Actually having an upside down car loan is a very common occurrence today when a person buys and finances a vehicle with a very small or no down payment at all. Automobiles depreciate rather quickly and unless you put down a sizable down payment or have a trade-in that is worth several thousand dollars there is very good chance you will end up with an upside down loan during the term of the loan up until the last year of the term.

The Process of Trading a Car with an Upside Down Loan

People trade their cars in every day that owe more on them than they are worth. There are a few conditions that must be met for a person to do this, one is that you must have good credit or they have the cash to pay off the outstanding balance. Also the amount of their upside down loan is a reasonable amount which will depend upon the vehicle they are purchasing. The way this usually works is that the amount that is outstanding on the old car after they take into consideration the value will be in to the loan of the new car. If the balance is just a few thousand dollars and the buyer has good credit it usually not a problem. However there are times when a person may be many thousands upside down and the lender will not allow that outstanding balance to be rolled over onto the new loan.

To give you an example let’s say the vehicle you want to purchase is $20,000 and your trade-in is valued at $10,000, but your outstanding loan on your trade-in is $12,000. Therefore you are upside down by $2000. The dealer will apply the $2000 which is outstanding to your new vehicle loan which makes the amount financed $22,000. This is very common practice, but if you do not have good credit the lender will not allow you to add the $2000. Auto lenders have parameters which dictate how much they will finance of the new vehicle depending upon your credit score. All lenders have rules and regulations, but to give you an idea what I’m talking about if you had a great score of let’s say 780 the lender may allow you to finance up to 140% of value of the vehicle. Now if you had a credit score of 680 the lender may only allow you to finance 100% of the new vehicle and if your score was even lower then they would only finance 80% of the vehicle which would then require you to have a 20% down payment and pay the $2000 outstanding balance which caused your loan to be upside down.

According to the above example if your loan was upside down by $9000 you would be required to pay $1000 up front because the bank would only finance $28,000 which is 140% of the $20,000 car that you want to purchase. In this scenario the bank would require you to have excellent credit. That should give you a pretty good idea on how to trade your car with an upside down loan. The best way to avoid being caught with an upside down auto loan is to put down as much money as possible and you purchase a vehicle. A good rule of thumb is 25% of the amount financed to avoid being in a negative equity position the next time you trade-in your car.

Check out the Steps to Buying a New Car

The consumers are very frustrated because they want to buy a car but the extremely low inventories are forcing them to purchase cars that they would not otherwise buy. They are buying almost anything so they can participate in the Cash for Clunkers program before the budget runs out of money.

Now on the other hand car dealers are very nervous about the Cash for Clunkers program because they are still experiencing difficulties entering information in the dealer portal of the program. Many dealers say that they have not been able to get all their sales loaded in to the system because of problems with the process and website. From a few of the dealers that I talked to, they said that none of their sales have been approved by the government as of yet.

The Cash for Clunkers official website has posted a notice that they will accept future deliveries, for people that need to wait for a new car from the manufacturer. Sounds great, but it also sounds a little scary. Is it a mess in the making? The dealers are very reluctant to process a Car Allowance Rebate System credit for a car that might not be delivered or picked up for 3, 4 or 5 weeks.

Would you, if you were a Cash for Clunkers Car Dealer?

There was also a notice posted that they would not accept any car purchase transactions that were done prior to July 24, 2009. What happened to all those dealers that were accepting the Cash for Clunkers, clunkers before the 24^th?…… The law was passed on July 1^st, 2009………MESS IN THE MAKING!!!

A quote directly from the http://www.cars.gov/ website.

“We’ve heard that dealers are asking consumers to sign agreements with contingencies when they participate in the CARS program.

CONSUMERS ARE NOT REQUIRED TO SIGN CONTINGENCY AGREEMENTS TO PAY BACK THE DEALER SHOULD THE CARS CREDIT BE REJECTED.

We’ve also heard that dealers are asking consumers to keep their “clunker” until the deal is approved by NHTSA.

IF THE DEALER HAS THE NEW CAR IN STOCK, THE DEALER MUST ALLOW YOU TO TAKE POSSESSION OF THE NEW CAR BEFORE THE DEALER MAY SUBMIT THE CREDIT APPLICATION TO THE GOVERNMENT. PLEASE REPORT ANY DEALER TO NHTSA THAT DOES NOT ALLOW YOU TO TAKE POSSESSION OF A NEW CAR PURCHASED UNDER THE CARS PROGRAM. PLEASE CALL THE CARS HOTLINE AT (866)-CAR-7891.”

Did you read that carefully?

It says that consumers are not required to sign contingency agreements to pay back the dealer……The program does not require them to sign such an agreement, but the dealer probably will.

Cash for Clunkers or Mess in the Making….You Decide!

You can read all the latest at the Official Car Allowance Rebate System WWW.CARS.GOV

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1. Car Dealer Reputation: This is probably the most important factor in selecting a car dealer. Buying a used car with fair, honest and accommodating car dealers is easy as long as you find a reputable dealership. You should check with the local Better Business Bureau at www.BBB.org for car dealers that have had numerous complaints. It is always a good idea to ask relatives and friends for car dealers they have done business with.

2. Car Dealer Services: Finding the best car dealers should not be the only factor to consider. Make sure the services the car dealers offer are a full line of services like the following:

* Full Service Department – Most car dealers provide express maintenance and service appointments to its customers.

* Financing Available – Some dealers extend their services by handling or providing assistance with the availability of financing.

* Service Specials – Each car dealership has customer service discounts. Special service rates may vary depending on the name, location, other benefits, and negotiations.

* Extended Warranty – Some car dealers offer free extended car warranties when you purchase used cars or service and examine vehicles from them.

Find the Best Used Car Dealer

3. Good Selection of Various Prices: Most people assume that the price you pay is for the whole vehicle. This is not the case when doing business with car dealers.There are other things to remember such as taxes, doc fee and license.

Most dealerships include “add-ons” that may include window etching, entertainment systems, CD changers, paint protector products, rustproofing, car interior accessories and many more. Some dealers may try and force the customers into purchasing them usually install the add-ons.

If these additional accessories that is important to you, great. However, if you prefer to purchase the car without accessories, check to see the car you want to buy includes add-ons, don’t pay for things you don’t want.

Extra fees such as dealer handling and dock fees (lingo) are charged to set up a used car for sale, maintaining the car and preparing needed documents for the car sale. These extra fees could be negotiated since all of these services would only provide additional profit for the dealer.

Aside from a respectful, dignified and honest dealer, consider these factors in choosing the best car dealer. You may be purchasing a used car, but by looking for the best person to assist you, it will lead to a good investment and a good dealer experience.

Our Newsletter for the Steps to Buying a New Car or Car Buying Questions

You can buy a used car by going to a few local dealers, checking the classifieds on your local paper or visiting various websites. Some people prefer to buy from a car dealer because they believe the dealer has checked over the car and would not sell anything that was junk. This is not always true, some dealers sell cheap used cars or as they might call them bagels or hoopdies (car lingo) in an As-Is condition.

There are a couple reasons that most everybody knows why used cars are cheaper. The first reason is that new cars that are purchased and driven the off a lot depreciate immediately. A common rule of thumb is that most cars depreciate about 20% after they are driven off the lot and then about 15%  each year for the next 5 or 6 years. So you can see why used cars can often be a good choice if they have been taken care of.

Looking for a Cheap Used Car - Beware!

Another reason that used cars are cheaper is that not everyone can afford to pay in full when buying a car. Therefore they would need to finance their new or used car purchase. However with the tightening credit market of late, financing a car with poor credit has become more difficult. These people that need to buy a car and are unable to finance their purchase need cheap cars to buy.

With the state of the economy at the time of writing this post, many banks and lending institutions have had quite a few repossessions. Being that the banks are not in the car business, they take them to the auction and often sell them for less than is owed on them. Then wise car dealers will buy these used or pre-owned cars at auction and sell them on their used car lots. Some may get serviced, inspect and reconditioned, buy some might not. Do your homework, the few extra steps can save enormous amounts of aggravation and money.

The Cheap Used Car – Beware!

Before buying a car do some research and decide what type and price range of used car you want to buy. The time spent doing some research online could save you countless hours of going from car dealer to car dealer. By doing this type of search online and checking out various dealer’s websites, you will better your chances of finding the used car in your price range and be able to pick up the right car at the right price. While you are online you can always go to Edmunds, where they will provide values and prices on new and used cars, recently they started including some used car listings.

Cheap Used Car History

You know you can check the history of a used car that you are seriously considering. You can go online at AutoCheck (opens in a new window) and type in the vehicle identification number or VIN. This can check for accidents, amount of owners, recalls, mileage verification and any other unusual history of the car. I personally would not buy a used car without a History Report from AutoCheck, this very small investment can save you from scams and any type of unscrupulous activity along with untold amounts of money down the road.

Cheap Used Car Maintenance Records

Ideally the used car you are considering should have a maintenance record, but not all do. You should ask the dealer to see it and if it is not available, you should contact the dealership or repair shop where most of the work was done.

Test Drive and Inspect The Cheap Used Car

Make sure you take the used car for a thorough test drive at different speeds and road conditions. The best thing to do if at all possible is to bring someone that is a mechanic or a friend that is knowledgeable when it comes to cars. An alternative would be to ask the dealer if you can take the car to a mechanic’s shop that you trust for an inspection.

Last but not least, what kind of warranty does the car include? Depending on the used car you are considering, the cheap used cars might not have any warranty or a very short warranty. That is something you need to consider. However there are companies that warranty almost any used car that you can purchase from directly, one good one is Smart Warranty.
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Happy Car Buying

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so much about car dealer scams. If you feel out of your element and at the mercy of your car salesman in order to get a great deal, then read on. You will learn about some of the most common car dealer scams that will help you be in control of the car buying process and keep you from getting help up without a gun.

Car Dealer Scams and Car Buying Scams to Separate You and Your Money – There are Many!

In order to have a better understanding of common car dealer scams, let me give you a little background and insider insight of how the car dealers do business on a regular basis.

Misdirect Your Attention Car Financing Scam

The car salesman and dealer try to keep your attention focused on the payment rather than the price. If you are an educated car buyer and did your research you will be concerned about the price because the rest is just math. So during any type of negotiations you will want to stay focused on the price you are paying for the new car, not the payment. While the car salesman gets you to focus on the monthly payment rather than the price they can easily have you paying more than list price for a car.

When you focus on the payment they have many variables that can change, such as interest rate, trade-in value, car buying fees and loan term. The car salesman loves to sell a car to a payment buyer because the dealer can easily pick up several thousand in additional profit from a payment car buyer.

Take Note of These Common Car Dealer Scams

The Low Balling Car Dealer Scams

Perhaps one of the most common of car dealer scams is Low Balling. Your car salesman will try to convince you, the buyer that they have the lowest price for the car so they can start negotiations and get you to focus on the payment rather than the price. The salesman will probably tell you that you can get the car that you want for a lower price and then begin to dance around the issue and start negotiating payments

Best Price Matching Car Dealer Scams-Yeah Right!

If the car dealer fails to sell you a car while you are there, they will tell you just before you leave to visit other dealers that they will match or beat any price that you will get anywhere.  By this time, you are probably sick and tired of looking around and dealing with car salesmen and common car dealer scams that you will take their offer. This is very often the case in the car business. Nobody wants to drive from car dealer to car dealer to deal with car salesman tricks and deceptive practices.

Would This Car Salesman Scam You?

Trade In Car Dealer Scams-Look Out!

When you are buying a new car and trading in a used car it is very common for the car dealer to undervalue your trade-in so they can make more profit on the overall purchase transaction. They will test drive your trade-in and talk about it making noises or something and try to find anything in order to have you accept less money for your trade in. Usually the new car buyer will accept less money for their trade-in car when they feel that they got a good price on the new car. This car buying scam is all about the customer’s perception. Once you start imagining yourself in the new car you usually soften on the amount that you will accept for your trade-in. (This one usually the dealer’s favorite scam)

The Spraying Car Dealer Scams

When you visit your local car dealer and test drive a car, but not buy a car the car dealer salesman will start calling you. The salesman will pursue you relentlessly until you finally buy a car. If you tell them that you bought a car they will ask you what you paid and then tell you that they could have sold it for less and upset you. In order to avoid this common car dealer scam give an incorrect phone number and they will not be able to call you.

The Puppy Dog Car Dealer Scams

The dealer will allow you to take the car overnight. The idea is to get you the buyer to experience ownership for a longer period of time than a test drive.  Then you can see the car in your driveway or garage, your neighbors can see it, your friends see it, and you start to form an attachment to the car and end up buying. After you have driven a brand new car for the last 24 hours do you really want to go back to the car dealer and get back into your old car to leave? Logically it might be the smartest thing you could do, but emotionally you want that new car. They got you!

Today Only Price Car Dealer Scams – This Price is Only Good Today

While you are at the car dealer, but have not bought a new car the dealer will give you a great price but they will tell you that the price is only good until the end of the day. This car dealer scam will very often make you think it is a great deal and end up buying the car without checking what other car dealers have to offer for fear of missing out on the great price they offered. This car scam is used every day by car dealers. The car dealer knows that they have a better chance of selling you a car now rather have you leave and logically examine your choices. The strongest motivation for buying a car with this car scam is the fear of missing out on a good price. The car salesman and dealer are trying use your emotions to get you to buy a car. Buying a car with your emotions is the quickest way to become the victim of a car dealer scam.

Throw It In Car Dealer Scams-Stuff You Don’t Want

In order to sweeten the deal and soften you up on price the dealer will offer to give you extras like floor mats, car window etching, fabric protection and other accessories. This common car dealer scam will slow down the price issue negotiations and take your attention away from the price and make you feel that you got something of value.

Everybody wants to feel that they got a good deal when they buy a car, the idea of being taken advantage of with these common car dealer scams is exactly the reason that so many people would rather get a root canal than buy a car. Now when you go to the car dealer you will have a better idea of their lingo and what is going on in order to be prepared to control the process and the car dealer experience. Do your car buying homework and you will be better prepared to control the car buying process.

There are many more car dealer scams and car dealer tricks and many of those are combined with dealership financing. I haven’t even scratched the surface yet, there are many more like dealer prep fee, car dealer fees and car dealer ads just to name a few. You can avoid many of these if you are prepared and follow the steps to buying a car.

You can avoid a whole lot of hassle by getting 4 FREE – No Obligation Quotes from Yahoo! Autos by CLICKING HERE NOW! Get 4 Quotes sent to you email address and you can evaluate your options without a car salesman pulling a car buying scams on you. Avoid the car dealer tricks and the car salesman tricks when you know what is going on by following the steps to buying a car.

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The New Car Spot Delivery – Convenience or Car Scam

The Last Step In The New Car Spot Delivery

At many dealerships after someone calls for a spot delivery, a new car porter will come and get the keys of the new car and fill it with gasoline and then do a final clean-up and remove all window stickers and any protective materials from seats and floor. The plan is to have the car in take home condition for the customer when they are finished in the finance office. Then when they are done signing all their paperwork the new car salesman will escort the car buyer to a delivery area where the spot delivery (car lingo) will be ready for the customer to drive home their newly purchased car.

Sounds pretty good, right. Ideally, the new car buyer is impressed by the efficiency and ease of buying a new car at the local new car dealership. That is exactly how the spot delivery process and dealership wants the customer to feel. They want you, the new car buyer to feel that the entire dealership has worked together to get your new car ready so you can drive it home as soon as possible (new car spot delivery or car scam). Then give you a quick orientation on your new car, thank you for your business and watch you drive away.

New Car Spot Delivery Ulterior Motives

The new car dealer, just like any good business wants you to be happy and impressed with your purchase and your car buying experience. However there are some undisclosed reasons or car buying scams for the new car spot delivery other than making the car buying process and experience as smooth and fast as possible.

They want you to stay busy and overwhelmed with the whole process so you do not have time to think clearly. In the car business they call it “being in the ether” (car scam). Your new car salesman, finance manager, sales manger and new car dealership does not want you to come out of the ether until after you have taken delivery and get home.

Think Twice about the New Car Spot Delivery

There is no cooling off period or fixed amount of time that allows to to return a car in most states. Once you drive your new car off the dealerships lot as part of the new car spot delivery process, you own the car. Period. If you get home and find a problem with the car, it will be taken care of under warranty, If you get home and have an issue with the numbers on your paperwork…..to bad…You signed it…..YOU OWN IT. There are NO returns. This is a very common of the car buying scams.

The moral of the story, be careful. Read everything and check the numbers thoroughly before signing. Inspect your new car in the new car spot delivery area to make sure there are no problems or issues. One you drive it away……IT IS YOUR CAR.

Our Newsletter to Avoid Car Dealer Scams and the Steps to Buying a Car or for any Car Buying Help!

The Answers to your Car Buying Questions and more!

The car buyers that gets the best deal is the car buyer that works at a dealership, has a family member or close friend working at a dealership or the informed and educated car buyer. So, if you are not related, a friend or working at a car dealership the next best thing is to get yourself educated by doing your homework so you can avoid car buying scams. These car buying statistics should help you be a more educated car buyer and understand the thinking of the car dealer and car salesman.

Car Buying Statistics Help Get The Best Deal

Car Buying Statistics and Car Scams

Car buyers will buyers will usually buy a car in 3 days or less of making the decision to buy before they even visit a car dealer.

It is said that 80% of car buyers buy a car different than what they came in to buy. Such as different color, model etc..

More than half of the car buyers visiting a car dealership that sells their preferred brand will come to look and end up buying a car on their first visit.

Over 95% of car buyers take their new car home on their first visit, it is called a Spot Delivery. (see lingo)

The car buyers that are the happiest with their car buying experience usually paid the most profit. (I don’t have a percentage on this, but it is the rule of thumb quoted by professional car sales people)

Most dealers with a good sales staff will sell or close between 20% and 30%  of all the visitors to their car dealership.

Car buyers that are determined to look at many different dealers in order to get the best deal usually buy at the second car dealer they visit.

It is said that 86% of all car buyers start their car buying research online by visiting various manufacturers and dealers websites.

Most car buyers use emotion rather than logic to buy a new car when it is somewhat close to their price or payment range, the easiest way to become a victim of car buying scams.

When you decide it is time for you to buy a new car keep these car buying statistics in mind and do all the research regarding price, model, colors, options and financing in order to get the best deal possible. After all it is your money, make sure you spend it the way you want, not the way the car dealer scams want you to.

Our Newsletter to avoid Car Dealer Scams and Your Car Buying Questions