How to get the lowest car payments possible on that Honda or other vehicle you desire
With today’s gruesome economy (a recession could easily be lurking around the corner or may already be upon us depending on which news source you listen to), it is more important than ever to cut wasteful spending and save money wherever possible. One of the biggest and actually easiest areas to save big is with car payments and it doesn’t matter if you are purchasing a new or used car, truck or SUV (I would advise you to abstain from an SUV unless you really need it as they are horrible on gas and will waste even more of your money). If you know what you are doing and follow just a few steps you can easily save yourself thousands of dollars that would otherwise have been easy profits for the car dealer and sales staff.
First, to be ready enough to go to the Honda dealer (or any other car dealer as the same techniques will apply there), we should first have a few things planed before doing it – planning is essential to your success in negotiating and obtaining a truly great deal! The first thing we need to plan before going to a dealer is to have enough money to buy (this includes whether or not we are paying cash or financing and how much we can really afford to put towards the purchase price (down payment)). We need to discuss how we are going to get a car loan if necessary and from whom. It is always a good idea to pull your credit before going to the car dealership.
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It is also a very good idea to shop your credit around through some internet sources and a credit union or two. You will get a great idea of what you qualify for, rates, and more. This way the car dealer can’t pull the wool over your eyes on that new or used Honda and try and trick you into accepting higher rates and worse terms than you qualify for. Don’t think your car dealer would do that to you – read this – according to Edmunds.com, Consumer Reports and numerous other sources car dealers will try and inflate the rate 100% of the time if you let them! This rate inflation on average amounts to almost $2,000 in extra profits for your car dealer and their finance manager.
Be careful of extra add-ons, markups, and other hidden extras. Car dealers love to add these on to the price of your next Honda or other similar vehicle. It can be as simple as the dealer prep fee, an additional mark up for a hot vehicle or something as simple as mud flaps. Yes, some cars don’t come with mud flaps as standard, but you shouldn’t pay the $200 most dealers will charge for this little add on – the true dealer cost is around $40. It’s the same thing with a spoiler or other fashionable accessory. A car spoiler costs around $200 to $250 including having it painted (many car dealers do not stock painted spoilers and have a local company paint them on demand). They then charge you anywhere from $600 to $1,000 for the spoiler.
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Then there’s the First Place Finish or whatever paint sealant system the dealer uses. They all do the same thing – provide a polymer protectant and then a minimal guarantee that might cover something depending on how the car was used (in most cases the warranty or guarantee is meaningless as it has so many loopholes as to the care and conditions the car is subjected to). The true cost and value of this protection is around $5 to $10 (you can buy the exact same polymer protectants at your local auto supply store). What do dealers charge? On average $500 or more! What a rip off! It may not seem like much at first, but $300 here, $700 there – it all adds up to serious profit for the car dealer and much higher car payments and costs for you. Almost every Honda car dealer is a millionaire. The average Honda automotive finance manager makes $100,000 per year or more. If you are the average American they make far more money than you do. Why would you want to give away your hard earned money to these characters for products that you can easily purchase yourself or do without and save a ton of money? The best rule is to avoid any and all dealer add-ons (this applies even if the car dealer is non Honda).
It’s also a good idea to bring your own calculator so you can easily see the true cost of adding that spoiler, warranty and more into your payments and the term of the loan. This will help you guard against the finance manager spreading out the term so your payments are lower and more affordable. For example, if your payments are $350 per month and to keep all the add-ons you want the finance manager adds another 12 months to the term and you just paid out another $4200. You have to be savvy and do your homework.
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If you don’t go to the car dealer prepared they will basically rob or fleece you dry – it’s their job to do this. And they have many, many tools at their disposal to do this. They will start by making you fall in love with the car. Then they will take you and go over your trade in with you. They will point out all the chips, scratches and anything wrong with it so you will take a lower offer (notice how they will never tell you anything positive about your trade in – this works entirely to their benefit). Next they will play the four square game with you where they try and get you off of price and trade in value and into payments – because once you are sold on payments they’ve basically got you.
Do your homework before going into your local Honda car dealership. Pull your credit, apply for a loan if you need one at your credit union and other online and similar sources as they can many times give you better terms and rates than the car dealerships (right now many car dealers are offering 0 percent and similar low rates – keep in mind that 75% of car buyers do not qualify for these special rates and this is where it really pays to be prepared). You may not have bad credit, but barely miss the special rates and so no the dealer is trying to give you 10% when you qualify for 6.5% at your credit union. The difference 3 to 4 points in rate can make is huge over the term of your loan. So shop your financing and remember do not buy any add-ons at the car dealer. All of these can be purchased elsewhere for far, far less (the average dealer markup on an add-on is well over 150%). If you heed these steps and go in to your local Honda car dealership (or any other make for that matter) prepared and with a plan you will get a much better deal than most everyone else and end up paying thousands less!
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