Avoid Window Etching at the Dealership

It's great that you want your car to be protected from theft, but don't waste your money on window etching. In case you don't know what this is, here is a brief overview.

For a couple hundred dollars (I've heard of this costing up to $900), the dealer can etch the VIN number onto all of your vehicle's windows. This way, if your car gets stolen and disassembled, the police and your insurance company can figure out where the parts came from.

To etch the windows takes under 10 minutes. I've done it plenty of times myself. Basically, I would stick a decal onto the each window. This decal has the VIN number on it. Then, I would blot an acid solution over the decal. The acid would etch the VIN number into the window.

Here are my objections to the whole thing:

• First of all, I have never seen any evidence that it is effective. I'm sure somebody could enlighten me as the pros and cons.
• Second of all, if you pay the dealer more than $20 to get it done, you're being ripped off. Search the web and you can find do-it-yourself window etching kits for $20. As I said, it only takes 10 minutes to do. If you can put a decal on a window, blot an acid solution on top of it and remove the sticker, then you're qualified to do the job yourself.

Instant Respect (Car Buying Tips)

I don’t mean this in a bad way, but salesmen are used to a typical type of customer. This is exactly the type of customer you do not want to be when you are buying a car:

• UNPREPARED
• UNINFORMED
• EMOTIONAL

These customers typically walk into a dealership with no car buying resources of their own. They look to the dealer or the salesman to educate them about the inventory on hand. In the end, they pay the most for their cars. They get burned bad!

Here is the quickest way for you not to be mistaken for a typical customer. Do this and you will instantly have the salesman's respect:

• Start with the reverse car loan calculator to determine the desired selling price to fit your monthly budget.
  
• Do a lot of research into cars that fit your price range.
  
• Get all the information you can about the type of car you want. Print out reviews, prices, statistics and whatever you can get your hands on.
• Use a car loan calculator to figure out the approximate monthly payment for the car you want.
  
• Organize your information so that you find the details to be easily accessible. Put it into a big three-ring binder. When I bought my last car, my binder was at least three inches thick. I knew more about the car than the saleswoman did.
• Bring your thick car buying notebook to the dealer with you. Make sure the salesman knows that you know your stuff! When he sees your notebook of information, he is not as likely to play any typical games on you. Your car buying experience will be completely different from the unprepared buyer’s experience.

Car buying is a serious issue. If you approach it half-heartedly, you can still get the car, but at a much higher cost. Therefore, take the time to educate yourself and be careful to let the sales professional know that you are not the typical buyer.

If You're Upside-Down (Car Buying Tips)

If you owe more on your car than it is worth, then this car buying tip is for you.

I had a customer who wanted out of his payment. The guy got financed at close to an 18% APR. That is quite high. He owed about $4,000 more than his truck was worth and his monthly payments were stretching his budget too thin. In car lingo, this is called "negative equity." His solution was to trade in his truck and buy something newer while hoping he could get a lower interest rate.

Here is the problem with that. Whatever vehicle he chooses will be bought with an additional $4,000 added to the price to cover the negative equity. It's normal to have negative equity for about the first two years of a car loan, but with the extra $4,000, this guy would be upside-down for at least three years or more.

What Should You Do If You're Upside-Down?

• Do not try to trade in your car so that you could get a lower payment on another car. It will just make you even more upside on the next car you buy. This is a cycle to avoid.
• Your best bet is to refinance at a lower interest rate. Use every possible resource to find a better interest rate than the one you're currently paying. In the case of this individual who was paying 18% interest on a $24,000 vehicle, his payments were around $660 per month and his total interest on the loan was over $13,600. If he could drop his interest rate to 15%, his monthly payment would reduce to about $620 and his total interest would be about $11,140. That's a reduction of about $2,460 in total interest charges over the life of the loan. Try my car loan calculator to run through different interest rate scenarios for your situation.
  
• When refinancing, figure out how many payments are left according to the original loan. Make this the term on your new loan. So, if you have 30 payments left, get a 30-month loan. If you're willing to pay a little more in total interest to reduce the monthy payment, stretch it out a few months, but avoid this if possible.

Written by a former car salesman, college math instructor, health insurance analyst and the author of The Car Buying Bible. This 162-page car buying guide is full of great car buying tips and offers the best car loan calculator around.

Get Insurance Quotes for the Vehicles You Are Considering (Car Buying Tips)

Too many buyers stretch themselves too thin with their car payment before they even consider the cost of their car insurance. This is especially true of buyers who trade in an old car for a brand new car. In general, insurance will cost more for cars that are worth more since it would cost more to replace a more expensive vehicle.

You will need to know the details of your current coverage before you start getting insurance quotes for the car that you are considering. You could usually get an insurance quote from the dealership, but they will always pad it to take a cut of the profit. You will likely get a better rate on your own. Start by contacting your own insurance agent. Give your agent the year, make, model and, if possible, the VIN of the car that you are considering. Be prepared to answer any other questions, such as the size of the engine, the number of doors, any safety features, security features and any other factor that may affect the rate. Ask if your agent will need to run your credit report. If so, offer to share the results of the report that you ran for yourself. This will help to reduce the number of inquiries into your credit history. This is important since inquiries into your credit can reduce your credit score.

Do not stop there. Put the policy out to bid with other companies as well. Some people stay with the same insurance company for many years. They readily accept rate increases as a normal part of being insured. It is possible that they have not shopped for better rates and they may be surprised to find substantial savings elsewhere. This is an opportunity to re-evaluate your insurance rates for all of your family vehicles.

Written by a former car salesman, college math instructor, health insurance analyst and the author of The Car Buying Bible. This 162-page car buying guide is full of great car buying tips and offers the best car loan calculator around.

Lemon Laws (Car Buying Tips)

What If You Have a Lemon?

If you keep getting the same problem fixed over and over again and if your car is under warranty, then you might have a lemon. Even if your car does not fully meet the criteria for your local lemon laws, you still could be eligible for some type of consumer protection.

If you believe that your car is a lemon, then I recommend that you do the following:

• Act quickly. Every state has some type of time limit and/or mileage limit for you to seek lemon law protection;
• Collect all of your documents, repair receipts and any other evidence to support that your car qualifies as a “lemon.” Make sure that you can explain why your car qualifies for your state’s lemon law protection;
• Write to the manufacturer by way of a certified letter with a return receipt. This is necessary since the manufacturer is required to fix the vehicle within a certain number of days (which can vary according to your state's lemon laws);
• Your letter should include the following information:
  
• Your vehicle’s VIN number along with the make, model and year;
• An explanation of the problem;
• The name of the dealership that is handling the repairs and the dates the repairs were attempted;
• State that you are preparing to seek lemon law protection for this vehicle. This usually will mean that the manufacturer could be required to fully refund the price of the vehicle or provide a replacement vehicle.
• Follow any additional requirements according to the your state lemon laws. This may include requesting compensation, a refund or a replacement vehicle from the manufacturer.
  
• If you think the case will head to court or arbitration, seek the advice of a lawyer who has lemon law experience in your state. Also, consider seeking the testimony of a certified mechanic or any other authority who could support your case. In some states, the manufacturer must compensate your legal fees if you win the case.
  

Since the lemon laws vary so much from one state to the next, I put together links to lemon law resources for all the states and also Washington, D.C. These links are to the Attorney General’s lemon law resources for each state, whenever possible. Click on this link to see the lemon laws for your state.

Written by a former car salesman, college math instructor, health insurance analyst and the author of The Car Buying Bible. This 162-page car buying guide is full of great car buying tips and offers the best car loan calculator around.

You Versus the Salesman (Car Buying Tips)

When customers who want the lowest possible price negotiate with salesmen who want the highest possible commission, hard feelings could fly across the negotiating table. As a former car salesman, this is my advice to all car buyers.

1. Treat the salesman with respect. Yes, some salesmen will say anything to get a sale, but don’t assume your salesman is one of them. When dealing with your salesman, be pleasant and treat him as you would like him to treat you. Yes, that is the Golden Rule, and it’s always the best way to deal with people. Where I sold cars, some of the sales consultants were honest and trustworthy. Unfortunately, a few were not, but you get that wherever you go. If you can't trust your salesman, then ask for the sales manager so he can get you someone else to work with or leave and shop at another dealership.
2. Do your research before you show up at the dealership. It makes the transaction go much nicer for you and for the dealership when you arrive informed and with reasonable expectations. Honestly, for your sake, you will get a better deal if you take the time to educate yourself.

I mention these two things because when I sold cars, nothing was more frustrating than customers who assumed that I was liar and a cheat, except for the customers who were completely uneducated and who wasted my time with impossible expectations. No, you can’t buy a $35,000 truck with a $200/month payment and nothing down!

In the end, everybody should get a fair deal. You should buy a car at a fair price and the dealer should make a profit. This brings me to a point that I probably have not made clearly enough. You should save thousands and the dealer still should make a profit.

Written by a former car salesman, college math instructor, health insurance analyst and the author of The Car Buying Bible. This 162-page car buying guide is full of great car buying tips and offers the best car loan calculator around.

Seven of the Most Overlooked Car Buying Tips

by
Brian S. Tozer

While most of us are concerned about the price negotiations at our local car dealership, it would be a serious error to overlook some of the events that can happen in the Business or Finance & Insurance (F & I) Office.

These car buying tips may seem unusual and possibly new to you, but they will protect you from getting the bad end of a deal.

Seven of the Most Overlooked Car Buying Tips

1. Run your own credit check. Do not let the car dealer do it. Take the time to review your credit report and to contact the appropriate people if you find errors. If you let the dealership run your report, you will not have this luxury. Also, by knowing your credit score, you can research and even obtain financing on your own. This way, if the dealer offers you a financing arrangement, you will know how it compares to other options.

Credit inquiries never help your credit score. By running your own report, you can restrict the number of inquiries into your credit history. You can say to the dealership, "based on this score in this report, what rates can you get me?" The dealership could draft a contract contingent upon the accuracy of the report you provided. If the dealership needs to run its own report (to verify the accuracy of the one your provided) that would be fair and reasonable.

As a caveat to this advice, it is illegal for car dealers to run your credit report without your permission, but many of them still will. If the dealership can get your social security number or in some cases, your driver's license number, it can run a credit check. Beware of the following tactics that dealers use to get this information from you:

• Do not provide your Social Security Number to the dealership unless you are filling out a credit application. As soon as the dealership has your SSN, there is a strong chance that someone is running your credit report, even if you have not granted the dealership permission to run your credit. Knowing your credit score helps the dealer to come up with a strategy for negotiating with you. It is generally worth the risk to run your credit report as soon as possible since most customers will never check to find out that an unauthorized credit report was run.
  
• Do not provide your driver's license number to the dealership. In most cases the dealership will want to see and make a copy of your driver's license before you go on a test drive. Provide the dealership a photocopy of your license so that your driver's license number and social security number (if it appears on your license) are blackened out.
• Do not panic when you hear the words "Patriot Act." Many car dealerships are misusing this Federal legislation as an excuse to get your Social Security Number. Section 326(a)(2)(A) of the Patriot Act, requires “financial institutions to implement, and customers to comply with, reasonable procedures for verifying the identity of any person seeking to open an account to the extent reasonable and practical.” This rule is supposed to help prevent money laundering and other methods of funding terrorist activities. Basically, the purpose of the Patriot Act is “to deter and punish terrorist acts in the United States and around the world, to enhance law enforcement investigatory tools, and for other purposes." If you are not applying for a loan through the car dealership, then the Patriot Act does not apply to you. Once you start filling out the loan application, then you must provide your Social Security Number. Until then, the dealership should not have it.

2. Avoid all mandatory binding arbitration agreements (MBAA's). Chances are that you probably will never have to take the car dealership or the manufacturer to court, but if you do, the mandatory binding arbitration agreement is going to kill almost any chance you have of taking any meaningful legal actions. Usually hidden within the small print of the many pages of contracts that you must sign, the mandatory binding arbitration agreement basically says that you are waiving your right to take the dealership (and sometimes the manufacturer) to court over any grievances that you have. Instead, you are agreeing to allow an arbitrator to hear the case. This would be a disaster for you for the following reasons:

• The arbitrator's decision is final. The consumer has no recourse for making an appeal;
• In a court of law, rules are governed by existing law. With arbitration, the rules of governance are not as clearly defined;
• The arbitration company is chosen by the dealer, so the arbitrator might be biased. In fact, bias may be likely because the arbitrator could lose the dealer's business if it favors against the dealer;
• The fees you must pay for taking the dealership to the arbitrator are usually significantly higher than they would be for taking the dealership to court;
• In some cases, consumers must travel to distant cities for their case to be heard by an arbitrator.
  

In many cases, the contracts will require you to submit to the mandatory arbitration agreement, while they allow the dealer may take you to court. It's one-sided and to your disadvantage.

If any paperwork mentions a mandatory binding arbitration agreement, do not sign it. Tell the dealership that you will only sign contracts without an MBAA. If the dealership is adamant about subjecting you to this unfair arrangement, carefully consider if you really want to do business with it.

3. Avoid the spot delivery. In other words, do not take your car home until the financing has been approved in writing. Usually in the paperwork, one can find wording that says, "Subject to loan approval," or "Subject to financing." This is extremely important for those with poor credit. In what is often called the "spot delivery scam," the unsuspecting buyer receives a call from the dealership saying that the credit was not approved at the negotiated rate. This could be days after the sale was completed. Sometimes the person's trade-in is already sold by now. The finance officer will usually then say that the loan was approved at a higher rate. Usually, most buyers accept the higher rate since their options are so limited. One can avoid this altogether by waiting for the original negotiated rate to be approved before taking delivery of the car.

4. Read everything carefully before you sign any paperwork. Literally, read every word. Read all the fine print. This may take hours, so ask to take the paperwork (or a copy of the paperwork) home with you and arrange to come back to complete the sale. You need to look out for wording such as "mandatory binding arbitration" and "subject to approval." Highlight any wording that may be objectionable. Aside from being careful, this will also give you some "cooling off" time if you are about to make an emotional purchase.

5. Do not leave any blanks in any paperwork. Everything you sign while buying a car is a legal document. Your signature holds you accountable for everything that is on the page that you signed. Dealerships have been caught adding things to documents after the customer has signed.

Fill in every blank line with "N/A" or "Not applicable" before you sign. Get the finance officer to initial each of these lines. Sign your name only after all the blanks are filled in.

6. Get a photocopy of all paperwork pertaining to your car purchase. Request a photocopy of all the paperwork pertaining to your car purchase. Be thorough. Make sure you get a copy of the backside of any two-sided forms.

7. Find out how much the exact document preparation or paperwork fees are in your particular sales' transaction. These fees usually refer to the paperwork for registering the vehicle's title and license plates. According to an article dated October 11, 2006 in the CUNA's (Credit Union National Association) website, fees vary by state and dealership and can be as high as $900. Analysis by this author reveals that the online car loan calculators used by some of the major lenders assume a $300 paperwork fee.

The CUNA's website suggests negotiating for a lower fee or for additional features on the car in exchange for paying the fees. If the dealership will not budge to reduce exorbitant fees, then start shopping elsewhere.

Brian S. Tozer is the author of The Car Buying Bible. A former car salesman, college math instructor and insurance analyst, Mr. Tozer offers car buying tips with a strong emphasis in the financial aspects of buying a car. His website offers free online car loan calculators that he personally developed.

The Secret Used Car Pricing Code (Car Buying Tips)

Most car buyers are frustrated when the used cars on the lot have no prices on them. You'll have to pull teeth to get a price from a salesman! You'll hear lines like, "Let's take it for a drive first to make sure you like it before we discuss the figures. There's no point in discussing price if you're not going to like the car." With enough persistence, you might get the price out of the salesman, but usually you won't get any useful information until after you completed a test drive.

Why do dealers make the price on used cars such a mystery? When I sold cars, the explanation I got was, "We want the focus to be on the car and not the price of the car." The sales manager would say, "Just land the customer on a car. Get them excited about it and price won't matter." In case you're wondering why new cars have price stickers while used cars do not, it's because there is a federal law requiring the price to be displayed on all new cars.

Let me end the mystery for you right now and reveal the secret used car pricing code!

Here Is the Secret Used Car Pricing Code
Usually, on the windshield, there will be a sticker that gives the year, make and model of the car. You may notice some letters on this sticker. For example, you may see, "LSKKE." This, my friend, is the price once you can read the code!

Write down the word "BLACKHORSE" so that:
B = 1
L = 2
A = 3
C = 4
K = 5
H = 6
O = 7
R = 8
S = 9
E = 0

Using this code, where the letter represents the number given above, LSKKE is $29,550.

Once you're sitting at the negotiating table, you can bet this is the price the dealer will give. Therefore, if you know you're looking for a used car with an asking price of $20,000 or less, you can read the codes yourself. Any 4-digit code is safe since it represents a price of $9,999 or less. Any 5-digit code that begins with a "B" is safe since it represents the $10,000 range. If it starts with an "LE", you're pushing into your limit or beyond since you know the price is at least $20,000.

Written by a former car salesman, college math instructor, health insurance analyst and the author of The Car Buying Bible. This car 162-page car buying guide is full of great car buying tips and offers the best car loan calculator around.