Do's and Don'ts of Auto Finance

Paying for Your New Car: The Do’s and Don’ts of Auto Financing

It’s a sad truth but auto loans can go wrong. When it happens, it’s often the result of a problem during contract preparation in the finance and insurance (F&I) office.

Car buyers need to know what typically goes wrong with auto financing and how these problems can be avoided.

Many consumers have a lot of information about the cars that they want to buy. The problem is that they don’t necessarily have the right information. The F&I element is absolutely crucial.

Typically, a dealer’s first basis for negotiation is ascertain your monthly payment. “So, about how much a month can you afford?” Or, “How much can you spend a month?” Once a dealer knows your payment ceiling, he can often pad a deal in rate. After all, a dealership is a for-profit entity.

To move through the F&I part of a deal, you can cut out the principle problem by going to the dealership with financing in hand. You can proceed as a "cash buyer" if you have the financing in place. When you are a “cash buyer”, all you need to negotiate is the total price of the car. When you’re negotiating for the price of the car only, salesmen are at a disadvantage because they can only really obscure the total cost of a vehicle if you are a "monthly payment" buyer.

You can get independent car financing from banks, credit unions, online lenders or independent leasing companies.

One of the big mistakes of prospective car buyers, most do not know their credit rating when they apply for an auto loan. Because credit is so important, it is crucial to make sure that your credit report is in the best shape possible before shopping for a car.

Another big mistake made by buyers involves the budget. Far too many people overlook their budget. You should set a sensible price range for the car you want to buy and stick with it. Monthly car payments and related expenses generally should not exceed about 20 percent of your monthly net income.

Research the current interest rates in the marketplace. Compare rates online. Look at leasing! Particularly if you are the kind of driver who gets a new car every 3-4 years.

Most consumers approach dealers without their financing organized. When they finally reach the finance department, they are worn out and in no position to stay on track, scrutinizing the details of the contract they are about to sign. It’s very common for people to agree to buy things they didn't plan to, simply because they are worn out.
To manage the sudden appearance of extra fees, question everything. Dealers are known to add extra fees.

The way to manage dealers and avoid financial mistakes is to be prepared. Do your research and be ready to stand your ground when the dealers come to you.

At AutoBidsOnline you can overcome a great deal of these issues. You can gather all of the information you need and submit a buy bid to our dealer network anonymously. Dealers are incented to accept your offer – quickly! Because if they do not, there is a good chance another dealer will.

Only when your buy bid has been accepted will a dealer know who you are. You can then stroll into the dealership, with financing already in place a get your new car – quickly, efficiently and cost effectively!

How to Work the Numbers

How Does A Dealer Work The Numbers: What You Need to Know to Stay On Top

Even when you are set to purchase your next car online, you need to understand numbers to get the best deal possible results.

Traditionally, the process for getting to the best deal on your new car has been determined by the way your dealer establishes numbers on a worksheet. Generally, there is a four-square worksheet used to determine ballpark pricing.

The worksheet dealers use covers everything from monthly payments to trade-in prices.

You need to understand the significance of all of the four squares. Knowing how they fit together, you can get a good handle on negotiating a fair price.

The trade-in is often the first square on the dealer’s worksheet. It refers to the credit they will afford you for your old car. Although dealers generally want you to put down as much as possible, the figure is negotiable. It may not even be required at all if you choose to lease.

The second square refers to the purchase price of the dealer's car, which is the sales price of the car plus fees - sales tax, title, licensing and destination fees. If you have already negotiated your price with AutoBidsOnline, all you need to ensure is you are not paying any extraneous or unnecessary fees.

Finally, you have to factor in the down payment and the monthly payments. Your down payment will figure out how much cash you have to pay up front. Remember, do not use cash to make your down payment under any circumstances! Use a credit card instead. That way you can be sure to get your money back should something go south.

The monthly payments are your fourth square for negotiating. Most care salesmen try to get you to focus on this number, the low monthly payments. You need to scrutinize this number most particularly to factor in how long it is going to take you to pay off the total amount and what exactly that total amount consists of.

Do not get trapped by the four-squares! You might consider selling your old car rather than trading it in. This could save you a lot of money. Another option is to think about securing outside auto financing before you even go near a dealership. This can help you maintain maximum control of the deal, particularly when you are having the dealers come to you online.

By taking advantage of these few suggestions and by knowing how dealers are going to be playing the game, you can get a great deal. But do not, under any circumstances, play the monthly payment game! Instead you focus your negotiations and car search on finding cars that are priced right and the payments will take care of themselves.

Talk the Talk

How to Sound Like A Car Salesman and Walk Away With Your Dream Car

Car dealers have a pretty bad reputation. The good news is that you can manage them with a few strategic moves. Imagine yourself walking on to a car dealership. You see a few salesmen hovering around. “Who’s up?” you say, and everyone jumps to attention.

All the salesmen are watching you, wondering now whether you are an experienced salesman. You find as you go about the dealership, test driving and reviewing your options for financing, that you are treated with considerable respect. The dealers are wearing kid gloves and it shows.

You have no problem walking away and transferring all of the information you learned to AutoBidsOnline, placing an offer for competitively priced cars that meet your exact needs.

No matter your method for buying a car – searching online or offline – dealers will treat you differently if you present yourself as someone who knows the game. Even auto mechanics will pay attention to you if you drop a few keywords of car salesman lingo.

You shouldn’t exactly be trying to trick people. You’re goal should never be to present yourself as something you are not. On the other hand, you can communicate indirectly and do enough to imply your level of knowledge.

So what words can you drop in conversation? You can start by pointing out that you may be a “be-back”, the type of customer who leaves a lot only when they have made a promise to return.”Bumping” is the process of raising an offer and you can drop this around. “I’m not interested in “bumping” my budget.

You might like to say “I’m interested in getting the info from F&I”. F&I is the finance and insurance office, the place in the dealership that most papers are signed.

Ask for the “first pencil”, which is the opening offer used by the sales manager. It will be written in pencil on what is called the “four-square worksheet”, used to establish the base price, the selling price, trade-in value and monthly payment for the car.

Here are keywords used by dealers that you need to listen out for. The first is the term, “full pop deal”. This is used to describe a vehicle financed at 110 percent of the sticker price, which his the highest price allowed by most banks.

The second is a “home run”, which refers to instances when a salesman is able to take advantage of a customer and squeeze out a profit on every element of a deal.

Then we have the “mini”, “packing payments”, “pounders”, and “ripping people’s heads off”.

The mini refers to the commission on a deal where the car is sold at the invoice price.

Packing payment is what happens when the dealer is able to add extra profits to the cost of a car. The pounder is a deal with a $1,000 profit, and finally, if a sales man “rips your head off”, it’s not a good thing because it means that they have taken you to the cleaners and charged you the maximum on everything.

So do your homework, incorporate the right language into your communication and by all means, never be a “laydown”!

In The Market For A New Family Car?

Family cars are not necessarily the most glamorous vehicles out there, but if you have children, you need the cargo room and the extra safety features.

Of all the family vehicles out there, it’s hatchbacks and wagons that have a couple of things going for them. Many offer lots of cargo room while remaining relatively compact. More good news is the pricing. With the growing strains on the economy tightening consumer budgets, the faithful family cars are now available at affordable pricing. If you’re looking for a budget new car, a hatchback or wagon may very well be the best choice for you.

Based on the manufacturer’s suggested retail pricing, the top ten most affordable hatchbacks and wagons of 2009 include the 2009 Hyundai Accent GS Hatchback at $9,970, the 2009 Chevrolet Aveo 5 LS Hatchback at $11,965, the 2009 Smart Fortwo Pure Hatchback at $11,990, the 2009 Toyota Yaris Hatchback at $12,205, the 2009 Nissan Versa 1.8 S Hatchback at $13,110, the 2009 Kia Rio 5 LX Wagon at $13,325, the 2009 Pontiac G3 Hatchback at $14,335, the 2009 Honda Fit Hatchback at $14,550, the 2009 Scion xD Hatchback at $14,650, and finally, the 2009 Scion xB Hatchback at $15,750.

When you need an affordable family vehicle to start off the New Year, these top ten picks offer a good starting point. Based on the invoice cost, you can also establish a basis for understanding what you might expect to pay for these types of cars. You can make a determination whether a new family car is affordable and whether the value for money is strong enough to justify the purchase.

As ever, when looking for a new car, you need to make a list of the top features you want. Think about how you are going to be using the car, where you will be driving, who will be driving, and how often it is going to be used.

The advantage to the types of family cars mentioned above is that they are tough and durable. They can survive regular, everyday usage, they are hardy in terms of the work they can do (good cargo storage, good miles to gallons ratio), and they are relatively safe as cars go.

You may want to research specific safety features for children when you plan on purchasing a family car with will be regularly used by your children, particularly young children. The principle detail, however, is that you have options and they may be more affordable than you think.