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Car
Buyers' Worst Mistakes How much money do you think educated car buyers can save over uneducated buyers when buying the same car? Would $5,000 get your attention? Not long ago, I was involved in an undercover filming at a dealership where consumers paid that whopping difference on the same car. And the difference in the customers? One couple made the "big mistakes" outlined here; the other didn't. While you may not save this much money, you'll save a bunch if you avoid these classic car-buying errors.
Big mistakes, big bucks out the window. We like to help you preserve your money --that's what credit unions are all about. Avoid these mistakes, and put that money to work rather than throwing it away. Editor's note: Remar Sutton's car-buying tips have been featured on "Good MorningAmerica," "Today," "20/20," "Nightline," and in magazines such as People, Newsweek, andCredit Union Magazine. He's President of the national Consumer Task Force for AutomotiveIssues. He writes this column exclusively for credit union members. Five Tips for Buying a Used Car Buying used can make smart money sense--if you follow these five easy tips:
A tip: Mid American Credit Union finances used cars at new-car finance rates. If you're in the market for a new car, you'll find several financing options. It's nice to have choices, but they can be confusing or downright expensive. In the end, you may be better off with conventional auto financing from Mid American Credit Union. These days, more and more dealers are offering low-rate loans or cash-back rebates. Most low rates that dealers advertise are for short-term loans. For example, one dealer offers 1.9% financing, but only on two-year loans. A new $20,000 car with a $2,000 down payment will require $18,000 financing. That translates to an astounding $765 monthly payment -- way out of reach for most buyers. Or, if you choose the dealer's rebate plan, you forego the low interest rate loan but get a $1,500 cash rebate. Adding the rebate to your down payment can make Mid American Credit Union financing very attractive, because the larger down payment reduces the amount you need to finance. Which alternative is best? Calculate your total finance charge and monthly payment after you deduct your down payment plus the rebate--call a loan officer at Mid American to help. Then compare your results with the same figures if you take the dealer financing but finance the higher amount. Or, if you own your house, a Mid American home equity loan might look even better. The reason, of course, is that home equity loan interest payments can be 100% tax deductible (consult your tax adviser to see if you're eligible). Whatever route you take, beware of the "hidden costs" in dealer financing options. First, the low-rate loans and rebates are almost always available only on slower-selling models. These cars may have lower resale values. Second, the low-rate loans can have prepayment penalties and can require larger down payments. Third, these financing plans usually are limited to dealer stock -- you may have to sacrifice the color, style, and/or options you want. That's important, too, because unwanted options easily can add 25% to 30% to the sticker price of your car. Finally, treat the purchase, financing, and trade-in as three separate transactions. One advantage of doing so is that you're less likely to become confused -- the dealer can't quote different prices for different financing options. So, don't be smitten by auto dealer low rate advertising --visit or call Mid American Credit Union first to explore financing options. Taking Delivery of Your New Car The wait is over. Your new car is in. Taking delivery is an exciting and emotional event. But don't let your enthusiasm distract you from your purpose: Make sure the vehicle in front of you is the vehicle you bargained for. Before signing a receipt and paying for a new car or truck, verify that:
When you placed your order you specified make, model, equipment, options, warranties, and so on. However, due to mistakes, availability, or other factors, you may not get exactly what you ordered. Sometimes options are missing. Sometimes the dealer or manufacturer makes substitutions. Check your new vehicle against your order, item by item. Don't accept a vehicle that's missing items or features, or on which inferior items have been substituted. You have the right to refuse or to re-negotiate a lower price. Also require that the seller specifies in writing all warranties and guarantees represented in your original deal. Some new vehicles are damaged in manufacturing or transit. Make sure yours wasn't. Inspect every body panel, fascia, trim item, upholstery, plastic parts, carpets, and all other interior surfaces to verify that nothing's damaged or repaired. Also test-drive your vehicle for at least 15 minutes with a dealership representative to make sure everything's operating and that there are no unexpected noises, vibrations, or odors. Some new vehicles have been used by dealership employees as demonstrators or for personal use. Make sure yours wasn't. Inspect the odometer: More than 40 or 50 miles should raise questions that deserve answers. Take time to thoroughly check your vehicle before you take delivery. That way pre-delivery discrepancies won't become post-delivery headaches. Rebate
or Low Financing? Cheap interest rates! Thousands of dollars back! Manufacturers and dealers are pushing these enticing incentives again this season, and, if you're a savvy incentive shopper, you may save a bundle. But be warned: Do it wrong, and you'll throw away those savings and even pay more. Here's what's really happening when it comes to "cash back" promotions, the most popular incentive. Rebates: Who gets the money? Rebates sound so straightforward: Buy this car, for instance, and get $1,000 back. In virtually all cases, the advertisements you see for rebates are real: The manufacturer, not the dealer, promises to send you a check after you've negotiated and bought or leased a particular vehicle. The money, in theory, has nothing to do with the price you may have negotiated on a vehicle. What should happen: The rebate money reduces what you're actually paying for the vehicle. Let's say you've agreed to pay $10,000 for a car. The manufacturer agrees to send a check directly to your home for $1,000 as a thank you. When the check comes, your total cost for your new wheels is $9,000. What does happen many times: The rebate money becomes extra profit for the dealer. The dealer convinces you to have the $1,000 rebate check sent directly to the dealership. They offer to give you "credit" for the money on the spot. But they don't really give you credit. For instance, you agree to pay $10,000; they agree to give you "credit" for the $1,000 rebate. You should owe them $9,000, but they draw up paperwork showing you still owe them $10,000. You just lost $1,000. And you generally won't see this trick occur because the sleight-of-hand is hidden in paperwork. How to prevent theft of your rebate money: Don't make that gift from the manufacturer a part of your negotiations with the dealership. Negotiate your price on the new vehicle as if there is no rebate. And then have the rebate check sent directly to you at home. Never allow the dealership to "apply" it to the amount you owe them. Will this work? It will work every time! And, believe me, you can be sure that $1,000 savings is real when you receive it in the mail. Editor's note: Remar Sutton's car-buying tips have been featured on "Good Morning America," "Today," "20/20," "Nightline," and in magazines such as People, Newsweek, and Credit Union Magazine. He's president of the national Consumer Task Force for Automotive Issues. He writes this column exclusively for credit union members. What's
the Real "No-Dicker" Dealership Story? Like most folks, you probably think dickering over price at a car dealership is as much fun as a barefoot hike on a bed of rusty nails. That's why many dealerships--new and used--are promoting no-dicker policies these days. Generally, all the major no-dicker operations promise three things:
Their systems aren't perfect, though. Money-back guarantees normally don't give you back fees and other charges, and many also charge you for use of the car. No-dicker places aren't free of pressure and salesmanship when it comes to trying to sell you financing, insurance, and service agreements, either. Even the best places will try to maximize profit on these items and aggressively try to sell you a high-interest rate loan and an unneeded warranty, if you let them. These places also can give you less for your trade-in than it may be worth, if you don't proceed carefully. How to shop no-dicker dealerships effectively?:
Editor's note: Remar Sutton's car-buying tips have been featured on "Good Morning America," "Today,""20/20," "Nightline," and in magazines such as People, Newsweek, and Credit Union Magazine. He's president of the national Consumer Task Force for Automotive Issues. He writes this column exclusively for credit union members. Shopping
with Credit Problems Ever been a little late on a payment? Or had a spell when your payments were really late? It’s happened to most of us, and you’ve probably worried about how payment tardiness affects your credit rating. That’s why you may notice a popular advertising campaign at new- and used-car dealerships: No Credit? Slow Credit? Bad Credit? No Problem! Come see us, the Credit Fixers! But don’t jump in your old buggy and head to the dealership just yet. If you really care about your pocketbook and your credit standing, read on. Why would dealers want to draw customers with bad credit? Because the dealership usually makes a lot more money on them. People worried about getting financing generally don’t argue about the price of the car or the price of financing. The result: big, fat profits--at times, thousands of dollars more profit on a person with marginal credit than a person with A-1 credit. Many dealerships even have special hardball sales tactics for these customers. "Make your money on the poor folks," one sales manager said in a sales meeting. "That’s why they’re poor." How do you avoid becoming a victim? Follow these steps:
Don’t let past credit problems make your credit even worse. Take your time, talk to the people at your credit union, and make decisions calmly. You’ll get a better price and a better credit rating, too. |
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