FOR IMMEDIATE RELEASE
Auto Buying Expert Rebuts Recent Media Reports;
Says Car Financing Through an Auto Dealer May Be Best Way to Go
Christopher Burdick of AutoHeroes Offers Five Rules to Help Consumers
Get Lowest Financing Rate on Their Cars
NEWTON, MA, April 20, 2004 -- A recent study by the Consumer Federation
of America reveals questionable business ethics practiced by automobile
dealers when securing loans for their customers. These practices have
been publicized recently on major newsmagazine shows like Dateline NBC
and 60 Minutes.
According to the study, "American car buyers are being charged at
least hundreds of millions and as much as a billion dollars annually in
undisclosed 'finance markup' charges." The study reports that a dealership
may secure financing at a certain percentage rate and then add on additional
percentage points to boost their profit. The additional points are then
paid back to the dealership by the lending institution.
Christopher Burdick, founder and president of AutoHeroes, says this certainly
is not always the case. "Our customers frequently finance through
the dealership and receive excellent finance rates," says Burdick.
"Consumers can easily take control of the financing process by researching
finance rates and shopping around. By exploring loans available through
outside institutions, a consumer can use those financing rates to negotiate
a lower rate from a dealership."
Burdick started AutoHeroes, a Boston-based personalized auto buying/leasing
advisory service, to help consumers with the often confusing process of
buying or leasing a vehicle. He has no ties to auto manufacturers or dealerships.
"Dealerships want consumers to finance through them because the
dealer makes money on the financing," continues Burdick. "When
a consumer is ready to buy and tells the dealer that they have been approved
for a certain percentage rate, say 4.9 percent, the dealer will offer
3.9 percent to get the customer to finance through the dealership. In
the end, the most important factor for the consumer is getting the lowest
financing rate. It really doesn't matter if they go through an outside
source or through the dealership."
Burdick offers these rules for getting the best deal on car financing:
Rule #1: Talk Total Cost Instead of Monthly Payments
When you start looking at a car, and the auto dealer asks how you want
to pay for it, make sure you tell them that you aren't sure if you want
to finance or not. Tell them that you want to look at the overall price
of the car, not monthly payments. Some dealerships will try to use monthly
payments to obscure hidden costs. Always negotiate the price that you
will buy the car for first, than work on the financing.
Rule #2: Do Your Homework in Advance
Find out what financing rates you can get from sources outside the dealership
before you talk to the dealership about financing. Check out web sites
like eloan.com. You can also get financing through the American Automobile
Association (AAA). Talk to your bank or credit union as well. This way,
when you go in to talk to the dealership, you already know what rates
you can get, and it's up to the dealership to try and beat those rates.
Rule #3: Keeping it Simple
If you can get a good financing rate through an outside source, you may
want to just use that lender. That way, all you have to discuss with the
dealership is the selling price of the car. This keeps dealerships from
hiding extra charges within the financing deal.
Rule #4: Benefits of Financing Outside the Car Dealership
Dealerships sometimes offer a low percentage rate OR a cash rebate on
the same car. IF you finance through the dealership, you cannot get the
rebate as well. However, if you get your loan from outside the dealership,
you can then get the cash rebate as well as low financing.
Rule #5: Cash Back or 0% Financing?
Nine times out of ten, it's better to take the cash back. However, it's
always best to do the math involving both options to see which is the
better deal. If you decide to take the cash back, you should still find
the best interest rate on a loan from an outside source, and take it to
the dealer to see if they can negotiate a lower finance rate through the
Last But Not Least
The last and most important rule - even though you may want the process
to be over with quickly, you need to look over the paperwork carefully.
Have the dealer walk you through the paperwork and explain each calculation
or fee that is included on your financing contract. A bit of scrutiny
here can save you a big headache in the future.
"Like every big purchase in life, the best way for a consumer to
guarantee that they get a good deal and avoid being ripped off is to be
an educated buyer," concludes Burdick.
AutoHeroes offers consumers additional advice at: www.autoheroes.com.