This is still kind of a little known fact about me, but I once sold cars for about 8 months. Yeah, laugh now – I was a used car sales(wo)man, with a degree from one of the top 20 universities in the country. Try explaining that one to your parents.
Anyway, I always thought I should write a book about my experiences and/or as a guide to how to buy a vehicle (particularly for women and idiots- not that those two things are necessarily the same).
I haven’t written said book yet (otherwise I’d be blogging from the 2000 sq foot lounge at my designer horse farm), but I figured I’d offer up this quick guide for people who may be looking to replace their vehicle sometime in the near future.
1.
Know your credit score – and what it means
If Blockbuster still calls you to harass you about that VHS copy of Dazed and Confused from 1998, your credit score probably sucks and no one is going to allow you to finance a newspaper, much less a $52,000 Escalade.
There are three credit bureaus – Experian, TransUnion and EquiFax – if any of them know you by name (or by multiple names – keep an eye out for identity theft), you probably have a problem.
Also, if you still haven’t made those back payments you owe to your baby mama for that little snot-devil you spawned, no bank is going to lend you money for a sweet ride. You don’t care about paying Lil Homie’s doctor’s bills? You probably aren’t going to pay for your new wheels, either.
2.
Know what you can afford before you go to the dealership. If you’re budgeting for around $300/month for a car payment, don’t start off in the Corvette show room (unless you like indulging in a little S&M-style torture).
Also, nothing new or relatively-new with “ss,” “turbo,” “hybrid” or “harley davidson edition” after the name is going to finance for anywhere near $300 a month, so set realistic expectations.
And just because you think you can afford $300/mo for a car payment (you know, including the allowance money from daddy and the little bit extra on the side from the occasional pot sale) doesn’t mean the bank will agree. Generally banks will approve you for around 10-15% (depending on your credit of course) of your gross monthly income (it’s called gross, because that’s how you feel when you realize that’s how much you had before the government got their hands on it).
Bring pay stubs (and not hand-written ones signed by your John) to prove your income.
3.
I don’t care what the commercial said – you cannot trade in the 2003 Dodge Durango on which you still owe $10,000 and lower your payments in a fully loaded anything. That’s not how math works.
When car dealers say ‘We’ll pay off your trade!’ what they mean is ‘We’ll trick you into thinking we paid off your trade by rolling the balance due into the cost of your new car!’
That $10,000 doesn’t magically disappear – sometimes dealers can use a manufacturers rebate to eat some of it (if you’re buying a new car), but in actuality, you’re still paying most of that balance on top of the cost of your new car. Which means the Chevy HHR with a sticker price of $18,500? That just became almost a $30,000 vehicle. Good luck trading out of that thing any time soon.
4.
Monthly payments aren’t just magical numbers that salespeople pull out of their asses. Those rates are calculated based on actual things like ‘interest’ and ‘total amount financed’ and ‘length (term) of the loan.’
So when you yell at your salesperson for refusing to give you a $500 monthly payment on a $26,500 Silverado with that 2003 Durango (valued at negative $10k) as a trade-in, keep in mind that somewhere, a logic kitten is crying.
If you take $26,500 + $10,000, and just divide that by 60 (assuming 0 percent interest – which you’re almost NEVER going to get on a 5 year term, and certainly not with less than absolutely stellar credit), you already get $608. And like I said – that’s without interest. There is no amount of magic or bribe-sex that will convince a car dealer to lower the price of a vehicle that much.
5.
Finally, for godssake, plan on putting money down on the car. I don’t care how damned appealing ‘0% down!’ sounds, or how many inflatable things with wavy arms the dealership has – it’s a BAD idea.
When you buy a car, there are things associated with it, like tax, title and fees. If you put 0% down, you’re financing the cost of those extras into the cost of the car.
That means you’re already paying $2000-$3000 more for the car than it’s worth, and since the value of that car is going to drop another $5,000 - $10,000 the second you drive it off the lot, you’re really going to be upside down.
Now that Kia Soul that looked so trendy in the showroom is going to be yours for the next 7 years, unless Great Aunt Bertie dies and leaves you enough to pay it off.
So armed with these tips, you should at least make your salesperson a little less inclined to stab you next time you go to buy a car.
Anyone have any car-buying horror stories? Or any other questions about car buying that you’d like me to answer (from my obviously-overqualified-insider perspective)?