Reviewing the Five Components of a Car Loan Deal

There are five main components of a car deal that car salespeople hone in on when you visit their dealership. By utilizing skills acquired through a combination of training and experience, they are often able to get patrons to pay more money for their vehicles than they have to.  This article reviews what those five main components are so that you will be aware of how a dealership is trying to get you to pay too much for your next new car.

    1. Don’t be in a rush to buy.

The first thing that car salespeople are taught to do is to create a sense of urgency in the minds of their customers.  Car dealerships don’t want you to shop around on their lots.  They want you to buy – and buy today, if possible.  So from the moment you set foot on a car lot to the moment you leave, the intent of the salespeople is to be moving you towards the direction of purchasing.  By rushing you into a rash decision, they can get you to pay more money than you should.

    1. Know the price, not just the monthly payments.

The second way that car dealerships make money is by hiding the price of the vehicle you’re interested in behind the guise of monthly payments.  A difference of just twenty dollars per month at sixty months is twelve-hundred dollars.  By shifting the attention of potential buyers away from the overall price of the vehicle and onto an affordable monthly payment, dealerships get customers to pay more than they should.

    1. The interest rate on the loan.

Every person has a credit rating that entitles them to a particular interest rate.  One of the ways that car dealerships make money is by getting customers to finance cars at interest rates that are higher than what they qualify for.  Many people who begin the process of buying a car have only a vague idea of what their credit score is, and car dealerships use this ignorance to inflate their interest rates.  The dealership then receives a “kick-back” from the company financing the deal.

    1. Your trade-in.

If you’re planning on trading in a car to a dealership, prepare to receive thousands less than it’s worth.  Dealerships and salespeople specialize in devaluing their customer’s vehicles.  The truth of the matter is that they will then often simply wash your car, vacuum the inside, have a mechanic do an inspection that typically takes only an hour or two, and then sell it on their lot for thousands more than they just paid you.

    1. The extras.

The final arena in which car dealerships seek to get customers to overpay is in the finance office.  Most of the products offered in the finance office are completely unnecessary, and those that are necessary can often be purchased elsewhere for far less money.

By being aware of these five components of the car buying process, you should be able to plan ahead and avoid paying too much for the car of your dreams.

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