New Car Rebates and Incentives - What's Dealer Cash?

  An important reason to explore new car incentives and rebates on your own is because of a rebate which is not known by all consumers. It is referred to as dealer cash. The difference between this rebate vs. any other cash rebates on a list of incentives is that it can be given at the dealers discretion. A car dealer can choose to give away all or some of this money or none at all. Any of this rebate that is retained by dealer from a car deal goes straight to their profit. Now some stores are real up front about them and roll them into sales prices and run an add campaign that way but I can tell you there were plenty of times I would block it out and act like it didn't even exist if there was one. Pretty crappy of me huh? It's the cold hard truth though, I won't say I was proud of it. If you don't research your incentives before going in to the car dealer at least make sure you bring dealer cash up when discussing new car pricing. You might have to prod and pry but it is likely they will come clean pretty quickly if there is any dealer cash to give. If they are smart the embarrassment and bad word of mouth won't be worth it to them. I am going to go out on a limb here and say most dealers are not trying to retain this money like they used to because the Internet has made the car buying experience far more transparent than it has ever been. Knowing what it is and if it exists on the particular car you are buying though is still absolutely necessary to ensure you are getting the best possible deal you can be. Let me make your car shopping experience easy now by sharing a link to all of the car incentives available in your region.

>>>>>New Car Rebates and Incentives<<<<<

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Credit Life and Disabillity - Financial Car Buying Tips

  Our heath and just our overall lives are often taken for granted by us. Things we usually don't think about let alone want to think about can happen. Credit life and disability insurances are designed to pay toward your outstanding loan balance on your car in the event you die or are injured and cannot work. Pretty morbid to think about I know. It is a valid product you will be likely be presented with in the finance office at a car dealer.

  Like any insurance it is a blessing when you need it and you have it. When you don't have it and need it you wish you had it. Insurance is something none of us like to pay for but it is a necessary evil. I know what it's like to be severely injured, without health insurance, and unemployed all at the same time. I was just damn lucky at that time in my life I did not have a car payment. If I did have one I would have fallen behind real quick. The next time I have a car loan I will be looking into credit life and disability for sure.

 Like any insurance. You need to shop for the best deal. It is most likely that the best deal on such policies won't be found at a car dealership. Just like with some of the other services I have mentioned that are offered in the finance office. The dealer has placed themselves as a middle man and everyone involved between the dealer and the insurance underwriter needs to get paid. The dealer is more or less an affiliate to the credit life and disability programs offered within that store. I will get some links up for some of the more competitive credit life and disability carriers. Until then this is definitely one to shop around for and if you consider yourself to be financially responsible I highly recommend the product.

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Credit an Issue? Don't Do this then - Financial Car Buying Tip

    Perhaps credit is an issue for you. We've all been down on our luck before but if you have been making efforts to build your credit score don't blow it now. Now that you have built up or reestablished enough credit to get a loan it's time to do some research and find out which lenders in your area who specialize in not so perfect credit. As Always. I will preach finding your own financing before you go to buy a car. If credit is an issue. Your options are going to be narrow.

  What you are going to want to look for is a lender who specializes in secondary auto credit. Second chance auto credit is what it is referred to as well. Some stores will claim to specialize in second chance credit. While they may. They just simply have a finance Manager working for them with a long established relationship with the secondary lenders in the area. Unfortunately, a second chance credit finance manager can be one of the biggest slimeballs in the business you have ever met. They can be real good at putting you at their mercy real quick. Basically, hurt your feelings about your finances and make you feel damn lucky if you even get a car at all. I witnessed this time and time again and it made me sick. Watching a family who desperately needs a vehicle and has credit issues paying an absolute premium for what they drove out of the lot in. It was disgusting. Disgusting to know that the finance manager just got them approved through a lender they could have just gone to themselves and been approved. Approved for 1,2,3.......hell, who knows how many less interest points than the second chance credit jerk quoted at the dealer. A second chance finance guy usually has little problems in ripping someone's head off with a few extra interest points because he will establish himself as an authority in bad credit and present it as a "this is just the way it is" kind of thing. Profiting off of desperation to put it simply. Don't find yourself being so desperate to get a car that you ignore everything it takes to get there. Such as interest rates and price of the vehicle. My point is here. A second chance credit officer is no more or less of a middle man than any other finance manager. They themselves can't approve shit. They get on the phone with the banks and plead and beg for a low rate they can build some profit for themselves onto just like the others. You can cut this goof out of the deal just as well as a regular finance manager. Save yourself the trouble. You don't want to even meet a second chance finance manager at a dealer. There is a good chance he or she is living high off the hog and they are not your friend.

  I will tell you what I would do though if I had credit issues and I required second chance financing. What you want to find out is who that second chance guy is dealing with. Since these loans are high risk for lenders they will bought through local lenders. I would do some searches for second chance credit in the area I lived and start there. I would make some phone calls and try to assess which ones sound promising and then visit the ones I choose. If you are able to get a pre-approval through any of them. You will then know what you can buy. Once pre-approval has been achieved that lender will give you the criteria your new/used vehicle must meet. Such as the year, miles, price, etc. The car you are buying is that lender's collateral so it is likely there will be some somewhat strict conditions you may have to meet in terms of the vehicle you choose. So let's say. At this point for example. I have been approved for a loan and I have to find a vehicle that is a 2007 or newer with less than 50k miles and I can buy for $15,000. Those are vague conditions but it will be something like that. Now I at least know what types of vehicles I can truly shop. What I wouldn't want to do though is reveal to any dealer that I require second chance financing. Even though I am already pre-approved at this point. Letting the dealer know I am going through second chance financing could potentially kill a lot of negotiating power and just the overall seriousness I am taken with. Once I found a vehicle that may work for me I would then let my salesman know I was ready to work up a deal on it. At this point a good salesman will begin to poke and prod at your finances if he hasn't already. I would kindly let him know I have already made arrangements and I am pre-approved. He may go on to say things like " with whom, may I ask?" or "maybe we should take a look at your credit, maybe we could do better." Replying with something like "no thank you, I am plenty confident in my sources" may get him or her to back off a bit. The reality is this is your business and you don't have to share it with anyone. Keep your finances to yourself. If he wants to make a sale he will play by your rules. You simply want to get a purchase order for the car you want to buy so you can take it back to your lender to see if it meets the conditions they have set for your auto loan. Hopefully, at this point all is well and your lender approves your purchase sending you back to get your car. Now once you go back to the store to go through the finance office the financial cat will be out of the bag and they will know who you are getting your loan through simply because the lienholder will have to be typed on your paperwork somewhere. At this point it's ok if they know this. We've already bypassed the problem areas for someone with bad credit at the dealer. Which are getting hooked in by the second chance finance manager and losing our negotiating power with a salesman.

  Another great car buying tip I can give in terms of credit is DO NOT run around town to 20 different dealers and let them run inquiries on your credit (I don't want you to let a store run your credit period). This WILL drop you credit score. It makes you look like a trigger happy loose canon on paper and lenders don't want to see this. Not running more than a half a dozen inquiries within a month or so shouldn't hurt anything though. Remember that these dealers all get their loans through the same source and people all to often get the misconception that there is something "magical" one store can do for you that another cannot.

  Having bad credit is bad enough. That last thing anyone needs when trying to build their FICO score back up is a car they paid too much for with an inflated interest rate keeping your monthly payment higher than it needs to be. Do some research on second chance credit in your area. Make an educated decision on which ones sound the strongest. Avoid as many multiple credit inquiries in a small time frame as possible. Keep your credit siuation to yourself though the negotiating process and you have done everything you can as a person with bad credit can do to still get a good deal on a car. The main objective here is not to put yourself at the dealer's mercy. Trust me. If they know credit is an issue. They will play off of it if they can.

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Extended Warranties - Financial Car Buying tip

  Contrary to some beliefs. Extended warranties are a valid product and they do basically what they say. They cover items beyond the factory's specified original warranty. Depending on the extra coverage you purchase. An extended warranty may cover more items than the factory warranty and allow you to stay under warranty for a period of time and/or miles beyond the factory warranty's life. They could allow you to do anything from extend a powertrain warranty by a year to extending "bumper to bumper" warranties for years beyond factory conditions.

  Generally speaking. When I sold cars I frequently would inquire on the various costs of these warranties for my own personal knowledge. I can honestly say I never felt anyone was getting their heads ripped off by the dealership for the price of the coverage they were receiving. Like anything else that the Finance Office will be selling though. They do carry a markup and that finance officer is trying to make a commission. For the most part they usually were marking them up around 25%. Warranties they sold for $1600 were costing them around $1200 in just one example. That was also the price I saw most warranties start around. From that point. Upgrading to a Gold or Premium coverage usually only costed hundreds more rather than thousands. Kind of like buying in bulk. The more coverage you buy in the beginning, the better break they give you on the cost. Upgrades can also include things like reducing or eliminating deductibles all together and/or adding roadside assistance and covering rental cars while vehicles are being repaired.

  Extended Warranty cost is gong to vary greatly from brand to brand. The costs are based on the repair trends per vehicle. Some vehicles are of greater financial risks than others and does reflect what the costs of the warranties will be. I have seen the costs on some European brand extended warranties and found them to be astronomical. However, the reality is they can be vary expensive cars to repair and getting someone to just pop the hood and look at it could cost $500. Just one more reason an extended warranty may be something you may want.

  I won't endorse buying such coverage outside of your dealership though for a number of reasons. One reason being. I don't think you will find any better coverage out there for the money on your own. I have seen people get burned buying their own warranties and anything that they thought was covered really wasn't when it came down to using the warranty. Dealerships use reputable companies for extended warranties simply because the store's reputation is at stake. By buying your extended warranty though a dealership you also have a mediator between you and the extended warranty company if there is ever a dispute. The finance officer is going to have a good understanding of the warranty terms and will review these with you upon purchase. Buy a warranty from a third party company and you could find yourself frustrated and trying to take care of matters over the phone rather than just going to the dealership and getting repairs swiftly handled. Buying the warranty at the dealership will also make cancelling the policy later much easier should you ever chose to do so. Yes they can be cancelled at any time and will be pro-rated to you based on the amount of unused coverage.

  Let me give a personal example to help extenuate the value of an extended warranty. A personal friend of mine was very interested in a vehicle we had for sale. A vehicle I personally did not hold a high regard for quality on. I even told her that over and over again. However, she wanted what she wanted and her heart was set on the vehicle. There was no talking her out of it. I told her though. The only way I would sell her that vehicle is if she bought extended coverage because I wanted to keep her as a friend. She was reluctant at first because she was so payment conscious and the warranty was adding $30 a month to her payment. She did finally agree though and for the sake of our friendship I was so glad. As nice of a vehicle as it was. As I predicted. It turned out to be all the mechanical nightmare I thought it would be. Her navigation and A/C compressor took a crap on her in the first year of owning it. If you have any idea what these two repairs cost you will quickly understand the value of one of these warranties. To put it simply. She spent around $2200 on the warranty and had well over $3000 worth of warranty work done. Do the math. The warranty actually saved her money in the end and we stayed friends.

  I wanted to write this short article to alleviate any concerns about buying extended warranties. They are a legitimate product and the only "smoke and mirrors' in them is what it will cost you so don't be shy about dickering on the price of one. Personally, I think they are a great product and I would consider buying one if I were to buy a car. Based on a vehicles reputation for quality though I can say there would definitely be times where I wouldn't be as concerned about buying an extended warranty. If you are someone unlike me though that repairs their own vehicles. The peace of mind you get from these warranties could carry great value to you for the extra $20-$40 a month. Like any type of insurance. We love it when we have it but hate to pay for it when we never seem to need it. If there is a financial car buying tip I can give on extended warranties it's buy them at the dealer and at least give them a consideration.

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Covering Your Financial Ass - GAP Insurance

  In times like these where financial responsibility is at an all time low I thought it would be a good time to point out the importance of gap insurance. Gap coverage is available from most insurance companies and is something they would likely try to "up sell" you on in the finance office at your local car dealership. So before you ask yourself at the dealership if this a legitimate product or service, it is. There is just a real good chance that you can do better on your own as far as value goes.

We ALL need to cover our finacial ass

  The importance of gap insurance is to cover the full balance of the loan you have on a vehicle in the event it is ever totaled out. If you have ever carried any money over from another loan or you are buying with no money down you most likely would want some gap insurance. Your initial insurance protects the value of the car. Gap financially protects the value of your car vs. how much equity you actually have in it. It covers the "gap" between what your car is worth and what you really owe. For example : You have a loan for $16k and you wipe out a car that the insurance company is scratching out $12k checks for......you will find yourself with no car and a bill for $4k if you don't have gap insurance.

  For what you get out of gap insurance compared to what you spend for it is a tremendous value. I never saw it cost anyone more than $600 at the dealership. $600 over the course of a loan for that type of protection is a drop in the bucket. Like I said though. Most could do better on their own and usually pay half what you normally would at a dealer through your current insurance carrier.

  Another plus about gap insurance is it protects your loan against swings in the market that could suddenly devalue your vehicle over night. For various reasons such as fuel prices and manufacturer recalls. If you own a vehicle deeply affected by a market swing you can quickly find yourself owing much more on a vehicle than it is worth.

  So if negative equity is a concern of yours or even if you have the slightest doubts about it . Get some gap insurance. The impact it will have on your monthly payment will be minimal for the protection you will be getting in the long run. I highly recommend gap insurance.

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Payment Terms and Equity

  Maybe the last time you went in to trade your vehicle at the car dealership you were sent out with some disappointment. You discovered your car wasn't worth what you thought it was. Worse yet, it wasn't worth what you owed! More often than not this was an obstacle I had to overcome on at least a weekly basis.

  All to often when we originally purchase our vehicles we tend to be attracted to the lowest payment possible. Generally, unless you put money down. This can only be achieved by stretching the term of the loan out to the limit of what banks will do on a certain vehicle. Because of  better warranties and increased reliability and longevity of a car's life nowadays, 84 months has become more available to more people than ever before.
  That is seven years of your life you will be paying for this vehicle. Sure the payment might look pretty sweet but it isn't doing you any favors in the long run. Go up in term, you go up in rate. You go up in rate, you pay more interest. Pay more interest, and you are paying less on the principal balance of the loan. Thus, losing equity. To put it simply. Equity is what it's really worth vs what you owe. You will almost never stay equitable in a vehicle with a 6 or 7 year loan. I really want to say never there but I just threw the almost in there to cover my butt. The truth is there is a good chance you will not stay equitable in a 5 year loan unless you at least pay your tax, title, and license at sign-up. In any of these long term loans you will not see any equity return until the last year or two. Even then, it won't be anything staggering.

  The car market can be pretty wishy washy. Fuel prices can greatly influence the market and so can some bad press. If you have any of these prolonged term loans and you find the market on your vehicle has fallen a year or two after you signed. You will almost certainly be heartbroken. How can you prevent this from happening? Well, you probably won't like this answer. Money down and shorter terms. I have no problem with 5 year loans, they are very common. Just at least pay your fees up front. All too often people roll this right into the loan and when they find out they are $2000 upside down on their car later they're pissed. Uncle Sam got that money. Your dealership didn't get it. It is not part of the price of the car, just remember that.


  While most people cannot do this, or they don't really want to I should say. Put some money down and take out no more than a 5 year loan. 36 and 48 month terms I highly recommend. In the case of these your payment may be higher but you will remain equitable even without putting money down. 72 and 84 months is a long time to pay on a piece of metal folks. Don't let the things you own, own you.

  On the other hand maybe equity is not a concern for you. If you have no intentions of trading the vehice before you pay it off or you know you will be keeping the vehicle for the duration of the loan then I say go for it.This is a difficult thing for anyone to truly foresee going into an extended length loan term though. Just bear in mind you are going to pay a significant more amount of interest in the long run.

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Monthly Payment and the Fine Print

  Especially as an Internet Manager I frequently got a phone call regarding the "$XXX a month" lease or purchase specials. These can be seen on television or in the newspaper ads frequently. I can assure you that if it sounds like an incredible deal, it's probably been hyped up the best it can while covering their legal asses.

  In almost any of these circumstances these payments are contingent on some criteria conveniently listed in tiny print at the bottom of a newspaper ad, quickly flashed at the end of a commercial, or very quickly read by a narrator. This is the part they don't actually want you to read or hear. It's a marketing strategy, simply put. Is it wrong? We'll call it misleading. They just want that payment to jump out at you enough for you to stop down at the dealership, where they just schmooze you through the rest of it from there.

  No fine print you say!? Can this happen? It has and I have seen it happen. It is very easy for a dealership to dismiss it as a typo (as in the case I saw it truly was) and apologize. In the case I witnessed the girl threw a fit in the middle of the showroom and walked out shouting she was going to sue. Well, car dealerships get sued on a regular basis and usually have a pretty fantastic legal team. Blow it off and take your business elsewhere if this should happen to you. Otherwise, it just won't be worth your trouble in the end.

  In most all cases if it looks like a great payment or lease special the terms listed to get to that payment will almost always include some sort of theoretical amount of money as a down payment, excludes tax, and your credit is impeccable. This is not to say that the special is not good by no means though. They're just painting a scenario to get to that payment. A scenario most people can't do. The reality is most consumers do not want to pay any out of pocket at signing. While it is a very smart thing to do, it just isn't any fun and it kind of takes that "good deal" feeling away from the whole process to most people I think.

  The lesson? There is nothing magical in the car business that let's you buy $20K plus cars for $200 a month without some hitch. Look for those terms! Make a call to the dealership if you need them clarified. The last thing you need is going for a ride in a car you decided you love, to only find out that you need to cough up $5000 to get the payment you thought you would.

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How Can I Get the Best Interest Rates?

 Make sure you pay your bills and keep your credit score up where it should be for starters. That is the intention of a credit score. To let the world know if you pay back the money you borrow thus rewarding those who do.

 Nearly any car dealership has financing available and every single one of them is going to insist that they can get you the best rates in town. While a particular store may have more leverage than others in reference to getting those approved because of their relationship with certain lenders. The fact is banks and other finance institutions can do what they can do. Some finance institutions specialize more in auto finance than others.

 So where can you find the bast rates? Now I don't have some spectacular link that will whisk you away to the best rates on the planet. This blog is about transparancy and it just doesn't work that way. Quite honestly, it was very seldom that any finance institutions could top what the local credit unions offered. Most banks cannot compete with the auto interest rates of your local credit unions. More than likely your car dealership has a relationship with them and they can handle the paperwork for that credit union. Saving you the hassle of going to that credit union and getting approved and then going to the dealership from there. Just be sure the dealership is quoting you the rates currently offered by that credit union. In most cases they will because credit unions post their member rates online anymore for the world to see. Online is a great place to compare credit union member rates and you can research this before you go in so you know what your rate should be given you have adequate credit. If credit is good for you. You can probably do much better than big lenders like Chase or Wells Fargo if you keep your borrowing local.

 Now of course if there is a manufacturer's special interest rate offered that is going to obviously be an exception to this rule. In the case of standard interest rates though. Credit unions are almost always going to prevail.

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My TRUE Opinion of Leasing

 Before I started selling cars I had heard the word leasing for many years. I really never knew how it worked nor did I care because all I knew was ,you didn't "own" the car. That alone was enough reason for me not to care. I mean who wants to make monthly payments on something they will never even own? The driver that leasing applies to. That is who should. After working in the business for some years I got a much better understanding toward it and learned in some cases, when the customer fits a certain demographic. It makes perfect sense.
 I am going to tell you why certain buyers will always come out a winner on leasing. I also want to point out how many people actually never receive a title for the car they make payments on and never own it themselves. Until you pay your car off your bank is essentially the owner. After all, if you have a loan right now. Your financial institution has the title to your vehicle locked up in a vault. When I brought up leasing to customers the typical response was a quick no. If you have a car payment you do not fully own your car yet and if you trade it in before you pay your loan off you never owned it. Think of leasing as paying for the part of the car you are going to use, because that is exactly what you are doing.

 Examples of when leases work in your favor is when:

• You drive around the national average of miles year (10-15k a year)
• You enjoy the security and peace of mind from driving a newer car under factory warranty
• You like something new every three years (very common trend) just for the sake of change
• You need a gas guzzling monster SUV when fuel prices are unstable (anymore they always are)
• You want the most car you can get for the monthly payment

 Chances are if there is an exceptional lease rate on the particular vehicle you want your lease payment will be lower than if you were to purchase it and take out a 5 year loan on it. As long as you are meeting the right criteria like I listed above. If you do a lot of traveling and you are miling out cars in three years then it isn't for you.

 What is the connection with a gas guzzler and leasing? Well, when the gas prices hiked some years back. Lease companies lost their asses because that gas hike just crushed the resale values of any vehicle that was not fuel friendly. You see leases are figured based on a few factors such as your rent charge, initial purchase price, applicable fees in your state, and the residual value which is the calculated amount of depreciation of the car you are leasing based on the miles and term you have chosen. It is this calculated depreciation or residual value that was not foresaw in the years prior to the gas hike. The used SUV market made a big shift while a lot of SUVs and other gas guzzlers were in the middle of their lease. So you have a lot of lease companies getting back their vehicles that are now no where near what they had projected they would be worth at the end of their lease. In turn, losses were so big that a lot of brands pulled their leasing programs all together. A few of your stronger, mostly foreign brands still offer them though. The lesson here is that leasing protects you against swings in the market that could leave you upside-down in equity on a loan. If you were trying to trade in an SUV soon after the hike and you had a loan on it. You were hating life, I guarantee.

 Some people just want something new every few years for whatever reason. People like to have warranty on their car and people just like change for the sake of change. I had customers that took out 5 year loans and came back to see me every few years for a new car. In most all cases you are falling behind in equity unless 0% interest is available every time you go to buy. Keep trading in every few years when there is a loan on the vehicle and you are most likely to find yourself upside-down by thousands after a trading a few times. While I am on this subject of trade-ins I would like to point out that if you are upside-down in a car now and you fit the criteria for leasing, there probably is not a more cost effective means of paying down that negative equity if the rent charges are good and your borrowing amount does not exceed the banks limit. When the lease is up, you're all paid up and that negative equity is gone.

 There is a simple formula used to calculate leases however to the consumer I think the formula is somewhat irrelevant because most of the variables are already going to be set. As the consumer you are the one who determines the term and mileage allowance which can have great impact on payment. The factors that make it a good lease deal are the price of the vehicle, high residuals, and competitive money factors which on a lease are used in lieu of an APR and determine the "interest" you pay. If you are interested in the formula they cover it pretty well in the link I just left in this sentence. Your only concern of whether it is a "deal" as far as lease are concerned though lies in those three factors I just mentioned. The only factor you can manipulate on a particular vehicle is the purchase price. The residuals and money factors are what they are. So what's a good money factor? I will try to put this in a scale to explain. The further right of the decimal you get, the less interest you pay over the lease.

Money factor             .00XXX                        .000XXX                     .0000XXX
                         Standard or mediocre       Getting better               Hard to pass up    

 How good of a deal still largely depends on the price they are leasing it to you for. Many dealerships will try to mow over this one but you have every right to know how they got to those figures. While they may be more reluctant than on a purchase. The selling price still needs to be negotiated. I would also like to point out that in most and not all cases any special money factors will be in lieu of any cash rebates. I have seen some special lease cash in the past that a customer could also get with their special money factor. One other little known fact about leases very few consumers know, and this could vary from state to state. In Illinois where I sold the dealerships received credits for the taxes paid on the lease purchase after they are turned in. For example if there was $950 tax paid on a lease. When it is returned that dealer gets that money back and we would apply those tax credits to sweeten a lease deal if we needed to. At the end of a negotiation asking if there are any lease turn in tax credits available would not only probably surprise them for you knowing what they are, but may drop your payment another $20 or better a month. They could only be applied to leases and if I was trying to close someone on a lease and I was out of options I would frequently ask my manager if any were available.

 I don't want to go over my miles. What if I get a big scratch or dent in it? I don't want to pay penalties. Then I am stuck with it for three years. Popular deterrents of the lease. Choose miles that are closer to what you think you will drive. Smarter to go over a little than not use what you already paid for. If you have a 45k mile lease and you use 38k. They won't reimburse you. If you go over we are not talking thousands of dollars unless it were absolutely outrageously outside of the allowance you chose. There is also a commitment of term and that is something anyone needs to consider. Most lease programs have guidelines such as an allowance for body damage per panel. $200 a panel is common. Make sure you go over this in the F&I office.

 If you think leasing may be an option after reading this tell your salesman you want to see both lease and purchase options. It can't hurt to ask. You may quickly find yourself feeling you have wasted a lot of money over the years especially if you rarely ever keep a car long enough to pay it off. You could easily find yourself looking at vehicles you could normally never afford on a purchase if the residuals are high and the money factors are hot. You might as well rent it from the lease company because right now you're just renting from your bank if you have a loan. After working in the business for some years my feelings on leasing did a complete 180 turn. I would highly consider leasing for my next car purchase given the miles a year I drive. Below I have listed a few pros and cons to leases you must consider for yourself though.

Pros

• Payments can in many cases be kept lower than a purchase if the residuals are high and money factors are good. Allowing you to get more car for your money.
• Choosing a standard term lease you will most likely you be under full warranty for the duration of the lease giving the customer added peace of mind.
• You are protected against swings in the market against the particular vehicle you are driving. Guarding you against unforeseen depreciation that would leave you upside-down in equity on a purchase.
• Leasing gives you the opportunity to have a new car every three years where in the case of purchasing you would likely be taking a substantial loss if you traded this often. Typically equity isn't gained back on a purchase until after the 4th or 5th year of ownershp.
• You do still have the option to purchase the vehicle at the end of your lease if you so choose.
• Great way to pay down on some negative equity you may carry over from a previous vehicle. So long as the borrowing amount remains within the banks allowance. When your lease is over that negative equity is gone and you can start out fresh.

Cons

• You are locked in for the term of the lease unless any "early out" specials are made available by the manufacturer.
• You do have mileage and damage limits that you must stay within to avoid penalties at the end of the lease.

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Cash as a Negotiator

 From time to time I would get the buyer who was say something like "see if your manager will take (dollar amount) cash?" Maybe you heard dad or grandpa say this way back in the day but it isn't even worth mentioning these days. Before the days of technology we now live in. Where money has just become another number in a hard drive. Throwing the word "cash" into an offer was definitely a negotiating tactic for the buyer. However, because of wire transfer of funds it is likely that if you were to finance that the store will see their money in the bank as fast if not faster than if you paid cash. Let alone they would rather not even count out $25,000 and have it in the building. To be quite honest, the impact "cash" had in negotiating a car deal is the opposite of what it used to be. Dealers make quite a bit on the "back end" (interest rate profit, extended warranties,etc) and they would RATHER hear you are financing. Finance officers who figure your rates make profit off of the interest points they add above the "buy rate" (their "cost" of the rate) of your loan. For example. They phone into the bank you are financing through and "massage" the loan officer into a nice low buy rate they can add a rate point or two to make themselves a nice little profit and keep things looking good on paper for you while still making that financial institution some good money too.

 Is it fair to say the "cash" offer never works anymore. Not at all. It would all depend on where you are buying from. If you are at a small, shady, one man operation corner lot and the owner is ready to go have a drink after work on a Friday afternoon. "Cash" may perk that guy's ears but even the smallest of stores still make their money on financing as well. As far as a private purchase goes. It means everything for obvious reasons. The megastore that makes millions a year off of interest could care less.

 So the moral of the story is "cash" = less potential profit on the back end of the deal . With this said. Throwing them a bone during the negotiating of the price of the car that you may (even though you really aren't) be financing could make them ease up on the price of the car a bit in hopes of making money off of you on the back end. I have worked plenty of deals where my manager dropped his pants on the price of the car more than he normally would because we knew they were finacing. Using this outdated tactic is most likely to just make you sound as if you have not bought a car for 30 years.

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Buying A Car Out of State and Other Helpful Links

 I wanted to do a short segment on out of state car buying and include a few more links that were very useful to me over the years I sold cars. First off, buying a car out of state and the sales tax on the auto purchase you pay obviously varies from state to state and since it would be far too difficult for me to keep this blog up to date on that. I am going to instead include a link to Bankrate's tax by state page. There are a few states that do not collect tax at all on a vehicle purchase and then you run into the issue of the tax agreements between states. There were many states we did not collect tax for and the customer was responsible for them when they returned to there state. So that is also another issue you need to research before making the trip. Usually dealers have a list of these but you would probably be surprised how readily available it isn't. The Bankrate tax by state page is very helpful and if you read carefully they link to the state's main tax sites. Some are more difficult to find than others but it is all there. As far as licensing goes. If you are without plates you will likely be put on a drive away sticker from the state you are puchasing which gives you time to get your vehicle to get to your home state and get it registered. Otherwise, transfer is generally not an issue and is done from State websites. In general, aside from your taxes and reg. Nothing is much different. Enjoy these links. I have no doubt you will find them helpful.

• Tax By State
• Auto Loan Calculator
• NADA (Financial institutions use to determine loan amounts)
• Kelly Blue Book (generally more inflated than NADA)
• Fuel Economy
• Edmunds Appraisal Tool (only thing about Edmunds that was realistic to me. I think the rest of it is garbage)
• AutoTrader
• Cars.com
• Craigslist (private party and dealer cars. I often displayed signifigantly lower prices online as an internet manager)
• Carfax
• Autocheck  (every bit as good as Carfax and cheaper however these are free if the dealer is signed up either at the store or on their site)
• Crash ratings
• DMV

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The Infamous 4-square Sales Tactic

I was introduced to this at the second store I had worked for. It is just about what it sounds like. It is a deal worksheet divided into 4 areas with all your personal info written on top to look "official" lol. Typically the areas are divided into sales price of the car you are buying, value of your trade, how much money you are putting down, and what you can expect your monthly payment to be based on all of those figures. I am going to be honest and say that the sole purpose of this tactic is to make your head spin with all these numbers and literally break your heart. It is fully intended to shock the hell out of you and get any numbers out of your head you were hoping to do before you walked in the door. In a nutshell, make you feel as if your expectations to this point have been unreal.  It is also designed to mentally prepare a person with an inflated payment before they walk into the finance office to make any upselling easier when they get there.

 Now that you have seen these figures and you have a big lump in your throat like you are 6 and didn't really get what you wanted for Christmas. This is where the salesman goes over the figures with you and says things like "what were you hoping for?" There is still plenty of money on the table at this point. After all he just gave you his first proposal. Now that he has broken your heart he is going to play good cop/bad cop . He is going to poke and prod at you and try to figure out which one of those numbers really makes you tick. What I mean is. Generally there is an aspect of the deal that is most important to the customer such as trade in value or no money down. If you really want to put a salesman between a rock and a hard place at this point. Tell him you don't like any of the numbers lol. They are only going to manipulate the one that makes you happy anyway. In their defense though you cannot have it both ways. Trades are worth what they are worth and they can only sell a car for so little.

 What you need to do is look at your personal situation. Maybe you don't even have a trade. Maybe you are paying cash. We're down to 2 squares already now which really kills the tactic dead in its tracks. Truthfully, as long as our FICA score isn't a 450 and you truly know you have the ability to buy. You can tell them straight up how you want to see the numbers. If they have a problem with this then they are obviously so successful they don't need your sale and you probably don't want to buy a car from these folks anyway.

 Personally I recommend a good old white sheet of paper or their "other" worksheet for people like you lol. I am going to give you one piece of information at this time now which will allow you to tell them to leave the payment end of it out until you get into the finance office. With today's rates and sufficient credit you can expect to pay about $100 a month for every $5000 you finance on a 5 year note. Give or take $20/month .Example: financing around $20,000 you could expect to pay in the neighborhood of $400 a month on a 5 year loan. With that said, you can be sure you are looking at vehicles you can afford now so they don't use payment as leverage on you. With that said. Don't forget your fees as well. If you are wanting to be around $400 a month make sure you are looking at a car you think can be "bought" for around $18,000-$18,500 if fees come to $1500-$2000. Fees vary from state to state so get a general idea of these before you head in. We are at the sales desk at this point and we just want to hash out the price of the "car" itself. We are not interested in inflated payment figures full of gap insurance, extended warranties, and service plans. As for the money down, you can decide this as well when you get to the finance office. That's your business until you sign.

 So now that we have thrown "payment" out of their little scheme. We are just down to the price of the car and the value of the trade or maybe just the price of the car. Isn't it amazing how much the whole thing has been simplified just by taking the payment out? This is not what they want trust me lol. At this point though it will take some of your own research to determine fair values on either the car you are trading or the car you are buying. As a general rule. A new car you can typically expect around a 10% markup on a sticker price. This excludes factory incentives. If you are buying used get the average retail values between KBB and NADA based on condition and this should be fairly close to what you can expect to pay. If you can get it lower than that you're doing good. If you can't get to the averages between these two books though and strike a deal there is a possibility they own this car for more than they should. Up to you at this point if you want to look elsewhere or buy theirs. If it is something unique you can expect it to bring above book value though. In regards to trades do the same thing. Get collective average of both books and be sure you booking it as a trade. Trade and retail numbers are different for obvious reasons. Also, make sure you be honest with yourself about your vehicles condition. I seen all to often that the customer was a bit biased toward their trade. I myself would have to probably catch myself on this one. That line in the book values that reads EXCELLENT at the top. Well, that's more or less show room condition and about less than 5% of the vehicles out there will really qualify for this title. However, make sure they are playing by this rule as well. If they are showing you the best book numbers with their printout they made trying to justify their price make sure the car lives up to it. If he is claiming it's in excellent condition except for that little bumper scuff. Guess what buddy, it ain't in excellent condition.

 Now that we have broken it down to 2 (and maybe 1 in your case) simple figures we just want a difference number before fees. In other words. What are you going to sell me that car for with my trade? There is no smoke and mirrors at this point. If there car is $22000 and you think you can buy it for $20000 and you have a trade you are wanting $10000 then a difference of $10000 is what you are shooting for. It's fairly simple.

 One more thing I wanted to touch on quickly before I go is vehicle payoff. I plan to do a segment on this later but I want to touch on it so you know how it applies to a deal like this. Call the financial institution before you go work a deal anywhere. If they are a 4-square store or even not they will pry at this one to try to appease the "payment" issue. The best thing you can do on this is play dumb and factor the payoff number in your head into it when you are working the deal. For example. I will use the figures from the last paragraph. Lets say you worked a deal down to difference of $10000 and your trade-in payoff is $8300. Fees will be based on the $10000 (that could vary state to state) and your payoff will then be added to the total. So you are back up into the $20k neighborhood at this point.

 I would say the best advise to taking away a stores 4-square ammo away is to be vague about your finances (money down and payoff info) and don't express concern of payment. I have given you what types of payment you can expect for certain dollar amounts spent on 5 year terms and I can assure you that as long as the finance office does not have them loaded with "extras" and your credit is substantial it will be close enough to what I have said given the rate is competitive. If you should want to further payment estimates for different length terms or to play with different rates Bankrate.com has a wonderful payment calculator on their website. I hope you found this helpful and I hope it save some of you folks some money. Stay tuned, and I will post more of these.

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