Look Out For These Car Credit traps
It’s not a secret that when it comes to the automotive world – and it’s financing – it’s a buyer’s market. Between bankrupt automakers and desperate car dealers looking to get their extra inventory off of the lot, now has never been a better time to pick up a new car – especially if you need to apply for car credit to do so!
However, like with most shopping, it’s important to look out for these “too good to be true” deals, which often might not be the best option for you, especially if you’re looking to finance your purchase. Here are the deals you’re likely to see, and why you should avoid them at all costs:
Buy One Car, Get The Second Free. Sounds like a great deal, right? You can purchase one vehicle, and the dealer will throw in another car for absolutely free! This might appear to be a great deal at first – especially if you have a large family that will benefit from the second car – but don’t sign that contract just yet. Dealers won’t let you choose your second car; as a result, they’ll often give you a car that doesn’t sell well, like an SUV or gas-guzzling truck. Additionally, that second car isn’t necessarily free; dealers will attach hidden fees to your loan application to ensure that they get some financial return. If you’re paying for the first car with the dealer’s car credit, you’ll be hit with a high-interest rate loan to cover the costs of your “free” second vehicle.
Low-Interest Car Credit. Dealers are now looking to entice buyers into their dealerships with the promise of low-interest rate loans. Sounds like a great deal, right? Don’t get excited just yet: often, you’ll need a stellar credit history in order to take advantage of these great car credit deals. Besides, these attractive loans are often only available with certain models. If you have another car on your mind that’s not covered by this deal, then you’re out of luck. To get the best financing deal, get competitive offers from your bank or credit union before you approach the dealer. This way, you’ll be sure to get car credit at a competitive interest rate.
Purchase A Car Today. Many dealers are promising customers that their car credit loans will be approved on the spot, meaning that they can drive away with a car that day. Yet if you take a closer look at the fine print, you’ll see that the terms of the loans are subject to change – and you might see your interest rates skyrocket just a few days later.
Don’t fall for this trick; instead, be sure to get a competitive loan offer from another bank or lender before you approach the dealer for financing. Another important note: never let the dealer know that you intend to drive the car off of the lot that day. You want to have the power in negotiations – and this will only put your dealer in a superior negotiating position!
