Welcome to the Auto Buyer’s Weekly Edge for October 10, 2014. I’m Phil Kelton, and I’m author of Power Shift. The Weekly Edge is news and information you need to maximize your new-car savings. If you follow this videocast regularly, you will become a more successful car buyer.
First the headlines for this week:
- F&I Magazine, an industry publication, disagrees with the New York Times, and says that we are not heading into an auto financing bubble. Loan totals are way up, but delinquencies are rising slowly, and are well below previous highs. But, doesn’t overspending usually come before financial stress? Stick with a 4-year loan—you’ll be better off financially in the end!
- A new location-aware app feature from Edmunds.com called ‘Lot Buddy” allows you to lock in a price guarantee on cars at nearby, participating dealers. But, with completion ending before it starts … in exchange for a ‘fair price’ … I just have to wonder whose buddy we’re really talking about.
- The focus on monthly payments and costs can sometimes take you in expensive directions. Investor’s Business Daily, for example, claims that leasing to replace a gas guzzler can pay for itself. Sometimes you get so close the monthly payment trees, you simply lose sight of the total cost forest.
- Another story from F&I Magazine—The Association of Finance & Insurance professionals wants to police itself, and offers up evidence of their efforts: finding and stopping an F&I practitioner that buried a $700 window etch fee in an auto sales contract. Window Etch. You know, that thing you can get for free at your local police station or auto club? Let that be a warning to all of us—get an itemized price quote and double check it!
This week’s top story is titled NADA Chairman: Dealer System ‘Good for Everyone’ published by WardsAuto. The National Automobile Dealers Association, or NADA, is working hard to keep the Federal Government from regulating dealer financing profit. Forrest McConnell the third, chairman of NADA and a Honda/Acura dealer from Montgomery Alabama, defended the auto dealer-franchise system based on one simple thing—competition. He points out that consumers benefit from dealer competition by receiving lower financing rates—even lower than if the Government were to set a limit.
Now, I’m not a big fan of Government over regulation, and I do agree that competition drives down prices and financing costs, but … You can be sure that if you show up at a dealership unprepared, you’ll pay the maximum that a dealer can find a way to charge.
So, how about we take the chairman at his word—let’s apply completion to dealers at every step in the car buying process: the sales price with multiple offers, financing with a preapproved loan, and your trade-in by shopping it around. And if you decide you really need an add-on, like an extended service contract, by all means, get multiple quotes for that too.
Competition is your friend. It will save you thousands of dollars, and evidently, the dealers are counting on it too. So, let’s not disappoint them.
Thanks for watching this week. Please leave your feedback and questions in the comments below. I tweet news articles as I find them so you can stay up to date daily by connecting with me @phil_kelton. See you here next week! In the meantime, happy shopping!