2001FZ1 said:
Very true. The dealers will take all your money and give you a high interest rate if you don't know what is going on.
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Actually this statement is incorrect. The banks will not let the dealer mark the rate up more than a certain percentage. The rates the dealer gets are usually lower than what an individual can get thru the bank.
If you can make your purchase before the end of the month and are interested in a GM product, now is the time to purchase. Everyone purchases at GM employee price.
that varies from state to state. Here in IL, they can only mark up the rate 3%. In NY they can only mark it up to 24% (I think) Some banks will only let you mark up a certain amount, the captives are usually the most notorias for that (captive=loan company subsisdized by manufacturer; ie GMAC Ford Credit, Honda Finance, etc)
The problem isn't only the interest rate, it's the cost of the car vs the cost of the new car. If somebody like the person walked into a store that I was selling for, I am thinking, I just made my mortgage payment. Here is how...
I am going to lowball him on his trade (like offer him a grand for a car that is worth 4K) then I am going to sell him his car at sticker, tacking on an extended warrenty, gap insurance, undercoating, VIN etching, dent and scratch protection, etc. Basically, if I can sell it, I am going to offer it to him. But the way I do it is I only tell him the payment for the car, and I have it stretched out over the LONGEST TERM POSSIBLE, with the highest APR possible on the best rate sturcture.
So if you come in looking at a Chevy Cavalier with a 4K tradein that you own outright, I am going to come back with a payemnt of like $450 a month for 72 or 84 months. Then, when I get it down to like $375 a month for 60 months (removing some of the extras, giving him fair money for his trade) he bites. Now, here is the catch, i still sold him the car at sticker, and at the highest APR, and he left happy as a pig in shit because he went from $450 over 72 months to $375 for 60 months...
Welcome to the world that is a car dealership