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AUTO LOAN EXPERTS

Get Pre-Approved

Pre-approval might seem like an extra step in the car buying process, but there are good reasons to take a little extra time to get a pre-approved car loan:

It encourages you to stick to a budget: A pre-approval notice will let you know exactly how much you can spend.

It simplifies negotiation: Once you're pre-approved, you can shop for the car as if you had a check in your pocket. This helps you keep focused on the actual selling price of the car, rather than keeping track of the interest rate, down payment, loan term and trade-in. When asking for the price on the car, you can simply ask, "What's the 'out-the door' price on this car?"

It reduces the risk of spot delivery complications: "Yo-yo financing" occurs when a dealer allows a consumer with shaky credit to take possession of a vehicle without the financing being fully sorted out. A few days later, the buyer gets a call from the dealer saying that the loan was not approved and that he has to bring back the car to either re-apply for a loan (usually with higher rates), or worse, come up with a larger down payment. Buyers can avoid situations like this if they have been pre-approved for a loan

It saves time and hassle in the finance and insurance office: Car buyers dread the finance and insurance (F&I) office because of the time it takes and the sales pitches the F&I manager makes. Some of the delay is unavoidable. There is a lot of paperwork involved in the purchase of a vehicle. But if you have been pre-approved, the time — theoretically — should be cut in half. And when the F&I manager pitches tire warranties and paint protection, you can always use your pre-approval as an easy way of saying no. Let the manager know that you've been approved for a certain amount and you don't want to spend any more.

American 1 Credit Union can discuss loan options to help you set a realistic price range that fits your means and budget.

CLICK HERE to get pre-approved.

Get all the facts

­Before visiting a dealership at all, gather as much additional information as you possibly can on the vehicles in your price range. There are many websites that can help give you all of the information that you need including:

Be a smart shopper

Informed shoppers have an edge when negotiating price. To get the best deal, plan your moves and take your time:

  • Know what you want, but be flexible. Narrow your list to two or three models that best suit your needs and pocketbook.
     
  • Shop competing dealers to compare prices on the same vehicle, with the same or similar features. You're not likely to get the dealer's "best" price for a vehicle just by asking. Still, this can give you an idea of how willing the dealer is to negotiate. Never put a deposit on a car just to get a price quote. Don't allow the salesperson to "steer" you toward a more expensive vehicle or a version that includes features you don't want.
     
  • If you have a trade-in, don't acknowledge this fact until you've secured a firm selling price on the new vehicle from a salesperson. This way, he or she won't be able to "inflate" the trade-in value by manipulating the selling price of the new vehicle.
     
  • Test drive the exact car you've decided upon - before you buy.

Be a strong negotiator

Know the numbers: By now, you should know the approximate value of the used car you're considering. Just knowing this value will make you a better negotiator. After all, if a dealer is insisting a car is worth $14,000 but your research tells you it's worth only $12,000, you'll negotiate with more conviction.

The dealer will usually try to justify his asking price. But if you have looked up the car's value and included all options and allowed for the mileage, you should be very close to the right price.

Be ready to walk: Don't get your heart too set on one particular vehicle, no matter what the dealer says about the current "sale" going on at the dealership. There's always more where that came from. If a dealer thinks you're in love with the car you just test-drove, you'll be in a weak position to negotiate. But if he thinks you might walk away without buying, you will have more leverage when the negotiating starts.

Make a low offer and sweeten the deal slowly: The best way to explain this rule is to use some real number. Let's say the price of your target car is listed in the ad or on the window sticker as $12,700. If you've discovered that the true market value for that car is actually $12,000, you can start by offering a bit under that: say $11,700. Don't worry if the salesman acts insulted; it's just part of the negotiation process. Starting lower leaves you some wiggle room to negotiate. The salesperson may try to "meet" your offered price is by offering you dealer add-ons. Unless you know that you wanted these extras in advance, turn them down. If the salesperson still refuses your offer, raise your price to the approximate value and show a printout of this figure. The salesperson may counter with other valuations, such as citing the Kelly Blue Book price. Keep in mind that Kelley Blue Book shows "listing" prices that are being asked by dealers - not what they are really getting paid for the cars.

Inspect the contract

Before you sign anything, read the entire contract. Be certain you understand exactly what you're buying. The salesperson will likely pressure you to sign on the spot, to get a legally binding contract that sets the terms of your purchase. Worse, you may be in a hurry because you're eager to drive off in your new car. Once you sign that document, it's difficult, if not impossible, to get it changed. A little time spent reading now can save you a sizable amount of money later.

If in doubt, take the contract home. Go over it at your own pace, and contact the dealer if you have any questions. If a dealer doesn't want you to take the contract home, get a written purchase agreement that spells out all the details. Once you're satisfied with that agreement, it can be written into a contract. If a dealer won't provide either, it's probably best to walk away from the deal.

Here's what the contract should spell out:

  • Sale price: The amount you've agreed to pay for the car and optional equipment, plus any dealer-installed accessories.
     
  • Down payment: How much you have to pay immediately, either in cash or combined with a trade-in and/or rebate.
     
  • Trade-in value: The amount of money you're getting for your old car or truck, to be applied to the new-vehicle purchase.
     
  • Destination charge: Sometimes called freight, this is the cost of shipping the car to the dealer. Every vehicle has a specific, non-negotiable destination charge.
     
  • Sales tax: Check with your state or local government to determine how tax is assessed in your area. Most states levy sales tax on the full purchase price of the new vehicle. In some states, sales tax is calculated on the net price after trade-in value has been deducted.
     
  • Total cost: Be sure the all-important "bottom line" is filled in, so you know your total price including options, accessories, destination charge, dealer prep, and taxes. If a dealer leaves this portion of the contract blank, you can end up paying more than you had expected.

Consider fuel economy

If you’re like most people, fuel economy is a key factor when shopping for a car. This 2018 Fuel Economy Guide helps you choose the most fuel-efficient vehicle that meets your needs. The guide features updated fuel economy data for new and used passenger vehicles, allows side-by-side comparisons, fuel-saving tips and much more!

Protect your investment

A new or used vehicle is one of the most important purchases you can make.  Protecting your investment is so important. American 1 offers several products that can help you safeguard your vehicle – both from the wear and tear of driving and from unforeseen accidents that can happen at any time.

CLICK HERE for more information on protecting your investment.

Sources: Edmunds.com, howstuffworks.com

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