These past weeks, my family and I have been shopping for a minivan to accommodate our extended family of 7 — and finally replacing our 11 years old Ford Contour. The experience left me wondering if the auto industry really needs the bail out money at all. If I have to judge by how some of these car dealers acted, my guess would be NO.
Out of all the dealers I visited, I had a particularly horrendous experience with Hillside Honda in Jamaica, NY. The sales team was nice and courteous, but the financing guy and his manager was a whole different story.
Beware of the Car Financing Guy
I got to the dealer at about 2 PM on Saturday and managed to negotiate the $37,000 minivan down to $28,600. A little more negotiation knocked the destination charge down by another $335. All said and done, the car was mine for $32,200 after the 8.375% NY state tax. All that was left to be done was the financing.
Is that interest rate for real?
I track my credit score using Credit Karma, and I know my score was good (I am around 790 with TransUnion and around 830 with the other two credit agencies). So it was a shocker when the financing guy said my interest rate would be 8.99% for a 72 months loan! When I asked if that was the best rate that I qualified for, he conceded that it wasn’t and told me I could have 66 months loan at 7.99%. Talking about having my best interest in mind! — and by the way, the interest rate is still high!
If I agreed to this, the total cost of the car would be $40,934, an increase of $8,734 to the total price!
Lower the monthly payment by leasing
Sensing that I didn’t like the high interest rate, he tried to switch me into a leasing agreement and explained that I could lower my interest rate and my monthly payment will be around $150 less per month. All I have to do is pay the lease for 39 months, and buy out the car for $16,900.
What a tricky bastard. I cut this leasing conversation short by saying that I don’t understand car leasing, and I don’t buy what I don’t understand.
If I agreed to this, the total cost of the car would be $42,450, an increase of $10,250 to the total price!
Do you want extended warranty with that?
Next, he proceeded to ask me if I want the extended warranty, an alarm system, and a LoJack for my car. I said no to all three, but he insisted. After going back and forth a few times, he finally let it out that these items would increase my monthly payment by another $90! Sounds cheap right? Try multiplying that by 66 months…yes, $5,940 more.
He tried to argue that the alarm system (which adds $17 per month) would lower my insurance cost by 5% — that’s only $42 a year compare to the $204 I’ll be paying. Hmm, let me think. No, thank you.
He asked a few more times, and I kept telling him that I don’t want the extended warranty on one of the most reliable car on the road, I don’t need an alarm system, and I don’t need the LoJack.
If I agreed to this, the total cost of the car would be $46,874, an increase of $14,674 to the total price!
The Last Straw
This guy was annoyingly persistent, and after insisting about 30 more times, I finally gave up and walked out of his office hoping to find help from a manager. Unfortunately, the manager was rude and told me that I have no right to raise my voice in his showroom. Excuse me, I can’t complain? I didn’t even curse — geez.
He then pulled me into the financing office again and said, “Do you understand what profit is? We need to make a profit in order to sell you the car…” — this guy is freakin’ kidding right?
Then he went on to say that he is losing money on the car and I have to buy at least the alarm system (and with a remote start) for him to give me the car. I told him that his sales team shouldn’t have agreed to the price in the first place and what’s he’s doing is not only rude and unprofessional, but it’s a complete BS.
After spending a whole frustrating hour with these two (insert any bad word you want here), I finally gave up and told him that I am scrapping the deal.
Hillside Honda Complaints and Problems
Here are a bunch of complaints against Hillside Honda that I just found. Unfortunately, I didn’t find these before walking in the door. From ConsumerAffairs.com: Consumer complaints about Hillside Honda, Jamaica, NY
When you’re shopping for a car, you have to be careful. These guys are equipped with all kinds of pressure tactics and tricks. And I’ll repeat the golden rule of car negotiation here — negotiate the price of the car and not the monthly payment. As you can see, the leasing option has the lowest payment but it was actually one of the more expensive option.
Just to give you a little closure, I did finally buy an Odyssey from a different dealership. The price after tax was about $900 more, but the interest rate was much lower and the customer service was heavenly.
And thank you to President Obama and his Stimulus Plan, the sales tax I paid on the car will be tax deductible for 2009 tax year. I am a happy camper.
If you are shopping for a car, or recently bought one, let’s hear your story.
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.