Francisco Cortes Tips to Avoid Dealership Financing
Majority of shoppers do not take the time to check other car financing options before heading into a dealership. This gives the dealer an edge over the car sale. They swoop down to make money off your transaction.
Revoked Car Delivery
Spot delivery scams are not done by all dealers. However, they are on the rise. A dealer will arrange for financing and let you take the car home. He calls you up a few days later to inform you the financing fell through and you would have to return the car.
When you reach the dealership, the dealer pressurizes you into signing a loan with higher interest rate, larger down payment or both. You end up paying more than you expected with the dealer making a nice, fat profit. Most dealers are offered gifts or incentives by financial companies to drive business their way.
Inflating Car Payments
Packed payments are the most common car financing scam. It works in the favor of dealers because most shoppers do not focus on the overall value of the car instead look at only the monthly payments they need to make while arriving at a buying decision.
You should always arrange your own financing before going to a dealer to avoid this scam. If not, make sure you look at everything packed in the final car value and loan amount.
No Loan Obligations
A dealership is under no obligation to provide you the lowest rate or show a list of lenders offering you a loan. Dealers take advantage of this fact and present an offer that best suits them and not you. Dealers have to pay acquisition fee to the lender. They also take into account their finance markup while presenting a loan offer.
Faking the Credit Score
Most car buyers become desperate when they feel the car of their dreams slipping out of their reach. Dealers take advantage of this desperation that car shoppers get when they think they will not get financing. You are most likely to take up a high interest offer when you are not thinking straight. Many car shoppers do this without realizing that they made a huge profit for a dealer.
Increased Buy Rate
A dealer shops your loan application to various lenders to get different quotations. This is called the ‘buy rate’. However, dealer financing is not obligated to provide the same interest rate as the lender quotes to the dealer. A dealer is allowed to legally pile on his administrative charges and other fee to this rate.
Francisco Cortes always advises to get your financing lined up before you hit the dealership.