The Auto Loan Insider

Introduction ................................................................................................................................. 5-6

Chapter 1 - Buying Your Car  ...................................................................................................... 7-8

Chapter 2 - Know Your Credit  ............................................................................................... 10-14

Chapter 3 - Another Way Dealerships Make Money..................................................................15-23

Chapter 4 - Finance Manger's Sales Strategies   ....................................................................... 24-29

Chapter 5 - Come Prepared to Beat the Dealer  ....................................................................... 30-32

Chapter 6 - The Finance Office ................................................................................................ 33-39

Appendix A - ........................................................................................................................... 40-41

Appendix B - ............................................................................................................................42-43

 

 

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Please note that much of this publication is based on personal experience and anecdotal evidence. Although the author and publisher have made every reasonable attempt to achieve complete accuracy of the content in this guide, they assume no responsibility for errors or omissions.  Also, you should use this information as you see fit.  Your particular situation may not be exactly suited to the examples illustrated here.  You should adjust your use of the information and recommendations according to your personal situation.

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Copyright © 2007. The Auto Loan Insider.  All rights reserved worldwide.

 

Introduction

Congratulations on your purchase of the Auto Loan Insiders e-guide!   This guide is broken down into simple and easy to understand instructions.  Although this is primarily a guide to help you understand auto financing, we will give a brief overview of auto buying as well.  After all, you can’t finance your car until you buy it.

 As we begin, keep in mind that I’m not anti-car dealership or believe dealerships should not make a profit.  I’ve been in the car business for 14 years and have met many good and honest people along the way.  I think it’s actually a good business, providing a needed product to you the customer.  But like many businesses, there are some negative practices that can affect the consumer.

This guide is not a means to give you information so that you can “stick it to†the dealership.  Dealerships must be able to make money and therefore, won’t do business if you “low ball†them.  For example, if it cost a dealership $14,000 to own a car, they are not going to sell it to you at $14,000 to break even.

On the other hand, too often the dealership’s “right to a modest profit†turns into greed.  When they see the dollar signs they’ll try taking advantage of the costumer, making a lot of front-end profit (sale of car) and back-end profit (finance of car).  Dealers can do this because customers come unprepared and uninformed.  After you read my guide, you will have the insider knowledge of how the dealerships make their profit, enabling you save hundreds, even thousands of dollars.       

  The purpose of this e-guide is to ensure that when you walk into the finance director’s office, after buying your car, you walk in with confidence, knowing how to save money on financing.

Chapter One

Buying Your Car

     When buying cars, you really should know the market.  The auto-market has a great influence on the price at which dealers can sell their cars.  Vehicle prices are affected by our economy.  For example, when the overall economy is good and gas prices are low, small/compact cars sell for below trade-in value and large cars/SUVs go for higher than trade-in value.  Just the opposite happens when the economy is not as strong.

Used Cars:

Dealers make most of their money on used cars, so do your research and get the best price possible.  When negotiating for used vehicles, go online and shop for it first.  The internet is your best friend when it comes to buying cars.  Narrow down your search for a vehicle to just a couple different types and do all the research you can.  Almost all dealerships have websites that list most of their used cars.  If you go to a dealership, write down the vehicles you are interested in, as well as the listed price.  Don’t buy anything yet!  Go to their website and compare prices.   Generally, dealerships mark internet prices much lower than the car-lot, and newspaper prices. 
        
        Once you have the internet price, go online to www.nada.com (NADA stands for National Auto Dealer Association).   From here, plug-in the researched car information and find out the trade-in value.  On average dealerships buy their cars for approximately $500 to $1000 under the trade-in value.  On average, they will accept a $1000 to $1500 profit on a used car, while their goal is to make $3000 to $5000 gross profit. 

If you know the NADA trade value, you will know approximately what the bottom-line price is.  For example: The dealership gives you a price of $14,900 for a car you are interested in.  NADA trade-in value is $12,500.  You should be able to negotiate for a price between $13,000 and $14,000. 

This is not an exact science, but it should help you make a reasonable deal with the sales person.  If you are not very comfortable and confident in buying a car, don’t let the sales person or manager pressure you into buying at that moment.  One of the dealer’s oldest tricks is to get the customers to buy on impulse.  “If it feels good buy it†is bad rationale for purchasing a car.  Your guiding motto should be “If the price is right, buy it.† It’s good to wait a day or two if you are not 100% sure.  Waiting a day will allow you to do additional research on the car if necessary. 

New Cars:

New cars are a lot easier to buy than used because the prices are standardized.  90% of the time, you can buy a new car at invoice or even slightly below invoice.  You can find the invoice by going to the manufacturer’s website or by asking a sales person.  Dealers are under pressure from the manufacturers to sell, so they are willing to take minimal profit.  Generally, dealers make very little profit selling new cars.