In the car business they say “sticker is quicker” which means you can have a hassle free car buying experience as long as you are willing to pay full price. Simply accept what you are being told by the car salesman and sign the buyers order as directed and before you know it you are on your way home with your new ride without negotiating or any other type of hassle. How does that sound to you?

Getting a Good Car Deal without Haggling

The No Haggle Car Sales premise is an advertising gimmick, a rouse that some of the car buying public has swallowed hook, line and sinker. Think about it for a minute, the car dealer advertises “no hassle” car buying at their dealership and then they show a reduced price from the M.S.R.P. on new cars and a reduced price on used cars that they determine to be a fair profit regardless of market value and you are willing to pay that price because they have advertised a no hassle and no negotiation policy.

Now that the price of the vehicle has already been determined by the dealer it’s time to settle up. If you are going to write a check for your automobile great, just hand over the check and drive home in your new vehicle after you paid the price that the dealership thought was fair. Sounds like the scenario I mentioned earlier that can be done at any dealership in the country. However if you are going to finance your automobile you will have to sign a contract with an interest rate that has been determined to be fair by the dealer. Is the dealer making a profit on your finance charge? Then you might want to add an extended car warranty to your finance agreement, but is the price of the warranty fair or do you also assume that the cost is reasonable?

Is No Haggle Car Sales Right for You

Ok, so what about credit life insurance, options and accessories are they also priced reasonably? Maybe you have bought into the dealership’s advertising so thoroughly that you assume you are getting a deal or perhaps you don’t want to take the time to do some car buying homework and research. Either way or whether it is used or new you are willing to pay more than you need to pay for your vehicle. That’s Ok with them as long as it is Ok with you and their no haggle car sales advertising dollars were well spent.

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Actually having an upside down car loan is a very common occurrence today when a person buys and finances a vehicle with a very small or no down payment at all. Automobiles depreciate rather quickly and unless you put down a sizable down payment or have a trade-in that is worth several thousand dollars there is very good chance you will end up with an upside down loan during the term of the loan up until the last year of the term.

The Process of Trading a Car with an Upside Down Loan

People trade their cars in every day that owe more on them than they are worth. There are a few conditions that must be met for a person to do this, one is that you must have good credit or they have the cash to pay off the outstanding balance. Also the amount of their upside down loan is a reasonable amount which will depend upon the vehicle they are purchasing. The way this usually works is that the amount that is outstanding on the old car after they take into consideration the value will be in to the loan of the new car. If the balance is just a few thousand dollars and the buyer has good credit it usually not a problem. However there are times when a person may be many thousands upside down and the lender will not allow that outstanding balance to be rolled over onto the new loan.

To give you an example let’s say the vehicle you want to purchase is $20,000 and your trade-in is valued at $10,000, but your outstanding loan on your trade-in is $12,000. Therefore you are upside down by $2000. The dealer will apply the $2000 which is outstanding to your new vehicle loan which makes the amount financed $22,000. This is very common practice, but if you do not have good credit the lender will not allow you to add the $2000. Auto lenders have parameters which dictate how much they will finance of the new vehicle depending upon your credit score. All lenders have rules and regulations, but to give you an idea what I’m talking about if you had a great score of let’s say 780 the lender may allow you to finance up to 140% of value of the vehicle. Now if you had a credit score of 680 the lender may only allow you to finance 100% of the new vehicle and if your score was even lower then they would only finance 80% of the vehicle which would then require you to have a 20% down payment and pay the $2000 outstanding balance which caused your loan to be upside down.

According to the above example if your loan was upside down by $9000 you would be required to pay $1000 up front because the bank would only finance $28,000 which is 140% of the $20,000 car that you want to purchase. In this scenario the bank would require you to have excellent credit. That should give you a pretty good idea on how to trade your car with an upside down loan. The best way to avoid being caught with an upside down auto loan is to put down as much money as possible and you purchase a vehicle. A good rule of thumb is 25% of the amount financed to avoid being in a negative equity position the next time you trade-in your car.

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What is a Buy Here Pay Here Dealer

The main purpose of the Buy Here Pay Here (BHPH) automobile dealership is to cater the buyer that has bad credit and even those with terrible credit. Their typical customers are unable to get auto loans conventionally because of their poor credit standing so these BHPH dealerships offer in house financing so practically anyone can buy and finance a vehicle regardless of their credit score. The car lot or dealer not only sells the vehicle, but also act as the lender and finances the purchase. The buyer makes their payments to the selling dealer on a weekly or bi-weekly schedule that usually correlates with the pay period of the buyers/borrowers job.  This way the payments are smaller and they are due on the same or next day that they get paid from their employer.

The Offerings of BHPH Car Dealerships

The inventory and selection of vehicles offered by the Buy Here Pay Here lot typically consist of used vehicles that often have high miles. These are not necessarily bad or junk cars, but they are less costly and this limits the amount of risk that is taken on by the owner of the dealership. They are financing people with credit problems and they want to reduce their exposure as much as possible. Repossessing and taking back cars from their customers that don’t fulfill their part of the installment agreement is not uncommon. In fact this is a very costly part of operating a BHPH establishment. Many of these dealers also offer extended warranties on the vehicles they sell and finance which is very good idea because nobody wants to make payments on a car that is broken down or inoperable. These warranties are sometimes included in the price of the vehicle or added into the payments which is a source of additional income for the dealer, but depending on how you look at it, this could a win/win for both parties.

Buy Here Pay Here Caveats

Doing business with a buy here pay here car dealer is not for everyone, but if you need a vehicle and your have bad credit then this might be your only choice. When I say bad credit I mean real bad credit, because there are many dealers that work with sub-prime auto lenders and finance companies that will be able to finance people with less than great credit, but only if the dealer has an association or relationship with these types of lenders. So choosing the best dealer for your particular situation is important. Buying and financing a vehicle though a dealer that has in house financing can be quite costly, but that is to be expected when you need to finance and you have terrible credit. In most cases you are paying more for the car than it is worth, you will be paying a high interest rate for your vehicle and you are often expected to make your payments in person at the dealership.

A word to the wise is sufficient, but sometimes you don’t have too many choices when you need an automobile to get to work and do what needs to be done every day. Sometimes people need a second chance when it comes to financing a vehicle and that is where this type of dealer comes in to play. Yes, there are perils and pitfalls of buy here pay here car dealers, but that may be the best answer when your financial situation calls for a solution to your transportation needs. Choose from a wide range of new and used cars for sale online at www.motors.co.uk and find fantastic deals on your dream car in your local area or nationwide from private sellers to trade dealers.

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Negotiating Car Installment Cautions

In fact the dealership and the salesman do their best to sell a car by going back and forth with the customer over the monthly payment. They use a technique that is commonly called “Packing the Payment” which is a standard practice among automobile dealers for negotiating car payments. To give you an idea of how packing the payment works it’s easier to use an example. Let’s say you have selected a vehicle to purchase that is priced at $20,000 and your credit qualifies you for a 5% interest rate for a term of 60 months. To simplify this example we will say that the sales tax, title and license fees are all included in the $20,000. So if you calculate the payments for the term and interest rate shown above the payment should be approximately $377 a month for 60 months.

As a way of packing the payment the sales manager may use an 8% interest rate and a $22,000 price which would come out to be $446 per month for 60 months. Now the car salesman presents the payments to the buyer and the buyer will negotiate lower car payments. The buyer and the salesperson will go back and forth and maybe settle on $415 a month. The buyer feels that they have made a good deal because they negotiated the payments down by $31 a month when in fact they will be paying $38 more than they need to pay (the difference of $415 and $377). Unless you have a financial calculator with you or you have calculated approximate payments before visiting the dealer you would never know.

Now when it is time to sign your papers you should be able to spot that something is not quite right if you are paying close attention. That $38 a month over 60 months comes to $2280 and these extra charges need to be shown on the contracts or car buyer’s order somewhere. It might be in the price of the car or it could be in the way of a higher interest rate. It may even come in the way of having the business manager selling you an extended warranty for only $15 a month to bring your vehicle payment up to $430 a month and then including the warranty on the paperwork for $2280 plus the actual price of the warranty. It could be in several different places, but this is what can happen when you are negotiating low car payments rather than the price.

You may be looking for advice on negotiating low car payments, but this one area where the car dealers can make thousands of dollars in additional profit. When your focus is all about the amount of the car payments it is easy for you to get taken. The best advice I could give that will keep you from paying more than you need to pay is to do your due dilligence before you visit the dealer. Take a look at the steps to buying a car for a step by step guide to preparing and doing the research you need to do before you get clipped by your local car dealership. You will find informative articles and posts that will provide you with an inside look at the methods car dealers use to get your money and my recommendations for bargaining on car payments.

The national average credit score at the time of this writing is 692 which is lower than it was only a few years ago. However when it comes to buying a car the automobile lenders consider anything above 700 to be a good credit score although some of the auto maker’s financing divisions require a 720 to qualify for the best rates. That is not to say that you can’t get an auto loan with an excellent rate because you can and people are doing it every day.

Car Buying Power vs. Credit Score

Credit Score: 720-849 – A score that falls into this range is considered excellent by automobile lenders and you will qualify for the best rates and longest terms. You will be entitled to any programs and special incentives that the auto maker or lending institution may have available and a down payment is rarely required. Lenders want to lend you money to purchase a car.

Credit Score: 680-719 – This is recognized by most auto lenders to be a good credit score to buy a car. Some banks, credit unions and automobile manufacturer’s finance departments may require a 700 score to get the best finance incentives, but most of them will include anyone with a 680 score or above.

Credit Score: 620-679 – Some creditors believe this to be a good credit score, but for many of the auto lenders a score under 680 does not qualify the car buyer for the best rates. A person can still buy and finance a vehicle, but their interest rate may be a couple of points higher and the term of the loan may be restricted to a shorter period or require a down payment. Often the car makers offer a rebate in lieu of special financing rates to compensate and reduce the cost of financing.

Credit Score: 580-619 – No matter who the lender this is considered a poor credit score. It doesn’t matter if you are buy a car or anything else. There are still financial institutions that will lend you money to purchase a vehicle, but you will pay a premium price when it comes to the interest rate on your loan. Typically you will be required to make a down payment and the term limit will be 60 months or less depending on the vehicle, price paid, down payment and credit history. Sometimes the only auto lender that may approve you for the loan is a sub-prime lender that specializes in car loans for people with poor credit.

Credit Score: 500-579 – When your credit score is in this range lenders are hesitant to grant you a car buying loan. There are lenders that will, but they are sub-prime lenders and a down payment of some kind is required. They limit the amount they will lend based on your income and down payment. These types of auto loans are usually reviewed on a case by case basis that also looks at your credit history. I have seen many people buy and finance cars with a credit score in this range, but their interest rate was always double digit and they were required to put down $1500.00 or more depending on the vehicle, mileage and the length of time on their job.

Credit Score: 300-499 – This is a bad to very bad credit score and the best option for buying and financing a car is at one of the many Buy Here Pay Here car dealers scattered across the country. They specialize in low credit score car buying and financing. They have what is commonly called in house financing. This is where the car dealer finances them and the payments are typically made on a weekly basis right where they bought their vehicle.

After going over the above credit tiers you should have pretty good idea of what is a good credit score to buy a car. Having an automobile at your disposal is a necessity today and therefore there are options for buying a car no matter what your credit standing. Knowing your credit score is one way of avoiding any car dealer scams and paying too much. There are more ways to save a fortune on a vehicle in the steps to buy a car.

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When you visit the auto dealer and you and the salesman agree on a vehicle and the terms to purchase that vehicle it is written up on a buyers order unless you are taking immediate delivery. If you take delivery during your visit you will complete all the paperwork which includes a bill of sale and then a buyers order will not be needed.

Uses for a Car Buyers Order

The buyers order is normally used when you will take delivery of you new vehicle at a later date. When you order a new car or have the dealer locate a new vehicle for you to purchase it is a standard practice to write an order that consists of all of your information, the details of the car including color, make, model, options, selling price and an approximate date of delivery. Then the buyer will be required to leave a deposit which will also be noted on the buyers order. If the purchase is to be financed it should also spell out those details, such as down payment, finance term and interest rate. When you return to take delivery of your automobile the buyers order will be replaced with a bill of sale that is filled out with the same information.

One of the other times that a car buyers order is used is when you are using an outside lender to purchase you new car. If you arrange your auto loan through your local bank or credit union often they will require you to provide them with a buyers order that spells out the conditions of the sale including amount financed and the VIN number (vehicle identification number or serial number) before they finalize your approval and provide the funds to the car dealership. Then after the purchase they will want a copy of the bill of sale and proof that they have a lien on the vehicle you are buying.

It is also common to leave a deposit and sign a buyers order when you are waiting to get your credit approved when you live in a state that does not allow a spot delivery. When there is a spot delivery there is no reason to have car buyers order.

When it comes down to answering the question what is a car buyers order it is basically a receipt provided by the dealership to outline the details of your automobile purchase and a document that provides you with proof of your deposit.

Remember, when you leave a deposit with the car dealer you should never give them cash or a check. If there is a disagreement about the transaction you can cancel the deal and request your deposit be returned. Some dealers will threaten to keep your deposit or run you in circles, but if you use a credit card to leave your deposit the card issuer will gladly issue the credit and charge back the dealer. However if you pay by cash or check it may be difficult to get your deposit back and maybe not at all. Read the steps to buy a car to protect yourself.

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Credit Reports and Automobile Dealership Legal Obligations

Many people are hesitant to supply their driver’s license when they go for a test drive because they believe that the dealer will run a credit report on them without their consent. To clear up this misconception you should know that a car dealership does not have the ability to run your credit without your social security number and written approval is the only way that your credit history can be accessed legally.

The act of pulling a credit report requires you to provide them with your social security number and sign a form that you are giving them permission. This is the only way that the dealer can legally check your credit. Only a few years back dealers would run your credit with your S.S. # without a signature of consent over the phone, but the laws have changed and this is no longer legal for car dealers to do when trying to sell you a car. Violating this law can result in the dealership paying a very costly fine that could be several thousand up to eleven thousand dollars depending on the state where the business is located.

Trade Keys and Legal Auto Dealer Methods

Another one of the most often asked questions about the legality of car dealers practices is holding the trade-in keys so the customer can’t leave. The customer can feel like they are being held hostage because the car salesman will take the potential buyers keys for their trade and give them to the used car manager to appraise their car, but not return them. Not until they talk or pressured to buy a car by the salesman and sales manager are the keys returned. As far as this being legal for a car dealer to do when they are trying to sell you a car is a gray area.

Technically it may be an illegal automobile dealership practice, but if you were to pursue the matter by calling the police you keys would be returned before the authorities arrive and when they finally do show up no report would be filed. It is not uncommon for the police to summoned to an dealer’s showroom either by the dealership or the customer, but it very rarely goes farther than the policeman making sure that things are under control and asking the customer to leave. The local authorities will almost always side with the dealership because they are a local tax paying business. You offered up your keys and that cannot be considered an illegal act as far as the law is concerned. Keeping your trade-in keys is a risk you take when visiting a dealership, but usually a firm and continued request will get your keys returned.

Paperwork and Legal Car Dealer Practices

One area where the legality of dealership practices is often questioned is the paperwork. Many dealers have been accused of adding items to the bill of sale or other documents after the buyer signs, but that is not very common because it is illegal for a dealer to alter a contract at a later date. The penalty and fines that accompany an illegal act like altering a document are quite stiff and not worth the risk. There have been cases where car lots or dealers have been found guilty of such a practice, but it’s not typical. Usually the car dealer will hide, cover or divert the buyers attention from an area that they don’t want the buyer to read, but when it comes down to it the buyer did not carefully go over and read the documents they signed. You might consider this to not be legal for a dealer to do, but signing legal agreements without reviewing them is not illegal, but the consumer’s mistake.

Yo-Yo Scam or Legal Car Dealership Move

The most written and talked about practice that automobile dealers do is to call a customer back to the dealership a day or two later and say that the lender said they have to put more money down or pay a higher interest rate. This may sound illegal, but in many states across the country this is a standard practice. It’s called a spot delivery, the paperwork is completed and the car delivered without the final approval of the lender.

The buyer assumes that everything is done and that they are approved, but in fact the finance manager thought the lender would approve the deal as written, but the lender has an issue with the borrower and they require more money down or a higher interest rate which in turn raises the monthly car payment. It sounds like an illegal move on the auto dealers behalf, but the truth is that the states where a spot delivery is legal this practice is legal for the car dealer to do when selling a car. In the states where a spot delivery is illegal the dealer won’t allow you to take delivery until your loan is approved which may take a day or two.

You might wonder about some of the techniques and methods that car dealers use to sell a car, but for the most part they are legal. There are some gray areas as shown above, but overall most of their practices are within the law. The business of selling cars is closely monitored by each state’s attorney general because of some of the methods they used in the past were illegal, but today the fines and penalties outweigh any profit they can make.

Car dealerships have many tricks and methods for getting your money when you buy a car legally so in most cases they don’t need to do anything illegal to sell you a car. However they are very good at pushing the envelope and staying in the gray areas because buyers that don’t do their homework and don’t pay close attention will pay them very big profits. Use the steps to buy a car to avoid scams and get you best price on a new car.

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