Dealership Car Financing: Buyer Beware

By Mary M. Alward

So you've decided to purchase a new car and have chosen to finance it through the dealership. Besides reading the contract thoroughly several times, using an eagle eye on the fine print and checking that the interest rates are locked in, there are other things you should be very aware of.

ADM (Additional Dealership Mark Up)
ADM can include a wide range of items such as dealer and licensing fees, dealer prep, vehicle identification engraving, rust coating and undercoating. Some dealers charge as much as $500 for dealer prep, which takes about two hours to complete. That's excellent money for the dealership, but leaves you out of pocket. Be sure to negotiate these costs with the dealer. They are negotiable, but the dealer certainly doesn't want you to be aware of that fact.

Spot Delivery
Many people have never heard the term "spot delivery." This happens when the dealership accepts your deposit and allows you to drive the car home before you have completed the contract. Then, before you receive your payment booklet and license tags, you get a phone call or a letter saying your financing was denied. (The dealership knows this as soon as they run your credit report.) What happens next can be a nightmare that you will live with for some time.

The dealership may ask you sign a new contract, which includes an additional amount toward the down payment, a much higher interest rate on the loan, and much higher car payments.

Always avoid accepting spot delivery of your car and be certain that the purchasing contract is complete before signing. Be very aware of any items listed under subject to financing.

Running Your Credit Report
Some dealerships will want to run your credit rating whether or not you are financing your car. If you are paying cash, refuse them permission. The only time a credit report is necessary by the dealer is if you are using their financial institution. If the dealership says its standard policy or their policy, head for the door. Your credit rating can decrease each time your credit report is run. When they see you heading for the door, they'll change their tune. However, keep right on going and seek out a reputable dealership where you can finance your car without worrying that you are being scammed.

Total Amount Financed
Always check and double check the total amount financed by the dealership to assure that it's correct. Has your trade-in been deducted? Have all rebates, both factory and dealership, been accounted for? Check this very thoroughly. Hundreds of times purchasers forget to check if these perks have been recorded and allowed on the contract. Where do they go if the purchaser doesn't receive them? Into the dealership's bank account. These can add up to thousands of dollars annually. Be certain you get everything you are entitled to.

Most dealerships are honest, but as with everything in life, you will find those who are duping people. Be alert and use the tips here to have a positive car financing experience. Remember the old adage, Buyer Beware!

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