Car loan dealers tricks; hidden costs

Car dealers have a bad reputation for sleazy, aggressive selling techniques. As usual it is the unscrupulous few that give the hard working majority a bad name. Having said that it is wise to be aware of the many pitfalls you can fall in when buying a new car and signing on a loan. When shopping we often look at the price tag to decide what is cheaper, what is a good deal and what is a bargain we can’t miss. Car dealers know this also which is why we must be careful when judging a dog by its collar or a car by its price tag. This leads to our first tip on our article, Car loan dealer tricks; hidden costs, Don’t work your bargaining from the price tag.

Don’t start from the price tag!

Pricing a second hand car can be a difficult thing to do, half art, half wishful thinking. Auto dealers know everyone likes to feel they got a bargain, and will inflate the price tags on their cars and then dramatically “reduce” the price tage value. When you search for a car, check the “book” value of the model, shop around, try to find out for how much they bought it. If work up from the price they paid or the “book” value of the car you will get a better deal than by trying to reduce and already inflated price.

Check / ask for the size of any final payment.

One trick to disguise the true cost of a loan is to include extra payments, or to pad certain monthly payments like the first and last month. It is also worth asking for the real cost of the loan. This way you can compare loans more easily.

Prepayment / early settlement charges.

According to some studies three out of every four loans are paid before their tenure expires. However this doesn’t mean it was a good deal for the buyers. Most banks and finance companies demand a penalty fee  shop around for a bank or finance company that doesn’t. Paying a loan’s capital before time is a smart financial move. Paying loans early reduces interest and the risk of lat payment fees. Sometimes companies will offer a break in the interest rates if we accept for a set prepayment fee. Especially if you are expecting to increase your income in the future and would like the option of paying capital off the loan before hand it is worth finding the lowest prepyament fee.

Beware of hidden extras and insurances

Once you are willing to spend dozens of thousands of dollars it is easier to carry on spending. Autod dealers are more than happy to increase your bill with a whole lot of accessories and other extras like insurance, paintwork, ABS, airbag. Once you are on a spending spree a few dollars here and there don’t seem to change a thing. Don’t be fooled! ask for a breakdown of the loan and its costs. This way you can see what your expenses are and you can guarantee there are no hidden costs buried in them.