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Wednesday, August 15, 2012
Sometimes People Are A Little Too Eager to Part With Their Money
A friend of mine is in the market to buy a new vehicle. He asked me to go automobile shopping with him a few weekends ago. We went to a couple of new car dealerships to get an idea of what his options are.
Like I told him, the way things are now, he shouldn’t be thinking about buying a car. The economy is still sluggish and there is no real job security anymore. In most cases, you’re stuck with the responsibility of making car payments after you sign a sales contract. God forbid that you lose your job. Unless you have an emergency fund saved up, you could end up defaulting on the car loan. We already know what a repossession does to the credit rating.
Since he already has a good used car, he should just keep driving the used car until it conks out. I don’t understand why he is in such a rush to buy a new vehicle. The car that he has looks nice, drives really smooth, and the mileage is really low for the age of the car.
I have been driving the same car since 2003. I purchased the Honda brand new and it is still going strong after almost nine years of driving. I have not had any major problems with it, either. As long as people keep up with routine maintenance on their vehicles, they will last until forever. Unless I catch Lotto, I am going to continue driving the same car until it is no longer functioning. I don’t want any more car payments for a long time.
Another thing that I noticed about car dealerships is that the game hasn’t changed much since I purchased my very first car over 20 years ago. Car salespersons still play the same games to make a sale. They make everything look good initially on paper. At the last minute, they find a way to bring the price tag back up. They like to throw a lot of numbers at you at once to confuse you. Most salespeople that I have dealt with are rarely willing to give you copies of proposed deals for future reference. Apparently these types of tactics work on most customers.
In my friend’s case, he was told that he would get a $2,500 rebate off a starting price of $25,000. Plus, they would give him $3,000 for his car, if he trades it in. The proposed purchase price was brought back up to nearly $25,000 after fees and taxes. This doesn’t even include interest charges on the car loan.
The salesperson showed us this chart with “payment schedules”. One of the scenarios on the chart was $411 per month for 72 months. I asked the salesperson what interest rate the chart was based on. He said that he didn’t know off the top his head, but he guessed that it was about 9%. I am no math whiz, but I thought “Who in their right mind would pay 9% interest, when interest rates are rock bottom?” All you have to do is go to www.bankrate.com and see that the average car loan interest rates are at about 4.46% (for a 60 month loan a new car). My friend has good credit, so there is no reason for him to pay 9% interest.
I convinced my friend that he should not rush into anything. If he really wants to buy a new car, he should continue shopping around. A smart person shops around for the best price on the vehicle that he or she wants, as well as the lowest interest rate on any car loan. Salespersons like to ask buyers what they want their monthly car payments to be. Consumers should never get suckered into focusing on a low monthly car payment solely.
The car salesperson started sweating bullets after we told him we were leaving. He brought in his manager, as they always do, to see if he could “work something out” for my friend to get him to buy today. The manager threw out an offer to my friend and told him that the offer was only good for the day.
It is their objective to make prospects feel a sense of urgency. They want to make prospective buyers feel that they are losing out on something if they don’t hurry and buy. For the most part, it is pure bullshit when a sales manager tells a buyer that a deal is good for that day only. The way I see it, if they really want to work with a buyer, they can make a deal happen anytime.
I know that is how car salespeople roll. It’s how they earn a profit, and I ain’t mad at them. But customers still have to look out for their own best interests. Anyways, we ended up leaving the car dealership without my friend driving away in a new car. I just hope that my friend won’t jump the gun and waste his money by buying a new car any time soon.
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