Don’t Get Ripped off Buying a Car!
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This really makes me mad! I have lost respect for most car sales people (yes, there are woman car sales people). I get a phone call on Friday from a younger coworker of mine asking if she could use me as a reference. I asked her “for what” and she said that she needed five references to buy a car.
Now this is a young single mother of two who doesn’t have a car. She took off work and a friend of hers dropped her off with her kids at a car dealership. She had never bought a car before. Bad idea from the start. The salesman could smell the desperation a mile away.
So I asked her a few questions since I knew she was going to get taken. She had no clue. She didn’t know how much the car was, the interest rate of the loan, length of the loan, etc. All she knew was the payment. $289 a month. Oh sure, I can afford that! Classic sales tactic. Focus on the payment rather than the total cost.
She must have asked the salesman these same questions since she didn’t have a clue. I could hear the salesman in the background giving her the answers. The car was $5900. Ok, that’s not too bad. 48 months. Ok, still not too bad. But get this: 23% interest rate! I thought the salesman was kidding at first. Nope. Serious as a heart attack. I could hear him telling her that it would build her credit, that she could trade it in for something else in a year, etc. Well, she just got ripped off. $289 for 48 months comes out to a whopping $13,872. That’s more than two times the original price of the car.
I told her not to sign anything and that I’d pick her up. Despite telling her that she was getting ripped off and that it was a horrible deal, she would not listen. She hung up on me and proceeded to buy the car. I have absolutely no respect for anyone who would take advantage of a young single mother who was so desperate like this coworker of mine. It should be illegal to prey on people like this. But stupid isn’t illegal. And some people learn the hard way.
So here are some tips so you don’t get ripped off:
1. Don’t get car fever or fall in love with a car.
2. Bring someone with you who can be your advocate (at least someone who has experience buying a car).
3. Do some research. A little homework goes a long way.
4. Don’t focus on the payment. Focus on the total cost.
5. Know what you’re signing. The terms, price, payment, interest rate, etc.
6. Bring your own financing. Having options empowers you. If you already have a pre-approved car loan, you can use it or have the dealer try to beat it. Or better yet, just pay cash.
7. Know your rights and maintain your walk-away power. Remember, that if it starts getting high pressure or if you get uncomfortable, walk away. You’ll always have another chance to buy a car. Don’t get sucked into the sales and marketing pitches.
6 Comments on this post
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CD Rates Guy said:
How infuriating! I can’t believe the woman wouldn’t listen to you. She’s almost worse than the person taking advantage of her, bc she’s allowing it to happen even after getting your advice and voluntary help. Some people just can’t be helped.
On a side note, that pic is perfectly hilarious!
May 29th, 2009 at 2:08 pm -
Henry said:
Some people just don’t listen and have to learn the hard way. The only good thing about learning the hard way is that it’s a good lesson (and most people will actually learn something that way).
Isn’t the picture great?
May 29th, 2009 at 7:17 pm -
gas card said:
If anything you’re friend should have listened to you, the salesman must have pithced her even harder after you got off the phone with her or had pitched her so hard before you were on the phone with her, that I guess she was blinded by it. When buying a car you really do have to do your complete homework. One time… my father and I went to a dealership to purchase a car, and we said to the salesman that the car was way over priced and we could get a way better deal in new york city, as soon as we said that, the salesman realized who they were dealing with, and immediately knocked off $7,000 of the sticker price of the car. We still walked away, but it just goes to show you that there is alot that goes on, and some poor soul who bought the car, probably paid the sticker price, if not close to it. And… 23% interest rate for a car is absurd! I’ve honestly never seen it that high.
-Randy
June 21st, 2009 at 1:45 am -
Auto Loan Guy said:
Without looking at your friends credit, it is tough to know if they were getting ripped off or not. Some states do not have a maximum interest rate, but you generally never see rates higher than the mid-twenties. It is definitely a good idea to shop around for an auto loan, especially if you are not getting a low rate. Generally speaking though, older cars will have higher rates than newer cars. Older cars have a better chance of breaking down, which increases the risk that the customer will not be able to make the car payment. Additionally, buying older cars usually means you are financing less money. On the $3,000-$6,000 cars, rates are generally quite a bit higher. IF YOU QUALIFY FOR CREDIT UNION FINANCING, go there first. There rates are generally lower, and they do not usually penalize you as much for buying an older car. Additionally, I can tell you from about 10 years experience, with the lenders that give 23% loans, there is no incentive for the dealer to send your loan through those programs. With good credit, we can sometimes get kickbacks from the lender to send the contract to them, but good credit banks do not allow us to write the contract rate so high. Perhaps your friend should get a copy of her credit report before applying for an auto loan to make sure that there is not something inaccurate on there messing up her chances of getting a good rate?
September 25th, 2010 at 12:53 pm -
Buying New Car said:
Before you part with your hard-earned cash, be sure to check the car’s history online. If you’re buying privately, make sure you view it at the registered keeper’s address .
Buying New CarNovember 10th, 2010 at 2:12 am
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