Car Financing - The Truth Revealed About Dealers

If you are on the verge of buying a new car, then you must be equip with enough knowledge about dealers in order for you not be ripped off and come up with the right decision.

Here are the truths that you must know about dealers:

1. It's all about cash.

Yes, whether it's in the form of spot cash payment or thru car financing dealers do always get cash for the car being sold.

2. Dealers do get more money when a buyer gets a car thru car financing.

If you do the math, you will see that if you compute your monthly payments for a period of 5 years or so, you will see for yourself that the amount you have paid is almost doubled the amount of the total value of the car the moment you bought it. So, you see, car dealers earn more money when you get it through car financing. For one car alone, say for example it costs about $30,000 in 5 years time through your monthly payments you are paying almost $60,000 which could have made you bought 2 cars in one go only if you have $60,000 in your hand during the time you bought the car.

3. Dealers are not the ones who do lease or finance the cars.

Basically, what happens is that you fill up a form for credit application and it's the dealer who will be the one to give it to the banks or finance companies. They are not the ones responsible in processing your credit application. What they are simply the bridge between you and the finance companies or banks.

4. Hidden fees.

This is something that you will be in total shock for. Dealers can change the interest rate even if your credit score is of good standing. Say for example, the finance company will have an interest of 5%; the dealer may add 2% on top of the 5% so in total it would be 7%. Their justification for adding interest? Well, it's to cover the cost of brokering the buyer's car financing. But in reality, it's additional profit on the part of the dealer.

However, you must not generalize all dealers some dealers do practice adding certain percentage but there are some who does not do this at all.

At the end, it is coming up with the right decision when buying car is your utmost priority. Do not give in to the hush and impulsive buying of a car. This might lead you to a deeper hole of debt and you might never get out anymore.