Most people concentrate on the sticker price of the car without giving much thought to the financing and “add on” features of the deal. The over all cost of your deal is what you should be looking at. This is a common blind spot that consumers have when buying cars and dealer know it.
In 1972, I bought my first new car at age 21. Being a computer programmer and over seeing the “Floor Plans” System for Union National Bank in Pittsburgh, I had a very good idea how much money the dealers where paying banks to keep the cars on the dealer’s lots. Going from dealership to dealership, I knew what inventories these dealers had. So taking advantage of me was not going to be easy. But like everyone else especially since I was young, they tried.
I found the car that I wanted from Dealer “A” but I went to Dealer “B” to buy the car. I told them how much I wanted to buy the car for. We agreed on a price that was lower than the sticker price. But the dealer thought that he was going to make up the difference on the interest rate of the loan and the “add on” options of the car. He started telling me how much the different options would cost me and I started telling him that the options he is talking about is already on the car. He quoted me an interest rate that his dealership would give me and I told him that I already have arrangements to buy my car using my bank.
Getting a loan was not like it is now. Up until 2008, a person could drop out of the shoot at the hospital and qualify for a loan. In my day, it did not matter if you had a good job or no job, at age 21 you needed a co-signer. My father co-signed for me. They offered me life insurance with the loan. In the event that something happened to the borrower, the loan would be paid off. But since the loan was in my father’s and my name, I took out the policy on my father.
In 1972, I bought my first new car at age 21. Being a computer programmer and over seeing the “Floor Plans” System for Union National Bank in Pittsburgh, I had a very good idea how much money the dealers where paying banks to keep the cars on the dealer’s lots. Going from dealership to dealership, I knew what inventories these dealers had. So taking advantage of me was not going to be easy. But like everyone else especially since I was young, they tried.
I found the car that I wanted from Dealer “A” but I went to Dealer “B” to buy the car. I told them how much I wanted to buy the car for. We agreed on a price that was lower than the sticker price. But the dealer thought that he was going to make up the difference on the interest rate of the loan and the “add on” options of the car. He started telling me how much the different options would cost me and I started telling him that the options he is talking about is already on the car. He quoted me an interest rate that his dealership would give me and I told him that I already have arrangements to buy my car using my bank.
Getting a loan was not like it is now. Up until 2008, a person could drop out of the shoot at the hospital and qualify for a loan. In my day, it did not matter if you had a good job or no job, at age 21 you needed a co-signer. My father co-signed for me. They offered me life insurance with the loan. In the event that something happened to the borrower, the loan would be paid off. But since the loan was in my father’s and my name, I took out the policy on my father.
Why? He was 55 at the time, smoked two or more packs a day and got about 3 hours of continuous sleep a day for 25 years. He worked 6 days a week from January to October. He worked 7 days a week from November to December for 25 years. Knowing the odds in 1972, he was at the end of his life span. He died less than 4 years later and the bank paid the car off and placed the car in my name. Some people called me all kinds of names because I was smart enough to know that Life Insurance is a gamble. You are betting that you will die and the company is betting that you will not. In most cases, I will not advise people to take out this option when buying a car because in most cases the odds are against you.
Below is a link to the article, “Biggest blind spot for car buyers? Financing” published by Zion’s Direct Online on September 29, 2011 written by Candice Choi.
http://think.zionsdirect.com/2011/09/29/biggest-blind-spot-for-car-buyers-financing/?m_source=ym_email&utm_medium=email&utm_content=article_3&utm_campaign=2011_10_05_newsletter
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