Tt’s not every day that you try to finance a new car, and believe it or not there is a right way and a wrong way to get this job done. Of course no one wants to do things the wrong way, but it happens every once in a while. Here are some true horror stories that other people have faced when trying to finance their new car. Perhaps we can all learn something from these problems so that we may never repeat them.
The Classic Car Dealer Hostage SituationMany people will choose to make their new car purchase through a local car dealership. There is nothing wrong with this, and sometimes it can be the only way to purchase a brand new car. To make things more convenient, new car dealers will also offer their own in-house financing. This sounds like a great idea. You can purchase your new car and get all of the financing done in the same place, but this may not be the best choice.
Not all car dealerships play nice. Some of them have even been known to play a few tricks on customers in order to get them to use their in-house financing. There have been extreme cases where car dealerships have “misplaced” the customer’s keys in hopes of getting them to sign a contract and finance through them.
Choosing car finance through the dealer also gives them the opportunity to overcharge customers. When the car dealership has control of the financing, they can inflate the price if they feel like it. They may include hidden dealer’s fees. Secure financing before you go to the new car dealership if you want to be able to avoid these types of problems.
Pre-payment PenaltiesYou would think that a bank would be happy for you to pay off your car loan early and in most cases they are more than happy, but there are some sneaky banks and financial institutions out there that are imposing fees for paying off a loan early.
We all know that banks are not loaning us the money for a new car out of the kindness of their hearts. They are doing it to make money and there are some banks out there who do not like the idea of you paying your auto loan a little early. This is because they make less money. That is why there is a pre-payment penalty. Whoever heard of such a thing? The honest truth is this. They do exist. Make sure that you don’t fall victim to these types of payment penalties.