You’ve finally settled on a new car. Test drives, negotiating and all the going back and forth has you feeling a little worn down but you’re almost done! All you have to do is sign a few papers and you’re out. So you thought.
Here are five things you might not have known about car dealership finance offices, and how they could be beneficial to you the next time you buy a new car.
1. What’s on the menu?
When you sit down across from the Finance Manager he or she will present you with a document called a Menu. On it you’ll see columns filled with additional products and payments shown at the bottom of each of these columns.
Your brain tries to put this all together when the Finance Manager begins to explain each item. Things like a Vehicle Service Contract (aka extended warranty), GAP, Maintenance Plan, Tire/Wheel, Paint/Interior and Key Care.
Here’s the thing … These additional products might seem great, and one or two of them might even make sense for your driving habits and lifestyle, but that doesn’t mean you have to pay retail price for them! Ask the Finance Manager what the actual price is and negotiate it down. You can do that! It’s not written in stone that you have to pay the full sticker for ancillary products that are presented to you on the Menu.
Note: Don’t ever let a Finance Manager tell you he/she will lower your interest rate IF you buy a product. In most cases, it’s not legal and is non-compliant.
2. Choose your term
You have an idea of how long you want to finance your new car. Five years seems pretty good, and since there’s not a prepayment penalty on the loan, you know you can pay it off faster if you want to.
Even though the numbers are all correct, and you’re about to sign your paperwork, that 60 month payment feels a little “snug” all of the sudden in your budget. What can you do?
Did you know that many banks will stretch that term out to 63 months with the same interest rate? That gives you a little more wiggle room, so that you won’t be stuck when the holiday season rolls around!
Also, ask the Finance Manager to show you a “two term menu” so that you can see what your payments look like in two different terms like, 66 months and 72 months!
Always be sure the Finance Manager shows you your Base Payment. That’s your payment without any additional products added on (aka what they’re showing you on the menu.)
3. Firming up the fees
When you’re finished negotiating the price of the vehicle with the sales person, and you’re ready to buy, the sales manager will then “push” that information into a computer program and assign it a deal number. The Finance Manager pulls that deal number up and begins firming up the fees. What the heck does that mean?
It’s the Finance Manager’s job to make sure that all state taxes and fees are accurate. The bottom line you agreed to at the sales person’s desk might not exactly match the number you’re presented with in the finance office.
If it’s a little lower – good for you! But, if it comes in higher and the Finance Manager tries to explain it’s because of fees, then let him or her know they’ll have to take it off the purchase price. Typically, it might be off by a few dollars but sometimes it could be as much as $20. Every penny counts!
Nowadays, many car deals are done for out of state customers because it is so tough to find the exact vehicle you’re looking for in your area. Don’t be surprised when the Finance Manager “firms up the fees,” and be prepared to ask questions and push back when appropriate.
4. Showing credit
You’ve been working hard to improve your credit and you know exactly what’s on it.
Now you’re a little nervous about getting a loan through the dealership because you’ve heard your application gets “shotgunned” to different lenders and that could hurt your score.
While your credit will bounce back after car shopping it does take time, and too many inquiries can look bad on your report. But there’s a way to lessen the blow.
Before you sign your credit application, tell the Sales Manager and the Finance Manager that you only want your loan to go to 2 or 3 banks at the most. And if you have a 750 to 800 score you can even tell them to bypass pulling your credit all together and just send it to 1 or 2 banks for the best approval.
5. Unlock it
You’ve done everything ahead of time so far. You’ve used YAA’s car buying email templates, negotiated an out the door price, and now you’re at the dealership ready to sign your paperwork and head home in your much awaited new car.
Your credit application is signed and the Finance Manager is getting your special APR incentive financing ready for you. And then everything comes to a screeching halt.
The Finance Manager says “I’m sorry Mr. and Mrs. Doe, it seems your credit is locked and we cannot get an approval for you at this time. Can you please call and have all 3 bureaus unlocked so we can move forward?”
Depending on how busy a Finance Manager is, getting your credit unlocked and finalizing your car deal could end up taking hours if there are other customers that now get to finish their deal before you.
If you have a lock or a freeze on your credit for protection, don’t forget to unlock it before you go to the dealership to complete your paperwork!
We hope these 5 little nuggets of information help you during your car buying process.