Car Loans and Car Ads

Car advertising that promotes low rates, special features and high trade in allowances has become common.  Special car loan promotions and low interest rate car loans are familiar facets in the plethora of car loan ads that can be found in the local newspaper, online in television commercials.  These numbers and deals all sound alluring; however, appearances or first impressions may be deceiving.

There are various factors to consider and evaluate before anyone should accept what these ads initially display.  Savings can be fleeting if all aspects of the car loan and the car purchase are not reviewed.  A car loan interest rate is simply not enough information to evaluate the benefits of loan over another.  The down payment requirement and the loans term will certainly be important as will the necessary credit history or credit report. 

The FTC has listed some questions that a consumer should ask a car dealer regarding these car loan promotions.  The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them.  Questions that should be asked and data about the car loan offer that should be ascertained include:

Will you be charged a higher price for the car purchase to qualify for the low auto loan rates or special financing?

Would the price for the car be lower if you paid cash, or supplied your own financing or car loan from a different bank or credit union?

Does the auto financing require a larger than normal loan down payment? 

Are there any limits on the length or term of the car loan?

Are you required to make monthly car loan payments that repay the loan in a reduced or shorter period of time, such as 24 or 36 months as opposed to a 48 or 60 month term loan?

Are there any other special payment arrangements such as a large balloon payment that will be due at the end of the car loan term?

In order to obtain the dealers car finance special, will you have to purchase any additional services or extra merchandise such as rustproofing, an extended warranty, or a service contract to qualify for a low interest car loan?

Are the auto finance options and terms available for only a limited time? 

Does the low interest rate car loan apply to all of the cars that available for purchase or only those cars in stock or only to certain car models?

Is it mandatory that you give the auto dealer the manufacturer’s rebate to qualify for a special car loan interest rates or any auto financing?

Some other special car sales promotions include high trade-in allowances and free or low-cost options added to the car sale.  Some car dealers may promise to sell the car for a stated amount over the dealer’s invoice.  Questions that should be asked and data that needs to be acquired to help you determine whether any of the special promotions offer legitimate value include:

Does any advertised trade-in allowances apply to all cars brought in, regardless of their condition?

Are there any deductions from the trade in value for high mileage, dents, or rust?

Does the larger trade-in allowance impact the initial sales price of the car and make the cost of the new car higher than it would be without the trade-in?  In some cases, you may very well be giving back the value of a big trade-in allowance by over paying for the new car.

Is the car dealer who offers high value trade-in allowance and free or low-cost options for the cars actually presenting you a superior price on the car than another car dealer that does not have these special promotions and offers?

Does the car dealer’s invoice reflect the actual amount that the dealer pays the manufacturer?  In these situations it may be prudent to consult some independent consumer or automotive publications for information about what the dealer pays.

Does the dealer’s invoice include the cost of special options, such as rustproofing or products, that already have been added to the car? 

Compare and shop to see if this dealer is charging more for these options than any car dealers?

Are the cars on the lot and in stock that do not have costly options?  If there are no cars available without special, costly options, can the car dealer order one without extra costs?

Will the special offers apply or be available if you order a car instead of buying one of the cars that are on the lot?
  
Can you take utilize all of the offers or a combination of special offers in for any purchase?
  
Any car buyer should investigate the offers, the car loan rates and special deals before going to the car sales lot to avoid high pressure sales tactics that may induce someone into a car purchase or car loan that has less than favorable terms.  Check car loan rates online and see what type of loan you can arrange first.

After making a decision on which car dealer is providing the car you want to purchase and you have decided on where to obtain an auto loan, be sure to read the invoice for the sales and the car loan installment contract carefully.  If you are not satisfied with the terms or they don’t match what you thought you would be getting, make sure you get a written explanation before signing the paperwork.  Thorough comparison shopping will help to make sure you receive the car you want at the right price with car loan that does not restrict your lifestyle.

Tags: auto finance, auto financing, auto loan, auto loan rates, car finance, car loan payments, car loan rates, car loans, loans

This entry was posted on Wednesday, May 6th, 2009 at 7:27 pm and is filed under Articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.