Tips to Avoid the Monthly Payment Scam
Car dealers are aware that most of their customers buy cars based on price, but people also consider their budgets. That’s why when you go to the dealership to shop for a new car the dealer tries to focus the conversation, not at the price of the car but the monthly payment you can afford.
The car dealer will typically start with a monthly payment that is two or three times what you told him you could afford. They can expect that you will be shocked when you learn that the payment is higher than you thought you would pay. They usually figure that as your monthly payment goes up, the loan length goes down, but watch out for the guy who does it both ways.
One of the dealer tricks used in cases like this is “the ether.” Salesperson tries to put the customer in the ether, the situation when the customer is excited, so they do not notice what is happening to them in the deal. And this is the best situation for the salesperson to make a profit.
You can avoid this dealer fraud if you follow several simple steps. Most importantly make your budget and know exactly how much monthly payments you can afford before entering the dealer’s lot. If you want to have some “room” left over, then you should try to spend at least 10% less than your budgeted amount. Always stick to your number and never go above your budgeted number. Remember that you may get into trouble if you buy a vehicle that you can’t afford. Probably the next time you go shopping you’ll hear the salesperson inform you’ve got negative equity.
Before you sign the contract read the document carefully and make sure that everything you negotiated and agreed with the dealer is written down on the contract.
Another thing you should look for on the contract is any point regarding “arbitration” or a “jury waiver”. There should be nothing written about this on the contract. Remember that you don’t have to give up your legal rights just to buy a motor vehicle. If your contract includes an arbitration clause or jury waiver don’t sign it. You are probably dealing with a dishonest dealership and the best thing to do is just walk away from the deal.