Look At The Big Enchilada When Financing A Vehicle

Hey Cool Car Fans,

Each year I focus on helping about 250 people buy, sell, trade, consign or lease a vehicle for their home or their business.  I offer my services for free, unless I deliver a vehicle and then I get paid out of the transaction like a realtor for cars.  Often times, I just give free advice to people, but it always comes back to pay dividends because people remember me down the road or tell their friends to call me.

My business model has never been designed to compete with the “big box” stores, the franchise dealerships or other independent car dealerships because my services are much more intimate like a “boutique” for vehicle purchases.  My clients use my services because of the relationship I have with them because I save them time, money and hassle.  All of my business is based on repeat and referrals because of this and it has served me well for a decade.

Photo 1Recently, I had a client who purchased a vehicle from me almost seven years ago call me and ask me to help her and her husband track down a good deal on a Toyota Sienna.  There wasn’t much available at the Dealer Auctions in their budget, so they ended up finding it on their own from a private party.  Unlike most people who would just go and do the transaction on their own, they asked me to assist them, which I was more than happy to do because they are friends of mine.

We had the vehicle inspected and it was in great condition from a couple up in Northern Colorado.  The couple selling the vehicle drove it down and I had it inspected for my clients and arranged their financing for them as well.  The title turned out to be a bit more complicated than expected because it was owned by a woman in a nursing home and her son had the vehicle and the title, along with Power of Attorney and he trusted that because I put transactions like this together daily he was going to get paid.  We were able to work through the issues and my clients drove off in a nice vehicle with low miles and financed at a better rate than they would have found on their own.  Most “auto brokers” would not have gone forward with helping people who found their own vehicle, but I didn’t mind at all and it all worked out.

2007EscapeHailI’m going to talk about financing in a minute, but before I do the story gets better because they had an old Ford Escape with hail damage and some mechanical issues that was sitting in their driveway.  They were not sure what to do with the vehicle and many times people getting a new vehicle and having one broken down in their driveway will donate it just to get it off their hands.

I recommended they contact their insurance company and file a claim for the hail damage, which they did.  They received a check in the mail for over $4,000 from their insurance company and I also shopped the vehicle and I was able to get them another $1,500 for their vehicle from one of the dealerships that I have a relationship.  That was $5,500 in additional funds that they didn’t expect because of their relationship with me as The Cool Car Guy.  Which is why I have had so many people use my services over the years.

Now let me explain a few things about financing.  If someone finances just $10,900 at a rate of 3.09% they will pay about $893 in interest over 60 months, which is about $14.88 a month in interest.  However, if they end up going to a bank on their own, which happened with another client of mine, where they were quoted 5.99% from their lender they will pay $1,771 in interest over 60 months, which is $29.52 a month in interest for the same vehicle and the same loan amount of only $10,900.  Think about that for a minute.  That’s almost $1,000 more in interest on the same vehicle for what “seems” like a low interest rate.  And I will have people contact me throughout the year about refinancing their vehicles for this reason as well.

So before you purchase from some of the large dealerships, you should go to Yahoo Finance and type in the stock symbols on some of the large “big box” dealerships.  You will see that many of these companies have a Market Cap that is in the billions of dollars, like any other Wall Street company.  They are not popular with Wall Street investors because they are losing money on selling cars.  In many cases, the “deal” you think you’re getting is not a deal at all because they have you focused on the price of the vehicle instead of the overall cost of owning the vehicle.  It can make a big difference on the year, make, model and type of vehicle you are financing or leasing.  I’ll write another article about a lease deal I recently structured that in the words of my client who was referred to me by another client “You blew the other broker I was looking at using out of the water.”.


John Boyd

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy