Before You Go

We highly recommend that you get approved for a loan at your local bank or credit union before you go looking for a vehicle. Not pre-approved, but fully approved for the loan. Also, get a print out of their rates for any model year of vehicle that you would be willing to purchase. Many times customers get pre-approved for a loan, but it is for new or up to 2 model years used, only to end up buying a 3 year old vehicle or older. Then the dealership can confuse you by showing you that the vehicle you're looking at doesn't qualify for the pre-approved rate. This, and several other circumstances can be avoided, by getting a list of rates for all model years and terms you would consider. If the dealership can beat the rate, and you feel comfortable with it, then take the dealership's financing. However, make sure the terms of their loan are the same as yours, so you're comparing apples to apples. Even if the dealership receives a small kickback from their lender for the financing, a lower rate to you is a lower rate and, therefore, less interest paid over the life of the loan on your part Get mentally prepared. Buying a car is a significant time investment. As much as we would like it to go much faster, it just doesn't work that way very often. So, be prepared for a marathon, not a sprint. Lastly, make sure you've ran several financing scenarios on an auto loan calculator website to get an idea of what payments would be like on different amounts financed (unless you're paying cash - which we don't recommend - see our section about this at the bottom of the page). This will help you recognize if the dealership or finance manager is trying to "hide" unnecessary items in the deal.

At the Dealership

Never talk about down payment or monthly payment until you're in the finance office. Do not mention to the salesperson whether or not you're financing or paying cash. These topics will come up very early in the buying process, as these help the dealership make more profit. The only thing you want to focus on is the out-the-door (OTD) price of the vehicle you want to purchase. Make sure the OTD price includes only the sale price of the vehicle, the trade-in value of your vehicle (if applicable), sales tax, title fee and doc fee. There may be other state specific fees depending on location. For these fees, ask the finance manager if they are mandatory for the purchase of the vehicle. Sometimes dealers add fees, that aren't required for purchase, but they'll tell you they have to be included. If the title work can be processed without the fee, it's not mandatory. Once all of the fees are settled proceed to discuss financing options from the dealership if you choose. Let them beat your rate, if possible, and take whichever avenue you wish. When it comes to the additional products offered for sale in the finance office (other than the extended warranty which we hope you purchase from Warranty Direct): GAP insurance, Pre-paid Maintenance, Interior/Exterior Sealants, Windshield Repair/Replacement, Key Replacement, Tire & Wheel, Theft protection, etc., we're not against the purchase of any of these, however, we do object to the massively overinflated prices of these products (just like their extended warranties). Most of these products have exorbitant profit built into them. Below is a guideline of the relative costs of the above listed finance products (these costs vary between dealerships and product providers and are not to be used as actual): GAP Insurance - $350 cost for the longest loan terms of 84-96 months (less for shorter term loans) Pre-paid maintenance - This is difficult to quantify as some dealers may price this internally vs using an external or factory sponsored program. So, we recommend breaking down the services against the retail cost from their service department. Int/Ext Sealants - $300 (if it includes a minimum 5 year warranty. Less if not) Windshield Repair/Replace - This is another product with potentially significant discrepancies depending on whether it's repair only or both repair& replacement. However, $500 is a good number for repair & replacement coverage. Less for just repair. Key Replacement - $250 Tire & Wheel - $400 Theft Protection (Window Etching) - $100

Paying Cash - This is only our opinion, and not to be used as, or considered to be, advice. Consider the following scenario: The option to invest money in a company's stock is presented to us, but it is disclosed that the company's stock would most likely (with a high degree of certainty) go down significantly over the next few years, would we invest our money into that company's stock? Our answer, of course, would be no. Let us now assume we needed to buy that company's stock even though we knew the stock's value would most likely go down, but we could borrow the money to buy the stock instead of using our own. Now, it's not our money subject to the likely depreciation of the stock, it is someone else's money being depreciated. The stock in the above scenario represents buying a new vehicle. Why expose your money to depreciation when you can expose a bank's money to that depreciation? Of course, we understand that you're paying interest on the borrowed money, but, in our opinion, the interest paid over the life of the loan is significantly less than the level of depreciation of the vehicle over that same time period. In closing, this is only information designed to help you. So, in the end, you must choose whatever option(s) are best for you.