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As I mentioned in the Finance section, the Finance Manager will offer you a menu with some products that you can purchase at an additional cost. These will of course raise your payments. Some people would go in to the finance office with their minds already made up that they weren’t going to purchase anything additional. Some think they’re not worth it, others can’t afford a higher payment and others thought they were just junk products. Dealerships do make additional profit from selling these products and the Finance Managers make commission off of them as well. Are they worth it?

Probably the biggest product they push is an extended warranty. If you’re purchasing a new car, it will come with the standard warranty. Typically that warranty is 36 months/36000 miles comprehensive and 60 months/60,000 miles power train. Some manufacturers’ warranties may vary somewhat from that but that is pretty much the standard. If you purchase a used vehicle, if it’s a certified pre-owned, it will probably come with some warranty as well. Some used cars will not come with a warranty. Every dealership is different on what type of warranty would come with a pre-owned vehicle. Some may give a 30 day/1000 mile warranty, some cars may be sold as is.

SHOULD I BUY AN EXTENDED WARRANTY

An extended warranty is similar to buying insurance. I’ve been a homeowner most of my adult life and have paid a lot of homeowners’ insurance over the years and collected very little in return. There is usually a deductible and I could handle replacing a faulty window for a couple of hundred bucks but when I had to replace a roof at a cost of $7000, I was glad I had insurance.

It’s great that auto manufacturers put a nice warranty on their vehicles, but usually not a lot goes wrong during your warranty period. It’s after your warranty expires that you start having problems. If your transmission goes bad at 61,000 miles, can you afford a $3000 bill? So there is much to consider here. How many miles will you put on the car annually? How long will you keep the car? What’s the deductible? What does and doesn’t it cover? Usually they will offer you different levels of coverage and call them Silver, Gold and Platinum or something along those lines. Each will come with varying levels of coverage. Be sure you understand the details. Many times people take their car to get it worked on and find out that something is not covered with their extended warranty. Ask questions and have the Finance Manager go over the coverage with you.

The prices of the warranties are negotiable. Dealerships typically mark up the price of the warranties anywhere from 100-200% so there is room to deal. Shop around beforehand so you have a good idea of what’s available. You don’t have to buy the warranty at time of purchase. You can buy it later. It is convenient at the dealership because you can include it in the financing if you want but not mandatory. They may pay the warranty company $700 and offer it to you at $2100. Ask for a better deal. If you say no, it’s too expensive but you would consider it perhaps at a lower price, they can do better. This is true whether you’re purchasing a new or a used vehicle. On a used vehicle, the price and coverage available will depend on the make, year and mileage. If it’s too old or too high of mileage, an extended warranty may not be available, or may be quite expensive. But always negotiate.

OTHER PRODUCTS

The list may be long of what they’re offering. The following are some of the standard ones:

Gap Insurance – If your car is totaled and you owe more than it’s worth, this will usually pay the difference. Some though may only cover a certain percentage. Make the Finance Manager explain the details. Also, check with your insurance company to see if gap is included with your policy or if it’s available. It’s a pretty good investment and not extremely expensive but do your due diligence. If you’re putting a large down payment on the vehicle, it may not be necessary.

Exterior Protection – In my opinion, not worth it.

Windshield Protection – In my opinion, not worth it. Check with your insurance company. You probably have some type of coverage. It may be a separate deductible from comprehension or collision.

Road Hazard for Tires – Your tires on your new car come with a warranty. That warranty is usually directly from the tire manufacturer, not from the vehicle manufacturer. Like other warranties, it covers defects but won’t cover a flat from a road hazard or anything other than from a defect in parts or workmanship. Many dealerships will offer you a hazard package. Again, it’s negotiable. I always buy my tires from Discount Tire. I’ve had terrific service from them and I always buy the road hazard insurance. I’ve had to use it a couple of times and it pays off. The package the dealership offers may also include damage to wheels as well as the tires.

Again, I would suggest going in to Finance with an open mind but remember that the price on most products is negotiable.

There’s more to getting a good deal than just paying the right price for your new vehicle. Obviously no one wants to be taken advantage of, but in the finance managers office, things can get confusing. We’ll go into more detail on another page, but here are the main things of which to be aware. 

1. Watch out for “leg” – Also known as payment packing. I give an example on the Finance page.  
2. If you don’t understand, ask questions, get answers. 
3. Don’t sign what you don’t understand. You’ve been there a while, they try to wear you down. Hang in there.
4. Look at the bottom line purchase price. Make sure they don’t slip something in without you knowing about it. Some dealerships include extras in the purchase price. These may include window etching, alarms, exterior protection etc… These should all be optional and not automatic. Don’t pay for them if you don’t want them. If they won’t exclude them, go somewhere else.
5. Remember your budget. 

You’ve done your homework, figured your budget, you’re ready to take the plunge. You pull up to the parking lot at the dealership and you’re not sure quite what to expect. I worked at a fairly large store with 40+ salespeople and depending on the day of the week and time of day, the number of people standing outside would vary. We had three teams of salespeople but only Friday, Saturday and Monday would all 3 teams be on hand and with staggered shifts. I worked in Colorado and there are no car sales on Sundays. We used no system of “ups” so it was just up to the salespeople to determine who would greet the guest. That worked out pretty well. Some people would make comments that we looked like a bunch of vultures standing out there. Don’t say that. Believe it or not, car salespeople are humans with feelings, trying to make a living. The better relationship you have with your salesperson the smoother the deal will go. No sense starting out with name calling. Again, salespeople are humans, most are nice, friendly and easy to get along with. But as in all walks of life, you don’t get along with everyone. If you feel like the salesperson isn’t doing it for you, you can always request to work with someone else. That didn’t happen very often at our store, but it did sometimes. If you’ve read the other sections I’ve written, hopefully you took my advice and contacted the internet department of the store. You’ll get the best pricing that way and they should set you up with a salesperson with whom you would have already spoken, and they may have a car or two ready for you to look at. Communication is very important when purchasing a vehicle. Make sure the salesperson listens to you and understands what you’re looking for. If they’re doing their job, he/she should be asking questions like, who’s going to be the main driver, what will you use the car for etc…  

Once you’ve been through the pleasantries and taken a look at the car that you will possibly purchase, the next step is to go for the test drive. At this point you’ll be asked for your drivers license and some stores will ask you for proof of insurance. Standard procedure. They will probably have a standard route they take people on, but don’t be afraid to ask if you can vary from that. Once you return to the store, you’ll give your opinion and if it’s the car you want, the salesperson will ask if you’d like to take a look at some numbers. Hopefully you’ve done your homework, have a budget and a pretty good idea of what the payment is going to be. You’ll be asked if you want to put some money down, what kind of term(months) and probably what you think your credit is like. At some point in the process if you decide to proceed, they will have to pull your credit, but that’s not necessary at this point. Typically the salesperson will come back with 2-3 options. Perhaps 48, 60 and 72 month terms, with different down payment options. At this point, the more homework you’ve done, the better off you’ll be. Did you run some payments on a payment calculator? You can find these easily online, and in fact, most dealerships will have one on their website. If you did, are the payments in line with what you thought they’d be? They should be close, probably a little higher than what you had looked at. Especially until they’ve actually seen your credit. They probably figured the payments on the high side. They would rather figure the payments at a higher interest rate and then give you good news when they find out you have really good credit than figure them at a low interest and then find out your credit sucks and your payment is going to be $65 higher. Now it’s time to start getting serious. Remember, HOMEWORK. Is the price at or near what you thought it would be?  Could you do a little better? If your research shows that you should be able to buy this vehicle for $27950 plus fees and taxes and you’re at $28500+,  tell them what your research says. If you’re at $27950 or less, you’re in good shape. You’re probably not going to do much better. It doesn’t  hurt to ask but keep in mind they do have a bottom and if you’re at what you think it should be, you’re not going to squeeze much more out of them. Many times people would want another $100-500 off and say “What’s $500 to a store like this”. Well, we sold between 600 and 700 cars a month. If we gave just another $100 off, that would be $70,000 profit out the door. Another $500 off would be $750,000 out the door. So once they’ve gotten to what their bottom price is, they’re not going to be willing to give up much, if any, more. Now you’re happy, they’re happy, you’ve bought yourself a car. Well, not quite yet. Now we start the paperwork. 

You’ve agreed to a deal. Fantastic. Hand me the keys. Well, not quite yet. We’ve got some paperwork to do. This will take some time. Even if you’re paying cash, there is still quite a bit of paperwork to go through. If you’re financing, there is of course the loan paperwork as well. Are you going to be on title by yourself or with someone? If there are two of you, both will of course have to fill out credit applications. Hopefully you knew your credit score ahead of time and the payments will have been figured pretty close to what they should be. If they pull your credit and find out it’s not so good, your payment may go up. The finalization of all that will take place in the finance managers’ office, not there at the salespersons’ desk. In most stores, the salesperson will help fill out all the preliminary documents then turn it in to the finance manager for printing and preparation of some other documents as well. Once they call you in to the finance office, the manager will typically get the title work out of the way before starting with the loan paperwork. Normally they will then show you a menu of some additional products available for purchase. If you buy any of these, of course they will affect your payments. These will include, as well as other things they may offer, extended warranties, exterior protection, key replacement, window etching, service contracts, road hazard protection for tires along with a few others. Every store is different in how they present these options. You’ll have these presented to you if you’re paying cash as well. They are all optional. Are they worth it? I’ll cover that on another page titled “Aftermarket Products”. I’ll give you my opinion, and that’s all it is, an opinion. Someone else may think differently, but my common sense is pretty good and I’ll let you know what I think of the most popular items. It is the finance managers’ job to sell and they do make commission usually on each product. Nothing wrong with that, but some are more aggressive than others. At times, it might feel like they are beating you over the head to get you to purchase something. Just say no if you don’t want something. I do suggest however, that you do at least look at what they have to offer. Many people go in there with their minds made up to just say no. Again, I’ll go over some of these on another page.

Stores make commission on interest rates. Many lenders allow dealerships to mark up the interest in order to make a commission on the higher rate. Every state has different rules about how much a dealership can mark up the rate. That’s why it’s important for you to shop around for rates before going to the dealership.

EXAMPLE:

You’re financing $25,000. The finance manager sends your deal to 3 institutions. They get an approval back from all 3. Lender 1 has the best rate. They’ll do it at 4.9%. This lender allows the dealer to mark up the rate up to 2%. The finance manager shows you your payment for 60 months to be $494 at 6.9%. You had already agreed to that at the salespersons’ desk so you think it’s all good. Had they given you the approved rate of 4.9, your payment would be $471. Not a big deal. But, $23 a month over 60 months is $1380 in extra interest. The dealer would then receive all or a portion of that back to them as profit. Or perhaps they want to sell you an extended warranty for $1200. You say no thanks. They say, what if I could keep your payment the same and include the warranty. Good deal huh? Well, then they give you the interest rate you actually qualified for and they make their money on the profit of the extended warranty. Not illegal but sneaky. That’s why you should walk in armed with a good idea of what rate you are eligible for. If you know your bank would give you say 5.25%, the dealership would rather you go directly through them so then they give you the 4.9%.

It’s obviously more convenient to go through the dealerships’ finance department but not mandatory. You can always go to your bank or credit union but may not drive home with the car. You have to take the paperwork to your institution and come back with a check. Also, it’s quite possible that the dealership works directly with your bank or CU and at the push of a button they send the paperwork to your institution.

1. Homework – Get a good idea of the vehicle you want including all options
2. Pricing – Check truecar.com, edmunds.com etc…to see what others have paid for the same car in your area.
3. Call the dealerships’ internet departments. This is typically where you’ll get the best price up front. Call several different stores and let them know what prices you have gotten from other locations. They want your business and don’t want you to go somewhere else. All dealerships pay the same price for identical cars. If you bluff them with a ridiculous price, they’ll know.
4. Check your credit score. Pretty easy to get these days
5. Know what the going interest rates are according to your credit score. Call your bank or credit union
6. Know the manufacturers’ incentives. Usually available on dealer web sites
7. Make an appointment. This can shorten your time. Salesperson can have a vehicle or two ready for you to look at
8. Test drive. Always
9. Stick to your budget. Have a tight range of where you want to be, payment/term and stick to it. Don’t tell the salesperson the most important thing is payment. They can always get you to the payment you want, just at a longer term or with more money down.

Wow! That’s exciting. Who doesn’t love getting a new car. It doesn’t have to be new new, but new to you. It’s also a little, or a lot, intimidating. It’s a large purchase. They say that for most people, it’s the second largest purchase they’ll ever make. And if you’re not a homeowner yet, it will be the largest, at least so far. Where do you start? So many questions. What car should I buy? Is the car I like a good one? Do I qualify? How much do I need for a down payment? New or used? Buy or lease? It can be overwhelming but it doesn’t have to be. I’m going to show you a step by step plan that will make your experience, simpler, faster and hopefully fun and enjoyable with a final decision that you can be happy with for years to come. 

The first thing you need to do is figure out is what car you want to buy. One of the biggest complaints people have when purchasing a vehicle is how much time they spend at the dealership. Buying a car does take some time. It’s not like running in to get a gallon of milk. Don’t go in to the dealership at noon to buy a car if you have a dentist appointment at 1p. You’re going to be late for the dentist. Give yourself ample time to make sure you see what you want to see and get all your questions answered.

There are websites that will advise you to get pricing from 5-7 dealerships. Some of you will take the time to do that, others won’t. Depending on the market you live in, you may not have that many dealerships available to you. You may be someone who wants to look at numerous different models. Or perhaps you have it narrowed down to 1 or 2 that especially appeal to you. Some people arrive with a stock number in hand. Others know exactly what they want although they may not have a stock number. Others come in with no idea. They want to drive this, and that, car, truck, SUV. Those are usually the people that spend hours and hours at the store.

Nowadays, most dealers have pictures of every vehicle on their lot on their website including descriptions of the equipment. Once you have figured the model you want, then you can start to narrow down the exact options you want and start pricing. Check out the PRICING page for more info on that. The more time you spend doing your homework, the less time and the easier it will be at the dealership. Obviously you want to check everything out in person eventually like, colors, interiors etc….  And of course drive the car. But if you have a good idea of what you want in general, it will be to your advantage. 

You also need to do your homework on financing. What’s your credit score? How much can you qualify for? What will my insurance cost me?

CREDIT SCORE

The higher the credit score, the easier everything gets. Does this mean you have to have an 800 score to buy a car. No, of course not. However, the lower your score goes, the harder it gets. Lower scores pay higher rates. You may have to put more down or not qualify for the car you want. That’s reality. You can still get into a car with less than perfect credit. And you can still get a decent rate with fair-good credit. Especially if you have good car credit. There are different ways to get your credit score. My bank supplies my FICO score online as does American Express. Keep in mind that there are 3 major credit companies(TransUnion, Experian and Equifax). They may not have all the same scores for you as they may not all be receiving all the same information. Credit Karma uses different metrics so it may be different from the others as well. Some lenders may prefer one particular agency. Others may pull all 3 and take the highest. It’s a good idea to know your credit score at all times but especially if you’re looking at making a major purchase like a car or house. Once you have your credit score, then you can check with your bank or credit union to see what kind of interest rate you might get.

PAYMENT

How much can you qualify for? And realistically, what percentage of your income should you personally allow for a car payment? There is some gray area here. The better your credit and the more money you make, the more flexible the lender is going to be. A good rule of thumb is to try to keep your car payment between 10-15% of your gross income. There are a lot of things to consider here. What’s your housing cost? If you’re young, your insurance will be higher. How much down can you put? You don’t want to be car payment poor. If you make $2000 a month, you don’t want to be strapped with a $500 car payment. You need to eat on a regular basis. You probably wouldn’t qualify for that anyway. But you should be able to qualify for a $200-300 payment.

My name is Fred Byers. I currently reside in Pawhuska Oklahoma after spending most of my life in Denver Colorado. I’m retired. From what? Well, I had a quite diverse professional life. I actually started out in life in the construction industry. I started as what is known as a hod carrier,(does all the grunt work for masons) and progressed into a mason for about 10 years. When I was 31, I decided that I didn’t want to be a bricklayer in my fifties so I went to broadcasting school and became a radio disc jockey in Denver. I stayed on the air for 7 years and then got in to the sales end of broadcasting. I took a short break from that and sold cars for a while but returned to broadcasting and continued with that until I lost my job at the age of 59 and decided to go sell cars for the remainder of my working life. I was very fortunate to land a job with a good store, great company and worked with a good group of guys until I decided to retire. Selling cars is certainly not for everyone, but I enjoyed it and now want to use my experience to help you and others who find purchasing a vehicle to be stressful, intimidating and at times scary. Hopefully I’ll help make it a much more enjoyable experience.

How much should you pay for that car? New cars are pretty easy to price out these days. There are a number of websites that offer pricing. To name a few, truecar.com, edmunds.com, nadaguides.com among others. It can get a little tricky though. The first thing you have to make sure of is comparing apples to apples. You may be at the dealership telling the salesperson that your neighbor didn’t pay that much for the same model they just purchased. Apples to apples. Easiest way to compare is MSRP to MSRP. If you think you’re buying the exact same car but your MSRP is $900 higher, than the vehicle you’re looking at must have more options. Keep in mind also, that perhaps your neighbor is fudging a little on what they paid. Everybody likes to think they got the best deal and it’s possible they’re fibbing a little. Manufacturers often times offer factory incentives on their vehicles. When you’re pricing the car out online, you may see $30,000 MSRP but the average being paid in your area is $24,900. A discount of $5100 off MSRP. It could be $2100 discount from the dealer and $3000 manufacturer rebate. However, the manufacturer may be offering an either/or discount. 0% financing for 60 mos./or a $3000 rebate. Which is better? There are a number of factors to consider here.  This is where knowing your credit score comes in handy. What credit score is needed to qualify for 0%? If you don’t qualify for the 0, but still qualify to buy the car, $3000 is a nice discount. If the manufacturer is offering 0%/or a $1000 discount, the 0% is probably the way to go. So a lot of factors to look at when determining best price. We’ll go into more detail in financing. 

Welcome to the wonderful world of car buying. Yes, I know that some of you would rather have a root canal than think about buying a car. We’re going to change your attitude about that and help you through the entire process. It’s 2019 and you have more resources at your disposal than ever before. With my help and a little online research, you’ll find that buying a car can and should be fun. I’m a retired car salesperson and will be offering firsthand, behind the scenes information about everything from meeting your salesperson to taking your vehicle in for your first service appointment. Let’s get started.