Digital News Report – The Federal Trade Commission (FTC) gives potential car buyers help by providing questions to ask before buying a car. The government agency tells consumers to ask if they will get a higher price quote if they qualify for low interest financing.
The FTC uses the term dealer, but in some cases the dealer may use an outside lender. Here is what the FTC says to ask and watch out for.
1) Apparently some dealers have been charging more for cars when customers take low interest loans. The dealer may make up for the low interest rate with higher prices.
2) The FTC also says consumers should ask if the low interest financing requires a “larger than usual down payment”. This could be 25 or 30 percent higher.
3) Ask if there are limits to the term of the loan. Can you repay the loan quicker? This could save car buyers even more on interest payments. The FTC says you might want to pay the loan off in 24 or 36 months rather than the dealer’s longer terms.
4) Are there any balloon payments? The lender may require a balloon payment of several thousand dollars at the end of the loan.
5) Ask if you have to buy special add-ons like rustproofing, an extended warranty, or a service contract to qualify for the loan. If so, you need to ask yourself whether this is what you really wanted.
6) Does the low interest financing only apply to certain cars or models? Perhaps the dealer is just trying to unload the cars they have in stock.
7) Will you have to sign over your manufacturer’s rebate to qualify for low interest auto loan?
It is natural for the dealer to work out the best deal for the company. It is your job to negotiate the best deal for you and your family. Finally the FTC reminds consumers to read the invoice and the installment contract carefully before signing.
By: Tina Brown