The truth about car dealerships!

What you need to know about leasing, trade ins and buying a new car at a dealership!

Leased cars: This is a car that is financed through monthly payments with a car dealership's bank and allows the lessee to only pay a portion of the entire price. The length is about 3 years, but can vary either way. It is a brand new car with a warranty and is great for people who don't drive too far or too much. The lease is determined by miles driven and/or a number of years.


This car is basically like buying your own new car but you get to return it before it's too much work! The wear and tear on tires and fluids need to be replaced by the lessee. Also, if the car is involved in an accident of some sort, the lessee is also responsible for choosing  a shop and getting the car repaired. However, no major upgrades or changes are allowed. The car will come with a warranty though, like any other new car, which should be the length of the lease. Any time over that may become more expensive with upkeep. It might be a smart idea to purchase GAP insurance (which covers the remaining amount, after your insurance company pays, if a car were to be totaled soon after purchasing or leased). The insurance companies do not always give full value or close to what you paid for the car due to the quick depreciation of cars.

Areas bigger than a credit card may cost you.

Upon returning the car to the bank (first it is taken back to any dealership under the same name), the bank will conduct an inspection on the condition of the car. They allot a certain amount of money for minor damages to the car, generally small scrapes or the usual wear and tear. While some may be lenient with the wear and tear, others may be very uptight and count every single scratch. This is why requesting an early inspection from the bank, if there are questionable spots, is a good idea. This will allow time to get the car repaired before being charged.


The bank generally is only concerned with the car being in good working condition. This means, for example, they aren't concerned with different tires than it started with. The car is then sold, sometimes back to the original dealer you purchased it from, as used. The bank will allow the dealership that leased the car to have first dibs on buying it back to sell in their lot. Sometimes there's a lease to own option though. The contract for the lease will show the remaining dollar amount on the car and is usually a pretty good deal for a newer car.The mileage is also checked to make sure the amount agreed upon is at or under the limit. Over mileage can cost up to 25 cents per mile.


Leases are great for some people, specifically if the person driving the car doesn't drive often or many miles, enjoys new cars often or do not care to maintain a vehicle for a number of years after it is considered new. But for people who drive a lot or long distances, leasing a car is not the best option.



 
Trade-ins: These are cars people 'trade in' to add to or use for a down payment on a new car. They are not determined by pricing on websites like Kelly Blue Book, they go by what people will pay for each car. This can be upsetting for people who believe they are getting what the value says online. The dealerships use stats to know what people will pay for each car, then consider how much they want to make on the car.





Car Fax/Vehicle History Reports: The facts come from estimate systems used by repair shops and insurance companies. Car Fax will buy information about the VIN number (not personal information) from those companies. They tell if there was any auto body damage, for example.

Dealerships will use a clean Car Fax to jack the price up of a car for sale and lower the worth of a trade in value with an unclean Car Fax. It will tell you how many owners the car had, if there was damage with a reported accident, type of usage, any type of damage and if the car was salvaged, junked or a lemon.

Labor is listed as auto body damage or work.

Frame work will list as auto frame damage.

Airbag sensor damage will list as airbag damage. 

This information is taken without knowing the situations of each car and may not be as bad as they seem on paper. But sometimes it is exactly what happens. Then there are times when the damage isn't written in these systems or reported to the insurance companies. There can be damage or minor work done without realizing it. But sometimes there is a big dent in your car with a clean Car Fax. So while this is a good source to use while buying a car, it may not always be accurate.



Buying cars: This can be anywhere from a brand new car to buying an older car in the back of the lot. The older cars are other people's trade ins, which is why you may see a Nissan at a Honda dealership.

Check for a Vehicle History Report on any car being purchased; usually the dealership will have them. While they are not always accurate, they are still helpful. Check for a warranty for peace of mind too. The older models probably won't have one, but if you really want one, dealerships offer a warranty for a fee and aren't as inclusive as new warranties.

Then obviously, the more you put as a down payment, the less your payments will be a month. Also, for financing a car, the insurance on the vehicle must be full coverage. It also can't hurt to try and get the payments as low as possible. A few minutes of haggling can save you hundred of dollars in the long run.

There are also some 'dealership options' available when purchasing a vehicle. Some are good, like a bumper to bumper warranty and others are almost a gimmick, like fabric protection that costs them next to nothing. So be wary of them trying to take advantage.