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 Financing Options - Consumer Information You Can Trust!
This is where dealerships make their money!
Dealerships may only make a few hundred dollars from your auto purchase, but often make a few thousand dollars if you finance with them. You must be even more careful in negotiating the financing terms of your purchase than you were with the actual purchase price.
Be prepared to deal with the finance manager
Even if you’re paying cash, even if you have a credit union check in your pocket, many dealerships virtually will force you to talk with finance managers (also known as “financial counselors” or “business manager”). They’ll also insist that you talk with their “after the sale” manager. This might be a separate person or the finance manager. Whatever, this person will try to sell you warranties, “protection” packages such as rust proofing and undercoating, GAP insurance, and add-ons such as alarm systems.
CU Auto Online recommends a simple approach for evaluating dealership financing, insurance, protection packages, warranties, and other add-ons. After the sales pitch, which invariably presents dealership products and services as the cheapest and best, simply say something like this:
“That sounds fine. And if your loan and products are cheaper, I’ll certainly finance with you. Now, would you mind giving me a copy, completely filled out, of the contract you want me to sign so that I can compare it with other sources?”
The credit union will be glad to do that, too – to tell you exactly what it will charge for the loan, life insurance, disability insurance, and warranties. If the dealership is cheaper, shouldn’t they be willing to give you these figures, too? To the penny?
If the dealership does that, the credit union will be happy to help you compare costs, and will send you to our CU Auto Buying service if it’s cheaper. But if a dealership won’t give you the details, what does that say?
What about their insurance, protection packages, warranties, and the like? At times, it might be sensible to buy extra rustproofing and undercoating protection, though many consumer groups doubt the need for extra protection. And, at times, an extended warranty might make sense – though manufacturer warranties are good these days. But it never makes sense to spend hundreds and thousands more than you need to for those products. Unfortunately, some dealerships now are trying to charge $1,200 and more for rust protection they used to sell for $200; they’re trying to sell $900 warranties for $1,500 or more. We don’t think you should spend that type of money without very carefully comparing products. Your Credit Union offers extended warranties that can save you hundreds of dollars!
Be prepared for the leasing “switch”
If you’ve been a particularly good negotiator, many dealerships at this point will try to switch you to leasing. Why? Because the dealership generally makes much more profit on a lease than on a sale. But don’t fall for this switch at this point. If you’re thinking about leasing, leave the dealership and ask us to help you compare the transactions.
After you’re finished with the finance salesperson
Don’t celebrate quite yet. If you’re financing at the dealership, many will insist that you take the car home that minute. Its called “spot delivery,” remember. But don’t do it. Go home and defuse a little. Check the dealer’s figures again. And give the dealership time to fix the little things wrong with any new car. You did check it over carefully, didn’t you? Make a list of the squeaks, rattles, sticking knobs, and scratches, and have them fixed before you agree to take the car.
If you’re financing with the credit union, just stop by or call, and we’ll have you ready to roll in an instant. You can even apply online!
When you finally pick up your new wheels
Check the vehicle over carefully. Don’t look at it in the rain. But if everything’s OK, smile. You did it the right way and saved a lot more than change.
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