FREE ...New Car Buying Guide
Discover The Secrets Experts Use When They Purchase A New Car

The Truth About Auto Dealer New Car Loans

No credit? Poor credit? We can help.

Stop for a minute and think about it...

How can a dealer offer those low, low interest rate loans, some as low as 0%?

Let's take closer look at it...you'll discover some interesting facts that the dealers may wish you never knew.  The knowledge you'll gain here will help you save money the next time you purchase a new car.

Here are two common traits of those low APR loans...

1. The loan usually applies to inventory that the dealer has on site.
2. The options already on the car are included in these rates

If the car has options you don't want, you can't get rid of them...they'll be included in the amount you finance.  There's a lot of mark-up in options so you could end up paying up to 20% more because of the unwanted options.

Please note...I'm talking about low interest loans offered by the dealer.  Loans offered by the actual Manufacturer are different.  They will usually apply to certain models within their line-up and are not affected by options or inventory on site.

These deals could be good...but you don't know that until you carefully read the fine print.

Let's look at a couple of conflicting elements here...

Many times the reason the car is being offered at these low rates is because the dealer wants to get rid of it.  Common sense would dictate that they lower the rate to move the car, hoping to make some money on the actual sale itself.  Sounds logical, right?  Many times this may be the case.  but you need to keep one thing in mind...

The Finance Manager...

The dealer has a Finance Manager on staff in order to insure that you pay the highest monthly payment possible!

While this person has a number of purposes, they have ONE MAJOR PURPOSE...they are there to insure that you pay the highest monthly payment possible!  They are not there to determine how little they can make your payment...they are there to squeeze the highest monthly payment, out of you, that they can.

Sometimes, in order to make the sale, they need to switch tactics and get a lower payment for you and extend the loan over a longer period of time...you still end up paying more in the long run.  And, if you think about it, they are still getting the highest payment they can out of you.

Is this bad?  No.  The Finance Manager works for the Dealership, not for you.  You just need to keep this in mind when you're sent to the Finance Manager's office.  Just good business sense dictates that the dealership wouldn't pay someone a salary in order to generate LESS profit for the dealership.

You can't escape the Finance Manager...you have to talk with them even if you have secured your own source of financing or are paying cash.

Why?

Because they also process all the other paperwork associated with your purchase.

So...beware...even if you have your own financing in place some Finance Managers will try to talk you into taking their financing package.  They may show you charts and computer programs that seem to indicate their financing package is a better deal.

Why would they do this?  Because financing has several profit streams, for them, built in.

• Banks pay the dealer in order to get the dealer to use the bank to finance your loan.  The bigger the finance charge the more the banks pay the dealership
• Extended Warranties put another $400 to $2000 in the dealer's pocket.  Plus, if these are rolled into the amount financed they jack up your monthly payment which in turn gives the Dealer a bigger fee from the bank.
• Credit insurance.  there's about 50% profit, for the dealer, when they sell a Credit Insurance Policy.  Plus it can also jack up the monthly payment which in turn increases what the bank kicks back to them
• The Finance Manager will also try to sell you a bunch of different products such as, paint sealant, undercoating, soundproofing, pin striping, window etching etc.  These product carry an enormous markup...and jack up your monthly payment.

So...as you can see, while on the surface they appear to be getting you the lowest monthly payment possible...they are, in reality, adding all kinds of stuff that will increase that low payment they got you.

Should you steer clear of dealer financing?  Usually I feel you can do better by obtaining your own financing.  But sometimes you can do ok with dealer financing.

Just remember, even if you obtain your own financing you still have to talk with the Finance Manager.  They will still try to sell you the add-ons that we talked about above.  After all, even if you don't finance with them they stand to make a good sum of money from these add-ons.  They make even more if you finance with them because they now also profit from the bigger payments.

What should you do?

Arrange your financing before you go to the dealer.  Arrange it before you even go car shopping...that way you know how much car you should be looking for.

You can check out sources of financing here.

Step Number 6...Search