Paying too much for your auto loan? It can easily happen. If you financed at the dealership, you could be paying a much higher interest rate than you should be.
Wondering how a smart person like you could have gotten a bad deal? You’re certainly not alone. It happens all the time. Click here to see the three costliest mistakes you can make when buying a new or used car. Check out these 3 tricks from bankrate.com that car dealers use to give savvy buyers like you a sour deal:
Negotiating the monthly payment rather than the purchase price. Buying a car based on the amount of the monthly payment is a trap most people fall into. Although it’s a good idea to know what you can afford each month, if you provided that number to the salesman, you probably forfeited your chance to negotiate a lower price on your new car. Once volunteered, a monthly payment tells the salesman how much room is available for them to hide other costs like a higher interest rate and expensive (and usually unnecessary) add-ons.
Letting the car dealership determine your credit worthiness. You probably already know that your credit score determines the interest rate on your loan. The higher your credit score, the better loan rate you qualify for. Shaving even one percentage point of interest from a $15,000 car loan over 60 months will save you hundreds of dollars in interest paid over the life of the loan. Did you look at your credit score and interest rate when you signed on the dotted line? If not, you may be paying too much! Still not convinced? A recent study shows that most people think their credit score is worse than it is, which makes it easier for car dealers to sell you a car and a loan with a higher than necessary interest rate, costing you hundreds or thousands of dollars!
Financing the cost of add-ons separately. According to a recent report by National Automobile Dealers Association, 37% of the average gross profits earned in new and used car sales departments were generated in the F&I, or finance and insurance, office through aftermarket add-ons. Did you look closely at what you signed? There’s a good chance the dealer added in a few extras that made them thousands of dollars at your expense
Worried that you’re paying too much? We can help! It takes less than 60 seconds to see how much you can save.