The car dealership Finance Office or F & I (Finance & Insurance) office has so many ways to make money on you it's staggering. Very often the car dealership will make more profit from arranging your car financing than they do on the vehicle sale itself! Be Warned -- this is profit at your expense!
I strongly recommend that you arrange your own car financing -- preferably before you go car shopping, and that it is absolutely imperative that you keep the financing out of the car price negotiation by not negotiating a car payment.
Negotiate the price of the car only!
Always negotiate the selling price of the car without financing and without a trade-in. This is the only way you can be sure of what you are really paying for the car.
Once in a while a Finance Manager in a car dealership will be able to get you a lower interest rate than you can get yourself, and it's perfectly OK to let them arrange your financing as long as you follow these simple steps to protect yourself:
Always carefully read everything on the loan contract before you sign it, including all the fine print.
Check the "Monthly Payment" on the loan contract to make sure it's what you're expecting.
Check the "Interest Rate" on the loan contract to make sure it's what they told you it would be.
Check the "Amount Financed" on the loan contact to make sure it's what you're expecting.
Make sure the "Term" in months is what you are expecting.
Make sure the loan contract has your "Cash Down" including any rebates listed in the appropriate place.
Be sure the "Trade-in Allowance" and the "Trade Payoff" (if applicable are listed accurately on the loan contract.
Read the loan contract and the sales order carefully to make sure they are not adding things like credit life and or disability insurance, an extended warranty, GAP insurance or anything else such as window etching, appearance protection package, etc. unless you actually want these items.
Some other important things to watch out for with dealer arranged car financing are:
Remember that if you have a trade-in with a payoff that the payoff will be added back into the new loan, and it will raise the "Amount Financed," so be ready for that shock.
If you do indeed have a trade-in with a payoff make sure you get a signed, written statement from the dealership stating that they will indeed pay off your trade loan, and make sure there is a date on the statement as to when the payoff will be made.
Last but certainly not least, get a written and signed statement from the Finance Manager or the Sales Manager stating that your loan is already approved by the loan institution that is taking your loan. If the loan is not actually approved yet don't sign the paperwork and don't take the car until it is. If you do, and the loan is not actually approved then they can come back to you and say there was a problem with the financing and they have to charge you a higher rate or take the car back or whatever. At the very least you'll have to sign a whole new stack of papers, and the odds of them sticking it to you go up significantly.
Listen, you may be dealing with a completely honest car dealer as most of them are, but you must protect yourself. You can't just assume that they are looking out for your best interests. That's your responsibility.
Tony Iorio is the webmaster and publisher of InsiderCarSecrets.com, a web site that helps people save money, time and aggravation when buying a car. All of the information, tips and secrets found on this web site have been gleaned from his 37 years of successful, experience working in car dealerships as a Service Manager, a Body Shop Manager, a Car Salesman, a Finance Manager and as a Sales Manager. He has also owned and successfully operated an independent body shop and a used car dealership. For additional tips on financing your car visit Car Financing Tips.
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