Overhaulin'

Am I getting scammed with my new car and loan at the car dealership?

So I have been looking at a new car and have been talking to this dealership for about a week, and i'm starting to think that a few things are sounding a bit shady... First off, the dealer doesn't seem to care about the price of the car, but rather how much my monthly payment will be...it just seems like that is more important to him. Second, he's starting to say that if I can't make the payments that he will pay off my loan....that in no sense seems right to me. Anyway, what do you all think is going on here?

Public Comments

1. Red flag whenever the dealer doesn't worry about the actual price of the vehicle. If all he is worrying about is how much you can pay a month, he is probably only worrying about how much more in the long run he can get out of you! Also, if you default and the dealership pays the loan, you end up owing the dealership more fees than you would have owed the bank. Definate Red Flag. Good article titled "Avoiding Car Dealership Scams" on a blog that I frequent Here is the link http://www.finance-your-life.com/?p=36 Best wishes
2. There are four parts to a car deal. Dealers call this the four squares. The first square is the selling price. The second is the trade in value. The third is the down payment. The fourth is the monthly payment. The dealer will try to get you to discuss three and four the down and monthly payment and forget about one and two, the selling price and trade in. You can only scam yourself by letting them win this struggle. It's amazing to me that most people have know idea what they actually paid for their car. The just know what they put down and what the monthly payment is. Most don't even know how long they have to make that payment. They'll get you the payment that you need one way or the other. How do you think they accomplish that? Your first mistake, if this is the case, was to tell them that you had a trade in and your second was to say that you were not a cash buyer. If you had nothing to trade and needed no financing then they only had one thing to negotiate, the selling price. Once you locked them into that you can always change your mind and say, "OK, what will you give me for my car?" If that sounds good to you then you say. "Great, tell me about your financing." You have just thrown them for a loop that they don't know how to deal with and they'll take any hit just to close the deal under your terms and get on with the next sucker. As far as the dealer making the payments if you can't make the payments? Neat trick if you can get them to put it in the sales contract. If not, well, wadayathink?
3. Basically they are trying to get you in the car by only telling you the payment. Not sure what you mean by him paying off the loan. Unless they are financing it for you, there's no way they can pay off your loan through a bank (that I know of). And if they tote the note and you default, I gurantee you they will not pay it off. More like come get it. Maybe you mean he will pay off the loan on your tade? Are you trading in a car? If it's worth less then what you owe they will add on what's leftover onto the car you are buying. Tell them you don't care what the payment will be, you want to know the actual price of the car and what they are willing to give you for your trade (if there is one). The lower the overall price, the lower the payment. Also, if you owe more on your trade than what they want to give they will give you more for your trade instead of lowering the price of the one you want to buy. Don't let them do this. You'll end up paying more in taxes. If you decide to look elsewhere, tell them you do not have a trade. Get the best deal you can with them thinking you are paying cash. Then after you get a good price ask them what they would give you on your trade just to see what your options are. Don't let them pressure you and don't sign anything until you are 100% comfortable with everything. If they agree to fix something on the car, get it in writing and double check it (they will sneak in something like "up to $50"). If you feel like it's a bunk deal, get up and thank him for his time, shake his hand and walk out!
4. As an experienced lender/analyst, I will tell you that when the dealer said he will pay off your car if you default (dont make payments) he meant it. You dont say whether or not your credit is A+ or bad. What you are experiencing is known in the sub-prime industry as "full recourse" or "payment sharing". The dealer is actually lending you the money. He sells the loan to a lender for a deep discount. He may not receive all his money up front from the lender, or he may be 'fronting" the money and having the lender service the loan which means he gets his money as you pay. If your credit is bad, and this is your only option, negotiate the payment to the best of your ability, and get it in writing that your on time payments will be reported to the credit bureaus. You can easily tell by looking at the contract if its this kind of loan (payment sharing). Look for an area generally on the lower part of the contract (or back) where the dealer signs. It will say the dealer sells, assigns all rights, title and interest to: name of lender. Finally, If you DO have bad credit and want to re-establish, this type of loan (auto) is the best piece of credit you can have. Just make sure its reported to Experian, Trans Union or Equifax or all 3. And make your payments, or dont buy the car. Consumers may think these kind of lenders are scammers, but without lenders willing to take a chance on deadbeats, lots of bad credit people would not get any chance to re-establish. Also, sub-prime lenders take risks and lose out more than 'A' lenders so they charge more to make it up.
5. You're right to think that this doesn't add up. Try separating the purchase of the car from the financing. Talk to a couple of banks or credit unions about what kind of loan they can give you. Credit unions will probably give you the best rate. Once you have your financing lined up, then e-mail several dealerships and describe the exact kind of car you want (with options listed). Ask them for bids. The Internet departments of car dealerships can sometimes be pretty competitive. You might get a lower price than the one the salesperson on the showroom floor will give you. Then take the lowest bid. See the webpage listed below for more details.
6. RUN FAST IN THE OPPOSITE DIRECTION..