It's done! The negotiating is over, the sales person has taken three passes at you and you've even gotten to meet the sales manager (closer), and have finally agreed on payments. Whew...What a relief that's over with. Now all you have left to do is sign some papers and you're on your way in your new car. At this point all you can think of is showing off your new car to all your family and friends...Boy, what a nice car.
STOP and focus. The most important part of your car buying adventure is about to take place and trust me, you'll want all your whits about you. If you think you're out of the woods you're wrong. The Finance office is where the majority of scams take place in this business. I'd be willing to say that 80% or more, of all car dealership scams you hear of on the news involve the Finance Department. That being said, I don't want you to automatically assume that all Finance Managers are going to scam you, but if you've run into the one that will, you'd better be ready.
I want to quickly state that I do not believe that the majority of Finance Managers are bad people with bad intentions, but the ones that are will stick it to you if you give them the opportunity. I've personally seen some very elaborate ways to stuff unwanted products into a contract, and the customer is none the wiser.
For most people, if their payment stays the same as what was quoted on the sales floor they believe everything must be in order and they will sign away, but what if the payment you were quoted on the sales floor was packed? Packed is a term used to describe "payment packing" in the car business. I'll save an depth explanation of "payment packing" for another article, but it's the practice of quoting inflated payments to help the Finance Manger sell products to you in the Finance office.
If you're dealing with a legitimate Finance Manager and decide that you do not want an extended warranty, GAP insurance, or any other products they are offering, then the Finance Manager will reduce your packed payment to your real base payment and away you go.
On the other hand, if you're dealing with an unscrupulous Finance Manager then they'll try to fill that packed payment with a product you did not opt for, so they can make money. I've seen Finance Managers stuff up to $2,000 worth of products into a deal without the customer having a clue, because they weren't paying attention.
How does this work? Let's start back at the sales persons desk. Your real base payment, consisting of sales price minus down payment, plus tax, title, license, dealer doc fee, and your finance charges, is $300. The sales person quotes you payments of $315 and you agree to that, not knowing what your real base payment is. This leaves $15 of "leg," a common term used to describe how much the payment has been packed. This may not sound like much, but over a 72 month contract this equates to $1,080.
The good Finance Manager will essentially give that back to you, but the unscrupulous Finance Manager will fill that with with etch (a worthless product for most people, but it's only got a cost in the $70 range, so there is a lot of finance profit) or some other inexpensive item, so they can profit from you. Again, most people are none the wiser. They will see that their payment is the same and gladly sign away.
Don't let this happen to you. The two most important documents you'll sign in the Finance office are the Retail Installment Contract and the Purchase Order. Never sign either one of these blank. The rest of the papers you'll sign are typically for the states Motor Vehicle division, and it is usually only important to verify that your personal information is correct.
I can't begin to tell you how many people will sign a blank purchase order! Don't let this be you. There is no reason why this form, no matter what they tell you, should not be printed. The Finance Manager should also fully disclose these forms at a pace that is comfortable for you to follow along. If they are going to fast stop them and ask them to explain further.
You'll also want to watch out for highlighted contracts. This can be a sign that the Finance Manager is trying to get your attention to the signature line and keep your focus off the rest of the numbers on the contract.
I personally will highlight Motor Vehicle forms, to speed up the process (I've signed literally thousands of deals, and it can get a little repetitive), but I never, never highlight contracts. I always give customers a full disclosure and ask them if they have any questions as to what we've just gone over.
Another key point is to bring reading glasses, if you use them. It blows me away that people that have a hard time reading small print don't bring their glasses. Remember, this is typically the second largest purchase most people will make, so you'll definitely want to know what it is you are agreeing to pay for over the next six years.
Always remember that at this point in the transaction you have not legally committed to anything. If you feel the Finance Manager is being deceptive get up and leave. If you feel they've broken the law call your states Attorney General office.
Keep in mind, when you're on your way into the Finance office it's time to clear your head, put on your reading glasses and know what's on your contract.
In the mean time...
Take care and beware,
J the Car Guy
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