costs down to new car dealer invoice prices. Your dealership may also offer you competitive rates on their financing that you wouldn’t otherwise have been offered.
Warranties, Fabric Protection, And Add On Costs
Skip The Extra Protections
Tinted glass, fabric and rust protection, and in-house service plans may seem like a deal, but you don’t really need them in most cases. This is especially true if your dealer says they are already included in the sticker price. It’s all the little extra add on costs that can add hundreds of dollars to your car dealer invoice price. Car dealer invoice prices with these add on “upgrades” often look like good perks to have, but are unnecessary and overpriced. For example, upholstery protection can usually be sprayed on for around twenty dollars, while it might cost you hundreds on the dealer car prices.
Skip The Extended Warranties
Today’s cars often come with sufficient warranties from the manufacturer, some even up to six years or 100,000 miles. The dealer gets paid when you purchase the extended warranty, but what they won’t tell you is that the manufacturer in almost all cases will give you a courtesy call giving you the opportunity to purchase the extended car warranty about 10,000 miles before the original manufacturer warranty expires. So, why pay for something you might not ever need to use, especially when you can purchase it later.
More Things Car Dealers Don’t Want You To Know
The Wall Street Journal Digital Network has an article by Sarah Breckenridge and AnnaMaria Andriotis from Smart Money Magazine that shares ten things car dealers won’t tell you. At http://www.smartmoney.com/spending/, you can read about sticker price versus actual car dealer invoice prices as well as issues such as lenders and financing, online auctions for cars close to actual car dealer invoice prices, and many more tricks your car dealer may try to play rather than disclosing their bottom line as you try to get the best price on a new vehicle.
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