Unfortunately, new and used car salespeople will do everything in the power to “get you to sign the deal” regardless of your viability to make the payments on the loan or the insurance.
New and Used Car Buyers Beware (Caveat Emptor)
Premier Shield Insurance agents are advocates for consumers in New England and we’ve seen far too many “shady dealings” and consumers putting themselves in impossible financial and insurance situations before even getting insurance quotes on the vehicle they’ve already signed for.
Just like the law, ignorance of insurance laws, rules, regulations, and prices is no excuse. In 2020, and for a few years now, car insurance dealerships have been making all their money off “vehicle financing” not off “selling cars”.
How to Car Dealerships Make Money in Massachusetts
If you’ve ever been to a larger car dealership, you’ll notice they’re massive in size and inventory. That means they only make money off high volume sales and “moving inventory”. That means they’re basically losing money on cars that sit for extended periods of time.
That’s likely the car they’re trying to sell you!
Internal sales at car dealership incentive car salesman to “push older inventory” for both “new and used cars” because time is money and the profitability goes out the window and vehicles become a liability for the car dealership.
Tricks Car Dealerships and Finance Managers Use to Get You Into a Car
There are many gimmicks, tricks, tactics used by car sales and finance managers they use to “get you into a car today”.
Below are a few examples of some of the many creative ideas car dealerships use to “win your business”.
1. Don’t Buy the Extended Warranty (The House Always Wins)
I bought my last car in 2015 and it wasn’t my first rodeo. Yet, despite my knowledge and wisdom, I fell for the “extended warranty” because they gave me additional money off and low financing I was like whatever “it’s free”.
The finance manager was good too, he had all the bills for the parts for the backup camera ect and said 8 years extended for $800, what could go wrong?
Then something simple like my phone charger didn’t work and the dealership says “Well the extended warranty doesn’t labor and that’s at least $125 to diagnosis”.
Wait what did you say?
Yeah, a simple job (electrical might not be as simple as I think) starts me at $125 and who knows from there the damage they can do with what the dealerships bill for labor.
Needless to say, I don’t charge my phone in my car anymore. I’m not spending up to $500 for something or I’ll find someone else more honest to fix my issue.
2. Extending Your Loans Beyond 60 Months
One of the largest bubbles is the consumer auto loan finance bubbles. There are many highly suspect lenders providing loans on cars they know will likely be “REPOED“.
Don’t be a victim of getting yourself into a situation where you ruin your credit by having a repossessed vehicle.
One of the many new lending tactics these companies use is extending loans beyond the standard 60-month loan.
Why is a Loan Greater Than 60 Months a Bad Idea?
When you’re thinking about getting a loan with longer terms, it might seem like an attractive deal, especially when you look at the monthly payments. This is the illusion of finance. these loan types cost much more in interest over the life of the loan. Outside of that, it also puts consumers in a situation that creates additional financial problems (like being upsidedown on the loan).
5 Reasons to Say No to 72- and 84-Month Auto Loans | NerdWallet