Beware of Graduated Payment Plans That Promise Very Low Payments When You Buy Your Next Car
A low monthly payment with no money down may sound like a great deal, but that payment quickly goes up to very high amounts on these plans
If you are in the market for a new vehicle, steer clear of dealers that use graduated payment plans to lure you in. Dealers that offer these types of payment plans often use a variety of ads and even paid programming spots aired late at night or on weekends in an effort to hook you with promises of no money down and exceptionally low monthly payments that later skyrocket to insanely high amounts.
They really are too good to be true
For many consumers, especially those that don't have a lot of income or that are desperate to get into a new vehicle, these deals may sound too good to pass up. What's the catch? Most people don't catch the small and often blurry fine print that says the monthly payment goes up significant;y after just a few months. For the television spots, there are often a lot of people dressed up or doing funny things to draw you away from the fine print.
For example, while a monthly payment of only $189 with no money down may sound like a great deal, it might be a bad deal. Unless you read the small fine print that is quickly flashed on the screen or can understand the fast-talking salesman, you may not realize that after three months the payment goes up to $350 or more.
Why do car dealers do this?
The primary goal of the dealer is to get you in the door and behind the wheel, and many are willing to use whatever tactics it takes to close a deal. All too often, the terms and conditions thrown at you by a salesman at the dealership are completely different from what you may have seen or heard in an ad. Across the country, unsuspecting consumers are being talked into buying cars they simply can't afford.
What should you do?
If you are in the market for a new vehicle, do your research! Don't fall for the gimmicks of desperate car dealers and rush into making a purchase before you fully understand what you are signing. If you're considering the purchase of a vehicle, remember these tips:
- Shop Around. Make certain that you are choosing a reputable car dealership. Asking friends, family members and co-workers for recommendations is a good place to start.
- Know what you want. Don't simply settle for a vehicle because you think you're getting a good deal. Choose a vehicle that meets the needs of your lifestyle.
- Make a budget. Budget your monthly expenses and determine how much you can actually afford to pay each month for a car. Many credit unions offer car buying services that will assist you in finding a vehicle and selecting the right financing plan. Check with your local credit union to find out more!
- Know a little bit about how car dealers operate. Check out our article about how to avoid being taken for a ride on your next car and how to see through the tactics used at many car dealerships.