Monthly Archives: April 2018

Only Three Things Worth Buying in Finance

In a perfect world, a finance manager, business manager, or whatever title is given to the person in the back that prepares paperwork will be just that: the person that prepares paperwork.

In the real world, the finance manager is probably one of the best and most persistent salespersons the consumer will ever meet.

They aren’t necessarily bad people. Most are exceedingly friendly and professional, dressed to impress and possessing an easy way that puts people at ease. To a car dealership, the finance manager is the last and best chance the dealer has to make money on a vehicle sale.

There are dozens of methods that the finance manager can make money from you. The good part is that not all of the ways are bad and not all of the products that they will offer are rip offs. In most cases, though, some of the offerings are just not worth the money the consumer will pay.

Instead of going over the details of the different products and suites that aren’t really worth it, here is a short list of items that a consumer should really question and investigate before purchasing:

Undercoating, paint sealant, oil change plans, VIN etching, scotch guard, preowned vehicle leasing, personal vehicle insurance, and tires for life.

There are others that are somewhat legitimate like the ones listed above, and there are some that are downright scams, but we’re here to focus on the potentially good ones.

Dealerships such as Oklahoma City Ford Dealers and other honest dealers around the country offer a basic, short list of products that consumers should consider:

GAP INSURANCE

Some call it a scam, but most who have totaled a vehicle with a lien on it can attest to the wonders of Gap Insurance. In essence, it covers the “gap” between what a vehicle is worth and how much is owed when a car is totaled. For example, if someone totals their vehicle and the insurance company agrees to pay $7,000 while the driver still owes $11,000, gap insurance is designed to cover it. Without gap, the insurance company will be forced to leave the remaining $4,000 to be paid out of the customer’s pocket.

Usually ranging from $300-$700, it is a good investment for consumers who (1) finance vehicles without securing equity by putting a lot of money or trade equity down on the car, (2) drive more than 10k miles per year, and/or (3) purchase new vehicles, especially high dollar ones.

EXTENDED WARRANTIES

Not all warranties are created equal. A consumer who plans on keeping a vehicle beyond the factory warranty should strongly consider an extended one.

Research beforehand into some extended warranties available online for the vehicle you are considering. Know the cost, deductible, what is and isn’t covered, and whether a prorated balance is refundable if the vehicle is traded, sold, or totaled.

Armed with this knowledge, it should be easier to get a good deal on a good warranty, whether it’s the one that the finance manager offers or a separate one.

CREDIT LIFE AND DISABILITY

Most life insurance policies are designed to help with cost of living. Debt should not be paid through standard insurance.

In case of tragedy, having a credit life and disability plan will help to pay off the balance of a vehicle loan. There are few things worse after dealing with a tragedy than to find that the loved one also left major bills and debts behind.

Final Thoughts

Not all “bad” items are that bad. Some may fit into a consumer’s needs. Not all “good” finance items are good, either. The key is to do the research before getting caught off guard by a finance manager ready to spray a $20 can of Scotch Guard in your new or used car for an additional $179.

Car Safety Tips to Give

According to the 2000 census, more than 112 million people drive or carpool to work daily. That number is certainly much bigger today, 10 years later. With all these people on the road, drivers need to take every precaution to ensure they arrive safely at their destinations. Here are some tips to heed for safer car travels, whether it be to work, for leisure, or taking the kids to school.

Know Your Route

Before hitting the road, take the time to map out your route. Motor clubs provide auto travelers with maps and detailed directions to their destinations. Be aware of traffic, construction and weather advisories along your route so you can make alternate plans should these conditions affect your drive. A GPS can be a really smart purchase. Knowing exactly where you are going step by step allows you to pay more attention to your surroundings when driving in unfamiliar areas.

Reduce Driver Distractions

Traffic, construction and careless drivers are distractions beyond your control. However, you can reduce the risk of an accident by decreasing the distractions inside your vehicle. Don’t use your cell phone while driving and certainly don’t try to send or read text messages. If you have a GPS, don’t try to set it while driving- pull off the road to change any settings. It takes only a couple seconds of distraction to possibly end up in a terrible car accident.

Have an Emergency Kit

In addition to standards such as a first aid kit and battery jumper cables, consider adding a safety light to your vehicle emergency kit. A safety light serves a dual purpose: it shines like a flashlight and alerts like a flare. The light can be used as a bright spotlight or as a blinking safety light to warn oncoming traffic of a motorist’s presence. Also consider having a tire inflating gizmo. Can come in really handy if a tire has deflated, and you just need to get down the road to get it fixed properly.

Preventative Maintenance

Keeping your vehicle properly maintained is absolutely essential to have a safe handling car. Follow all the recommended service intervals found in your vehicle owner’s manual- always monitor hoses and belts, and check filters, spark plugs and fluids. Also, be sure tires are properly inflated and rotated, and the gas level is sufficient. Get on a good preventative maintenance program with your local auto repair shop to ensure your car is always safe to drive.

Car Buying Tips

Having car buyers at the dealership, at the negotiating table, excited about a vehicle and ready to make a purchase is the only time the dealership has a chance to really make some money. The best way they can do this is by making consumers focus on payments.

This is where the four-square worksheet and other tools like it come into play. Usually the four squares show their price, the value of the trade, the cash down, and the payment. Here is a normal method of presenting the deal:

The car salesperson walks in and puts the sheet in front of you, facing you. They point to each square as they go over the numbers.

“This is for ours… this is yours… with $3,000 down, your monthly payments would be $789 per month. Initial here and I’ll go get it cleaned up!”

Whoa, whoa, whoa! $789 per month? $3,000 down? What happened to zero down and $249 a month like the advertisement said?

And just like that, they have you. The last two numbers were so outrageous and spoken out loud. The first two we skimmed over and never spoken. You’re ready to leave, but before you can, the salesperson will identify the objection, which will usually be the payment and money down, and try to fix it.

After a few rounds of back and forth, they relent to $500 down and $279 per month, magically making the numbers acceptable for you. Still, at no time did they adjust the top numbers. They simply kept the customer focused on payment and cash down. They won.

The best way to prepare for car shopping and get the best deal is to focus on trade difference – the difference between their car and your car. You can also consider “total financed amount”, which is trade difference plus your trade-in’s payoff.

Follow these steps and you’ll avoid getting redirected in the direction the dealership wants you to look:

1) Determine your likely interest rate. Better yet, get pre-approved at your bank, credit union, or other lending institution. The dealership will probably be able to get a better rate, but knowing what the current rates are for your credit situation and for the kind of vehicles you are considering will help dramatically.

2) Determine your monthly budget, desired down payment (if any), and desired term. Find a loan calculator and plug in numbers until you know match your budget. If you know going in that a total finance amount of $15,000 with zero down will be $311 per month for 60 months at 8.9%, you will be able to find the car that fits your budget.

3) Get all the numbers you need ahead of time. If you know how much vehicles you are considering are selling for at local dealerships, and you know how much your trade is probably worth, and you know your exact payoff, you can determine what your target trade difference and amount financed will be.

4) Try to get your trade evaluated first. Many dealerships won’t do it, plus it won’t help you in negotiating (despite other articles that claim the contrary), but it will tell you how much vehicle you can consider at that car lot. Do not make the mistake of trying to find the dealership that offers the most for your trade up front. If your car is worth $5,000, some dealerships will say it is worth $4,000, while others may say it’s worth $8,000. In reality, they are all giving approximately the same, but you’ll find that the dealership giving $8,000 is probably $3k-$4k higher on the price of their vehicles. Again, focus on trade difference.

5) As rough as it is to go to multiple car dealers, it is a good idea. Gather trade differences on similar vehicles, then go back to the dealership with the best one. Then ask them to make it even better. They may or they may not, but it never hurts to ask.

6) Talk payments with the finance manager only, and only after the trade difference is acceptable. If you know that a $15,000 loan will be around $310 per month, there is no reason to argue it with a salesperson who comes with numbers showing the $15,000 loan at $370 per month. They want you to agree to leave a “cushion” for finance to sell you a warranty, bump your rate, or sell some other products. Again, if the trade difference is acceptable, worry about the rest of the numbers with the finance manager.

7) Be strong. Focus on the prize. Do not let anything or anyone distract you from the important number: trade difference. That is the only number you need to negotiate on the floor. Bring a copy of this article if you must, but make sure they know you know what they know. You know?

If you can find an honest car dealer that works strictly with trade difference, you’ll have a much more enjoyable experience.

It is an extremely competitive market, more so than ever before. The internet has made it increasingly difficult for car dealerships to make money.