Auto dealer exemption makes very first time car buyers more worried

An auto dealer exemption was signed into the financial reform bill. The auto dealers’ exemption allows them to escape auto lending regulation that could have prohibited numerous common deceptive auto lending tactics. To get a better deal, very first time car buyers need to be aware of these practices. You’re going to want to know what you are getting into with auto financing as well. Post resource – Auto dealer exemption means first time car buyers must be wary by Personal Money Store.

Higher interest rates while there are lower car payments

According to AOL Autos, most dealerships make their money through auto financing, not auto sales. Car dealers ask their customers what kind of payment they want, not the car loan interest rate they’re looking for. The dealership bases anything off that information. An interest rate that is lower for a car loan will conserve people thousands of dollars. Be careful as a buyer about how you get your car loan.

Learning interest rate deals and credit score

Bankrate.com reports that dealers are middlemen working with lenders who give them wholesale interest rates. That rate can be marked up 3 percent. Many dealers hope the consumers don’t know what interest rates they qualify for so higher interest rates could be charged. Know your credit score and what type of rate of interest it qualifies you for.

Loans before car searching

A good way to know for certain what type of interest rate you qualify for is to get approved for a loan before you even set foot on the car lot. However, The New York Times reports that if a car buyer shows up already approved for a loan, dealers will make an effort to find some other way to make money off them. Dealers will make an effort to sell window etchings and service contracts or disability and other insurance. Numerous dealers tell the customers that they can only get their loans with extra add-ons, although this is illegal.

Loan approval and condition of sale have to be separate from one another

This is called “yo-yo” by the Times article A buyer drives away in the new car only to get a call from the dealership a few days later saying the car loan was not approved at the current rate of interest and contract needs to be rewritten at a higher rate. If you get the loan before you do anything, this will be avoided. Bankrate.com suggests you gets financing from the dealer before anything else continues. It may mean a few extra days before driving away with new wheels, but it could be worth the wait.

Additional reading

AOL Auto
autos.aol.com/article/car-finance-interest-data/
Bankrate.com
bankrate.com/finance/auto/3-tips-on-getting-a-car-loan-at-the-dealer.aspx
The New York Times
nytimes.com/2010/07/17/your-money/17money.html