MEA CULPA

     I know I have been absent from the blogosphere for over two months, and I beg your forgiveness.  

     The truth is that over the last year or so I have been battling stomach and intestinal symptoms which have led to a diagnosis of Colon Cancer stage IV.  I spent most of the last month in a hospital undergoing 2 major  surgeries.  I still have a ways to go and Chemo therapy ahead,  but I will try to stay in touch and resume the Blog.  Stay Tuned

A WORD TO THOSE WHO SELL CARS

     I would like to speak to the car sales people out there for just a moment, so you buyers change channels for a few minutes OK?    Is it just us?  Good.  

     Don't Judge the Book by its Cover

     I have known quite a few sales people who take one look at a customer and decide if they are "worth" dealing with.   I have seen the old timers "cherry pick" from the ups to get the "best" one.  These sales people do not want to spend the time working with a credit challenged buyer and go for the easy sale.  SHAME on you.  A true Professional Sales Consultant  is the one that works with all buyers not just the EASY ones.  We had a 30 year veteran at my last dealership.  He would stand at the door and direct traffic.  He would only take a customer if he thought it was a sure sale with a great credit score.

     One evening a couple got off the bus in front of the dealership.  To be honest, they looked like they might be homeless.  Our veteran wanted NOTHING to do with them and the rest of the sales staff ran away too.  I was the only one to greet these folks. Everyone was sure they couldn't buy a car.  I showed them a couple of vehicles and they chose their favorite.  We sat down to finish the deal.  The sale Manager wanted me to "broom" them so we could close and go home, but I had them fill out the credit app anyway.  When it turned out that they were both 800+ AND had $4000 cash down everyone had to eat crow.   Just goes to show ya, you can't tell by LOOKING

THE PROOF II

     After proving your income,  You will need to prove where you live and provide references.  

Proof of Residence

     Proving your address should be one of the easier things in the process.  Acceptable types of proof are Utility bills and bank statements sent to your address in your name.  You should  bring the last 3 bills and statements to the dealer so they can make copies.  One tip though,  make sure none of the bills has a "Past DUE" balance.....most lenders do not like to see that.

References

     The proof that most of my customers had the hardest time with was references.  Lenders are now looking to see if you have roots and stability.  Most will require from 3 to 10 references to approve your loan.  For a reference to be accepted by the lender you will need the Name, Address with zip code, phone number, relationship (friend-co-worker-relative) and how long you have known them.  It would be wise to prepare your list before going to shop for a car.  Be sure to let these folks know you will be using them because the lenders do check.  

THE PROOF IS IN THE...PROOF

     As you look to purchase a car, you will be asked a lot of questions.  You will be asked how much you make.  You will be asked where you live.  You may even bee asked to provide references.

Proof of Income

     In filling out your credit application you will be asked how much money you make.  You may surprised at how many people do not know.  The figure that most lenders want to see is your GROSS INCOME.  Gross is the amount of money you are paid BEFORE taxes or any other withholding is taken out.  It is always the larger amount.  The NET INCOME is what is left after all taxes and withholdings are taken.  That is the amount we get to "LIVE" on. You should bring several of your most recent pay stubs as well as 2 to 3 bank statements to prove your numbers.  

But I don't get a "Pay Check"

     Some workers do not receive a "normal" paycheck.  Folks who are self employed, freelancers, investors, or tipped employees in the service industries will have a harder time Proving their income.  Lenders are not as likely as they once were to accept our word about income. If you own a small business you may have to provide Tax records,  Bank statements showing monies deposited regularly for several months will often be accepted as proof.  SO  if you work for tips you will need to deposit those in your bank for them to be provable income.  

MORE ADD ONS???

     As you sit with the finance manager a LOT of products will be offered to you.  One that you should pay attention to is GAP insurance.

What is GAP Coverage?

     In a nutshell, GAP coverage or insurance covers the difference between what you OWE on your car and what it is WORTH in a "total" loss.   When you finance a car or truck you will be required to get "full coverage" insurance.  The terms of this insurance will only pay what your car is worth not the amount stilled owed to the lender.  So if your car is worth $10,000 and the amount you owe is $15,000 you will still be responsible for paying the difference to the lender.  GAP coverage steps in and covers the difference.  

Do I HAVE to buy it from the Dealer?

     The simple answer is NO you do not.  Many insurance companies also offer GAP coverage, but you will want to secure the policy before you take delivery of your car.  

I was told that GAP Insurance was REQUIRED!!

     As of this writing, there are no state or federal "requirements" for you to obtain GAP coverage.  Some lenders may make it a condition of their approval of your loan.  Remember, lenders will only lend money based on the level of RISK.  GAP coverage removes some of the risk involved in a loan.

Is GAP a good idea?

     I can't answer that for YOU, but I will relate a situation I had with one of my clients.  A young couple came in to buy the husband a car.  After deciding on the car, they went to the finance office.  The wife was trying to save every dollar possible.  She had been told by a "friend" to not buy ANY extras.  So she declined ALL the products offered even the GAP coverage.  The finance manager asked me to speak with them and stress the need for GAP coverage.  I tried but to no avail.  She was convinced that GAP coverage was worthless.  Some 8 or 9 months later they were back in the market for a car.  The husband had totaled the car 2 months after they had bought it.  It took them 6 or 7 months of making payments to the lender on a car they no longer had to be able to buy him another car.  The wife INSISTED on GAP coverage after that.

EXTENDED WARRANTIES

II

     Some extended warranties are Great and some are not worth the paper they are written on.  How do you know which is which???

Which Warranty is the RIGHT warranty

     Used car "warranties" actually work more like health insurance policies  They are designed to pay a portion of the repair cost after a deductible is met.  Like health insurance none will cover a "pre-existing condition".  There are a variety of options available to cover used cars, from basic powertrain coverage to nearly "bumper to bumper" coverage.  All are available at a wide range of prices and some are better than others.  Most dealers sell cars "As Is" meaning no warranty at all. and if there is a warranty "included" it is for very limited conditions/time.  The terms and conditions will vary from policy to policy, but in general expect to pay more money for more coverage.  You can purchase these policies from a number of places.  If the used car meets certain age and mileage restrictions you can even get the Manufacturers own extended warranty, possibly the best option.  Warranties are also available from many insurance companies and usually offer good value.  Third party warranties are the riskiest.  Some are offered by larege dealers and tend to be OK while others only separate you from your money and offer no protection at all.

     The Finance Manager is the person usually selling this product at the dealership.  Feel free to ask pleanty of questions about the product before you agree to buy, remember it is your money.  The attraction to getting the warranty from the dealer is that the cost of the warranty is "rolled" into the financing, just remember you are paying interest on this.   

EXTENDED WARRANTIES

     The likelihood of repairs increases as machines get older.   This universal truth is the reason behind extended warranties.  A car is just a machine and it will need repairs even if you buy a brand new one.

Should I buy an Extended Warranty?

     Whether or not to purchase a warranty is a very hard question to answer with a simple "yes" or "no".  In a perfect world, we would all have the discipline to save money from each check for "rainy days" .  Sadly most of us DO NOT.  Some of you are in the process of rebuilding credit and do not have a handy dandy credit card to fall back on.  A warranty may be right for you.  The cost of repairing a car can be EXPENSIVE.  Even what seems to be a minor repair can set you back major money.  

MINOR repairs?

     I grew up working on my own cars.  I do not claim to be a mechanic but in the past I could handle most minor repairs myself.  Today cars are much more complex.  Computers and sensors are all over the place and it looks like there is 100's of miles of wires.  I will use a radiator as my example.  On my older cars replacing the radiator cost under a $100 and would take me at most 2 hours,  My sister had a similar problem on her Kia.  You might think it would be cheap to fix a radiator on a Kia, you would be wrong.  Her radiator had a leak and in turn this caused several other components to fail costing well over $400.  An employee of my sister also had a radiator problem on her Mazda.  At last report she had spent over $800 and still going.  Getting cars repaired can be as expensive as going to a doctor.  

We will cover more about warranties in part II