More important than knowing the kind of car you want is how you will plan to finance it.
More often than not, auto browsers become auto buyers when tantalized by the glare of polished chrome, sweet talking sales staff and a dealer-backed loan that appears to be too good to refuse.
However, once the post-car purchase hangover sets in, many buyers find that not only did they over-pay on sticker price, but that dealer loan that looked so good in the showroom doesn’t look as ideal in the light of day.
Avoid auto buyer’s remorse using one simple tip--get pre-approved for a loan at your credit union if you are even thinking about car shopping. The National Credit Union Association (NCUA) found that credit union auto loan rates were consistently lower than the banks across the board, plus borrowers should begin the loan process with someone they can trust.
Dealer Financing Gone Wrong
For example, a dealer finance mix-up/scam left one Texas couple feeling the burn as they were “dehorsed” (removed from their vehicle and left without a ride) out of their newly purchased 2006 Range Rover. Although not typical of what happens with dealers, the story serves as a cautionary tale about what could occur when you get lured into 100% dealer financing.
ABC13 in Houston, Texas talked to auto buyer Tammy Taylor, who put down $4,000 and then financed the remaining amount of the car through the dealer. "We purchased it because it said credit approval," she said.
However, one week later the dealer called Taylor asking for the vehicle back because they had a better deal for the couple. That’s when Taylor said the dealer lowered the boom once her husband brought the car back. "They told him they needed the keys, because we weren't financed.” She says that the dealer would only return $3,400 of the $4,000 the couple used as a down payment and would not budge on returning the rest.
The Texas news station investigated the claim and found that the dealer said they couldn’t approve the loan because the Taylors had an auto loan with another lender. The Taylors said they did disclose this fact, to which the dealer denies.
"He said because we had another car on our credit. But yeah, we have two vehicles. But it shouldn't even matter because it says 100% credit approval," Taylor said. Adding insult to injury, once the Taylors returned the Range Rover they were left stranded at the dealership for two hours, otherwise known as “dehorsing” by the Better Business Bureau.
Dan Parsons with the Houston Better Business Bureau told ABC13 that what you see isn’t always what you get when you finance through a dealer.
"A consumer gets into dangerous turf when they go off of a deal and leave something unsigned, uncommitted, un-whatever. And in this case, financing up in the air," he said. It's a legal issue, and we have found consumers who are smart will get a lawyer and fight."
Consumers will need to make a decision before heading out whether they want to roll the dice with a dealer (or bank) or go with a trusted friend and partner--their credit union. Because after all, friends don’t let friends get dealer loans!