Bad Credit Auto Loans and the Car Dealership
by: Amy Latah
It's sort of like watching those First Aid
Course movies. There are 3 little kids playing happily in the sun. The
camera pans out and we see some power lines dangling near the ground
nearby. You KNOW what's going to happen and you are forced to sit there
and endure. Unfortunately, the same scenario holds true if you have bad
credit and are shopping for a car.
John and Mary Smith are working extra hard
to rebuild their credit after John's accident cost them thousands that
they didn't have. They've cut back everywhere they could; they narrowly
escaped bankruptcy several months back.
They know that an auto loan is the first big
step in re-establishing their bad credit. They have saved up some money
for a down payment and are heading out the door to the nearest car
dealership. It's a sunny day. They are smiling as they pull onto the car
Young Joe is standing nearby as they step
out of their car, (cue the Jaws music), he saunters up casually and
greets them with a smile. His shiny teeth nearly blind them. His
handshake is firm and his goal is clear: let's find you folks a new car.
John and Mary innocently warm up to their
nice, personable new friend. He seems genuinely concerned about their
past situation, and seems to be working extra hard to help them find the
perfect car. He brings up good benefits to the used cars he's showing
them; he's given them every reason in the world to believe that this
vehicle is the perfect one for them and their situation.
As they make themselves comfortable at the
desk and watch him get their registration out of their trade in, they
glance over to see the other salespeople looking over at them and
nudging each other. John and Mary glance uneasily at each other. Their
smiles start to fade.
Joe comes out from a door across the room,
followed by another gentleman who is looking directly at them as he
walks towards them. He introduces himself as Joe's manager and will be
sitting down to chat with them soon. His handshake is firm too.
Joe seems like a different guy as his
manager slips out of sight behind another door. “Now, the price of your
new car is listed at $15,995. The banks like to see about a third down,
which would be about $6000. Is that what you were thinking? Or were you
going to put down more to make your payments even lower?”
Uh, Joe, we told you out there on the lot we
only had $1000 to put down.
“Oh, sure you did, didn't you? Well, I've
found that most people tell me less out there on the lot because they
haven't gotten to know me yet. So, do you think you would be able to
come up with the whole $6000?”
John and Mary suddenly get an uneasy lump in
their stomachs. John's back starts to throb. Mary's hands feel clammy.
Soon Mr. Manager comes back out and explains
that the last car they took in just like their trade in was only worth
about $1500. He can see on their offer they were hoping to get about
$5000 out of it. Well, he can call around to different wholesalers to
see if they will give him a buy-bid of maybe $1800. Or, they could even
just keep it and try to sell it on their own for $2000. But, of course,
not having that trade equity will raise their payments.
The next 2 hours seem like a crazy circus
trip through a hall of mirrors. Bewildered and exhausted, John and Mary
finally emerge with an envelope of paperwork clutched in one hand, shiny
new keys to a 1 year old used car in the other.
They give Joe a pained, dazed smile and weak
handshake as they collapse into their new car, empty stomachs rumbling.
What John and Mary didn't see in their
rear-view mirror as they slowly drove off the lot, was Joe and his
manager smiling and shaking hands at yet another “pounder” for the
month. At this rate, they'll hit their 3rd level bonuses with ease.
John and Mary are the bread and butter
buyers of most auto dealerships across the US. They need the clout that
dealerships have with the lenders to get approved for a car loan and
begin rebuilding their credit. But the dealerships prey on this
weakness, and extort thousands and thousands of dollars from already
“wounded” consumers. John and Mary are already “buried” in their car,
owing thousands more than it's worth…and they haven't even finished
their hamburgers yet.
It's important to become as educated as you
can about your situation and all of the options and strategies that are
available to you…regardless of your credit. Don't think this little game
is ONLY played on the folks with bad credit. If you look like you can be
their next victim, you can rest assured you will be. Diligence and
knowledge are going to keep you free from the lions, and keep you on
track to buying cars without getting eaten alive.
http://www.insidethelionsden.com to find out the top three tips from
Amy that you have to know before buying a car.
Amy Latah is a
pro-consumer public speaker and strong supporter of
www.InsideTheLionsDen.com, a site designed to promote the
truth about how consumers have been played the fools for far too
This article was
posted on April 14, 2006