One of things you should know about a car buying loan that comes from the car dealer is that when you finance a car at the car dealership the financing is simply a product that the car dealer sells to you so they can make money. That’s right, the car dealership is merely an agent or middle man that sells you a car dealer loan. You know what happens when you have a middle man, they want to get paid. So when you buy a car with a car dealer loan it’s not really a car dealership loan, but another item that they sell. This product is provided by the actual auto loan lender.

A Brief Car Buying Loan History

Many years ago when cars were not so plentiful as they are today the car dealers and the manufacturers realized that they need to provide car buying loans if they were going to sell more cars. Early on they would make arrangements with banks to provide financing and then in the later years the car makers set up their own lending institutions to make car dealer loans for their buyers.

Back to today, we now have many different lenders that will provide you with a car buying loan. Most of them are banks, credit unions or lenders that are owned by the car manufacturers. The car dealer will make arrangements with many different lenders to finance the cars they sell and then they place or sell the car dealer loan to one of these lenders. They will choose a lender to sell the “Paper” or your car financing loan contract based on several different factors. First and foremost is the amount the car dealer gets paid to sell you an auto loan. Secondly they select a lender that will accept your contract (car finance agreement) based on your credit. With all things being equal, they naturally select the lender that is the most lenient and pays them the most for being the middle man.

Low Rate Financing and Car Buying Loans

You might wonder about those specials on new cars that you hear about that have 0% financing or very low interest rates. This type of car buy loan is financed by the car maker’s lending division and is supplemented by the manufacturer. For example; when an auto maker has a car dealer financing special that has 0% car dealer loans they also have a rebate for the car buyer that does not use the financing. If they advertise a 0% for 60 months special then they also have a $1000 instant rebate. The $1000 is roughly the amount that it would cost the lender to provide you with a car buying loan versus a standard rate loan, providing you have good credit.

Which is the Best Loan for Buying a Car?

There are many variables that come into play when you ask that question. Everyone is different and has different financial situations. So the best auto buying loan is the one that works for you and needs your needs. Before I buy a car I always go to Lending Tree….Click Here NOW!… and get 3 or 4 quotes from different lenders before I go to the car dealer and get a car buying loan. That way I always have several lenders competing for my business, which always provides me with a selection of different loans and then I can pick the best one for me. I can then compare those to any car dealer loan that they may offer. If I don’t choose a loan from the dealer I then get to deduct the rebate (when applicable) and avoid the extra expense that the middle man gets paid. Check it out and get the best car buy loan by Clicking Here!

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Get the Answers to the Questions to Ask When Buying a Car

The car salesman is trained to leave out some of the details because they may cause you to back out of a bad car deal and leave the car dealership in a hurry without spending a dime. The car salesman is experienced at dancing around your questions and changing the subject to keep you from getting the answers to the questions to ask when buying a car. The car dealer and the car salesman know that they must answer these questions if the car buyer insists on the answers because the details will come out sooner or later. However if they can avoid giving you these details throughout the entire car buying process which includes the spot delivery they know they will be home free because there are no returns. That’s right, you can’t return a car to the dealer after you take delivery so if you discover the answers to these questions to ask when buying a car after you get home it’s too late. You’re stuck!

5 Questions to Ask When Buying a New Car

Car Buying Question #1: What is the purchase price of the car?
The car salesman will try to turn your attention to the monthly car payment rather than the actual price of the car. The idea is to charge you list price or more for your car when they sell you on the amount of the payment. It is important question to ask when buying a car because you need to know the price of the car and negotiate that number separate from anything else. After all the rest is math and not the dealer version of car buying math.

Car Buying Question #2: What is the Interest Rate?
The interest rate is one area where the car dealer loves to make some extra money. They may try to sign you at a higher interest rate than you qualify for and then they collect the difference of the two rates as a profit. Everyone makes out except you, because you will be paying a higher monthly car payment than you should be paying. As shown in the steps to buying a car you should know your credit and the interest rate that you can get from another lender and then use that to compare the rate that the car dealer is using to finance you car. The answer to this question to ask when buying a car is critical because this car dealer scam could raise you monthly payment anywhere from $10 to $80 a month.

Car Buying Question #3: What is the term of you car dealer loan?
Not knowing the answer to this question to ask when buying a car can cause you to pay for your car for an extra 6 to 24 months if you are not aware of the car dealerships financing term. Sometimes the car dealer may try to stretch out your car dealer loan for a longer term in order to reduce your monthly auto payment without mentioning that fact. You might be expecting to finance your car for 60 months and the actual term is 72 months. You would be paying for your car for 12 months longer that you planned or expected. Not knowing the answer to this question when you buy a car can be very expensive.

Car Buying Question #4: What are these numbers on the paperwork?
When it’s time to do your paperwork for your new car you will be signing several documents that look overwhelming because of the large amount of information they contain. It is a very common car dealer trick to include charges and car dealer fees that were never discussed during the car buying process. So the questions ask when buying a car and going over the paperwork is “what are all these numbers”. Have your Finance Manager thoroughly explain all the car fees and charges to your satisfaction before you sign anything. Here is a breakdown and explanation of all the car buying fees that are real and the ones that are imposed by the car dealer including the Dealer Prep Fee.

Car Buying Question #5: Is my trade-in getting paid off and what is the trade value?
This question to ask when buying a car is similar to question #1 in regards to breaking this item out from anything else. You want the trade-in numbers to stand on their own so you can use your car buying research and trade information to verify the true used car trade value. Car dealers are know for playing with the numbers to make it look like you are getting more for your trade-in or a bigger discount on the new car, but you are smarter than that. You want to know the answers when you ask the questions for buying a car. Besides the value of your trade-in car you also need to make sure that the amount owed on your old car (if there is any) will be paid off as a condition of your purchase agreement.  You can ask the question, but you also need to see the details of the payoff on your contract before you sign anything.

These are the most important questions to ask when buying a car to avoid a car dealer scam which can cost you a bundle. When you know the answers to these car questions you will stand a much better chance of being seen as a savvy car buyer that the car dealer and salesman will respect. If you have additional questions you can visit the Car Buying Questions page for more information because there are always questions to ask when buying a car for your own protection.

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Car Buying Help to Save a Bundle

When it comes to the car buying process and getting some car buying help everyone can pick up some tips and advice that can save them anywhere from a couple hundred to several thousand dollars by going over the following information and links. Simply reading and comprehending the information contained on this website can save you money  even if you don’t follow the car buying steps, step by step.

Everyone Could Use Car Buying Help

I have been in the car business for years and I often get asked by friends and relatives for car buying help and advice. The first thing I recommend is that they do so homework on the particular car they are interested in buying. They should to the car makers websites and determine the car they want and also make sure that the car they choose fits into their desire price range. Once they determine which make and model of car I suggest they go to Yahoo! Autos and request FREE quotes. You can do this for Free and get 4 competing price quotes from 4 different car dealers. These dealers know that they are competing with 3 other dealers so their prices are VERY competitive, plus they email you a price in writing right to your email. It’s crazy not to take advantage of this free pricing service. Click Here..NOW! and get 4 quotes for FREE on a car you are considering. This can be a huge help for car buyers. Not only do you get 4 competing quotes, but you don’t have to visit or talk to a single car dealer or salesman and it’s a written quote. Follow the steps to buying a car and get the step by step car buying help you want.

Car Financing and Car Buying Help

Getting the best price on a car is important, but a little known car dealer secret is that the dealership can make as much or more money by providing dealership financing and selling extras. When you make a deal with car salesman at a great price the next step is to go into the “Business Office” to do your paperwork. The person doing your paperwork is going to tell you that you can relax now and that the hard part is over, but that is where you really need to be ready for their car dealer tricks and tactics. The Business Office of the car dealer is where most people need car buying help. Even the person that has bought a dozen cars in the past can be subjected to car dealer scams. Knowing the tactics they use when you finance your car with dealership financing and how the interest rate plays a huge part is a big help for buying a car.

Often Overlooked Car Buying Help

The two main areas for profit and potential car dealer scams are pricing and financing, but many people fail to consider the car buying fees that car dealers charge and that is where car buying help comes into play. Most people will tell you that they are normal and everyone pays those charges. However the hidden costs of buying a car can potentially add hundreds to the price of your new car. Some of these hidden costs and fees are not even legitimate charges and yet another way for the car dealer to get in your pocket.

I hope you can see that even the seasoned car buyer can use some car buying help at times. Laws, taxes and fees are changing all the time, so by doing your homework and going over the information and links above you can get some car buying help that will save you some of your hard earned money.

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The Need For The Buy Here Pay Here Car Lot

The Buy Here Pay Here Car Lot Solution

If you are one of these people, don’t think you are alone. In fact it is estimated that over 100 million Americans have bad credit. Now that is a lot of people, almost 1/3 of the public. Even more amazing is the fact that these people that have bad credit are almost half of the car buying population. You can see buy those numbers that there really is a need for the buy here pay here car lot.

Buy Here Pay Here Car Lot May Be The Answer

So where does someone affected by severely damaged credit turn when they need a vehicle? After all it’s difficult enough trying to repair bad credit. Then throw in the fact that you can’t get a reliable car to get to work. This makes for a pretty frustrating predicament. One viable option is to go to car dealerships that have in house financing or in other words buy here pay here car lots. You need to do your research and be careful of any car dealer scams, but that goes for anywhere you buy a car.

Advantages to Buy Here Pay Here Car Lots

One of the major differences between a Buy Here Pay Here car lot and a traditional car dealer is that the car lot is both the lender and the car dealer. Most car dealers use outside sources as lenders which can make the process more difficult and time consuming. The main advantage is that when you go to the buy here pay here car lot you can buy and finance a car rather quickly in most cases. However the most important thing is being able to get a car.

In most cases the the buy here pay here car lot structures payments either weekly or every other week  depending on when you get paid. So another advantage is making much smaller payments, but there are more of them. This will keep you from having to come up with a larger payment once a month and for some it is easier to manage.

When there advantages there are always disadvantages and one disadvantage is paying higher interest rates. Until you credit improves and your credit score rises you will have to pay higher interest rates for anything that you would finance. The buy here pay here car lot will charge a high rate, but it is something you have to deal with if you need a car and can’t afford to pay for it in full. The main idea is to help you out with a car loan while you start building you credit to the point that you can qualify for traditional auto loans and dealership financing.

If you need to buy a car and you have poor credit the Buy Here Pay Here car lot is probably the best choice, unless you have a friend or relative that will lend you the money.

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Credit Score Basics

To bring you up to speed on the basics of credit score or credit rating the first thing to understand is that anyone that has financed something has a credit score also know as a FICO score. Financial institutions that lend money to consumers report to one or all of the three major credit bureaus on the monthly status of your open loans along with past loans, late payments, defaults and any credit collections, bankruptcy filings or liens. These credit bureaus using a numerical rating system that ranges from 300 for lowest credit rating and 850 for the highest. Your credit activity gets numbers assigned to all the different transactions which are compiled to make up your credit score or rating. If you never had any credit experience you will not have a credit score. In the car financing business you are known as a ghost. If this is the case you may need a co-singer or perhaps you can qualify for one the auto makers first time buyer programs.

Auto Financing and the Impact of Credit Score

Most new and used cars that are sold today are financed by auto loans. Most of these auto loans are provided by banks, credit unions and automobile manufacturers. These sources for auto financing normally require a credit score above 700 for the best interest rates and terms. Having a credit score below 700 will not keep you from being approved for car financing, but it will have an impact on your interest rate and repayment term.

Credit and Car Financing Basics

The financial institutions that make auto loans use a tier system to determine your eligibility and interest rate for auto financing. For example; I mentioned earlier that a credit score of 700 will give you the best interest rate. If your credit score was a 675 you may have to pay a higher interest rate on your car loan that may be a couple of points higher than the car buyer with a 700 FICO score. Then a FICO score of 650 may be a few more points high and so on. I have seen car buyers pay interest rates as high as 24.9% on their car loan because they had a low credit score. This use of credit tiers by auto manufacturers lending divisions has often been abused by car dealership financing scams.

The difference between a lower credit score and the highest credit score could be as much as a couple hundred dollars a month in your car payment. Your FICO score can also dictate the amount of down payment you will be required to have on your car purchase. The tiers that determine your interest rate will also determine your down payment. The car buyer that has a 700 FICO score or higher may not need any down payment and the person with a very low score may be required to put down as much as half of the car financed. So you can see how important it is to have a high credit score when you are financing a car.

To avoid car dealership financing scams it is important for you to know your credit score. I personally use credit score monitoring service that is very inexpensive that notifies me whenever my credit is ran along with any changes that will affect my credit score. I was actually able to stop my identity from being stolen when I was notified that my credit was run by a cellular phone company. I was notified and was able to freeze my credit so the identity thief was unable to open any more accounts. I filed a police report and one piece of paper and the crisis was averted. Check Them Out Now! I wouldn’t be without the service. I can check my credit at any time and keep track if I am trying to improve my credit score.

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What is an Extended Car Warranty?

An extended automobile warranty is basically an insurance policy. A policy that starts when the car manufacturers warranty expires, in other words it can extend the warranty period for your new car to a pre-determined amount of time or miles. The warranty term can be extended out to 100,000 miles and a time limit of 7 years from the original purchase date. These are simply examples of different time frames and mileage amounts. You can buy an extended car warranty that has many different variables some of which are mileage limits, number of years and deductibles to be paid by the car owner.

How to Decide if Buying Extended Car Warranty is Right for You

To help you make a decision about buying extended car warranty for an extended period of time for your new car there are some questions that you should consider.

1. How many miles do you drive a year on average?
2. How often do you buy a new car?
3. Are you planning to keep your car long after the manufacturer’s warranty period?
4. How much does an extended car warranty cost?
5. Can your budget afford unexpected car repairs?
6. What kind of warranty coverage is available and what repairs does it include?

Buying a New Car Extended Warranty Considerations:

If you are buying a new car the first thing to consider is how long the manufacturer’s car warranty lasts. A very common warranty term is 3 years or 36,000 miles. So if you drive an average of 10,000 miles a year and like to get a new car every 3 years then an extended car warranty does not make much sense. However if you drive and average of 18,000 miles a year and would like to keep your new car for at least 5 years (especially if you have financed for 60 months until you pay off your car) you will have approximately 90,000 miles on your car after 5 years.

Should You Buy Extended Car Warranty?

Many car makers’ warranties include a 5 year or 60,000 mile engine and drive train warranty, but it does not include anything other than the drive train. So it the above scenario where you drive 18,000 miles a year and want to keep your car for 5 years you will have reached the mileage limit on your original warranty within 2 years. To take this scenario farther imagine you have 40,000 miles on your car and you have a problem that requires a $1200 repair that is not covered by your drive train warranty. You will have to pay for your repair out of pocket and still make your monthly car payment. If you have an extended car warranty you will have to pay your deductible (if you have one) and your monthly car payment. If paying your payment along with an unexpected $1200 car repair would be disastrous to your financial well being then to buy extended car warranty might be a good choice for you.

A $1200 repair on a car that only has 40,000 miles might sound out of the ordinary, but it can happen. A repair on a newer car that exceeds a thousand dollars is not extreme today when you consider all the electronics and technology that are part of today’s automobiles. A new car extended warranty that covers your car for 100,000 miles or 7 years may only cost you $1200 depending on the make and model of car if you do some warranty comparison shopping.

Buying a Used Car Extended Warranty Considerations:

When you buy a used car there are many things to consider when it comes to buying an extended car warranty. Used car warranties can be purchased that cover from 12,000 miles or 12 months or as they can long as 7 years or 100,000 miles and some can even be longer or more miles. One variable is the age of the used car that you are buying, if the car is too old or it has too many miles there may not be an option to purchase a warranty. If you used car purchase is only a year or two old your choices and considerations for extended warranties are very similar to those of a new car. If the used car you plan on buying has a warranty that is only a year away from expiring it is probably a good idea to evaluate your options and do some research and comparison shopping for extended car warranties.

Why Do Car Extended Warranties Have a Reputation of Being a Scam

The extended car warranties that car dealers sell have been seen as car dealer scams for a few reasons, all of which are because of the car dealerships that sell them. One car dealer scam that involves the purchase of extended warranties is the finance manager including an extended car warranty in the paperwork and telling the car buyer that it is a requirement of the lender. This is simply not true; there are not any lenders that require an extended warranty. This is a car dealer tactic to get you to buy the warranty so they can make additional money and commission on your car purchase. If you have a car dealer tell you that the lender requires an extended warranty you are dealing with a car dealer that is trying to scam you. Your best choice at this point is to get up and go to another dealer.

Another reason that extended car warranties are the subject of car scams is because of how much the car dealer charges you for a warranty. I have seen car dealers charge anywhere from a $100 over cost (which would be a great deal) up to 3 times the dealer cost. The car buyer that has not done their research has no idea how much an extended warranties cost. The best thing you could do is get some FREE quotes before you go to the car dealer by Clicking HERE! and get a quote from Smart Warranty.

What is the Price to Buy Extended Car Warranty?

The prices for extended warranties on cars can vary greatly based on the type, brand, make, model, miles and age of the vehicle. They are also based on the reliability of the particular car and the average price of repairs. I have seen the dealer cost of warranties be as little as $500 and as high as $10,000. See what I mean about how much the price can vary between cars (and those are dealer costs). The retail price can be any number that the car dealers finance manager decides.

Protect Yourself When Buying Extended Car Warranties

The best way to protect yourself from being the victim of a car dealer scams when you buy an extended warranty for cars is to take some extra time when doing your car buying homework. You would buy anything without comparing prices at a couple different vendors. So why would you buy extended car warranty for your car without getting some competitive prices. You can CLICK HERE and get FREE QUOTES on extended car warranties before you go to the car dealer. If you bought a car in the past and would like to buy a warranty you can get a competitive price for one HERE…at Smart Warranty. There is no obligation and it is FREE…. Click Here! NOW! And get a quote for free.

You can purchase an extended car warranty directly and avoid the car dealer scams or you can use your FREE Quotes to keep the car dealer on the up and up or to negotiate a better price. You have to decide whether to buy extended car warranty is right for you. Get the FREE Quotes and make a good decision for YOU!

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Car Buying Math of Car Dealers

What a Deal the Car Buying Math

When you are buying a car, the favorite car dealer scam is the dealers own style of car buying math.  Most car dealers use the “Four Square” to negotiate the price and payments on your new car. The car buying math that dealers use on the Four Square is designed to present you with a monthly payment that will put you on the ceiling (the lingo of the car salesman). In other words if your car payments should be about $400 a month the car salesman will present you with a payment of $585 a month. The car buyers response will one of several different reactions;

A. I can’t afford that much a month so they decide to look for a cheaper car.
Rather than look for a cheaper car the car salesman will ask them how much they can afford. Then they will start coming down on the payment until they can agree somewhere higher than $400 a month (the actual payment) or if they have go below $400 a month they will look at cheaper cars.

B. Are you crazy, where did you get that number from?
This reaction is a car buyer that has done their car buying homework. They have done the car buying math and have a pretty good idea what their payment should be. Now that the car salesman knows that they have a customer that has done the research and knows what they are talking about the salesman will start working the real numbers. If they can get this customer to buy a car they will probably get a fair deal.

C. OK, I was hoping for a lower payment, but I can manage that.
The car salesman hit a home run or “Took Your Head Off” (more lingo). The actual car buying math $185 more than the actual payment times 60 months equals $11,100. Now that is what you call a car dealer financing scam. There may only be a small percentage of car buyers that say “OK” when the car salesman presents them with the payment, but you don’t need too many of these customers a month to make a killing. The customer that does not do their homework and is foolish enough to believe what the car salesman tells them assumes that the car buying math is correct. (they get screwed)

Math and Car Buying Math

The above scenarios happen every day at the car dealer. Most times the reactions are A and B, but every now and then option C comes in to buy a car. All the car salesmen love getting an option C for a customer. The customer that doesn’t choose option C are then subjected to the other car dealer scams and car buying math for additional ways to make extra profit at the car dealership.

The car dealers use their own brand of math for car buyers, but when it comes down to filling out the  paperwork that you have to sign, all the figures have to work out to like the regular laws of math. The car buying math of car salesman tricks doesn’t fly on the paperwork and the dealer financing agreement.

To protect yourself from the car dealer tricks of car buying math you need to do your homework. Go to the Steps to Buying a Car and be prepared before you go to the car dealer. You can figure out your monthly payment by using the Auto Loan Calculators on our site. Being prepared is the way to avoid car dealer scams.

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