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May 18, 2001
Get the vehicle you want,
at the price you deserve!
By Ronald P. Edwards
Senior Vice President, Chief Lending Officer
Farm Bureau Bank
One of the advantages of living in the Information Age is having all the data at your fingertips when making major purchases or financing decisions, like buying a new car or truck. Unfortunately, many Americans have not taken advantage of this information and have often left the dealership with the vehicle they wanted, but at a price or financing that was higher than they could have received had they used the information that was available.
It's easy enough to determine the manufacturer's suggested retail price of a car—check the ads. But this is only a first step for comparing vehicles. What more accurately tells a car's value is the price a dealer must pay for it. The "dealer cost" is typically thousands of dollars less than the manufacturer's suggested retail price, and it provides a realistic starting point from which to negotiate.
Dealer costs are published in books, magazines and are available over the Internet from a variety of sources. Perhaps best known is the Blue Book, but other useful publications include monthly magazines such as Consumer Reports and Consumer Digest. Dealer costs are usually provided not just for the vehicle itself, but for all available options as well.
How much should you pay? Don't expect to get the vehicle at dealer cost. After all, the dealer is entitled to a reasonable profit. An informed buyer can often seal a deal by offering a markup of 4 to 5 percent (except on the market's most popular cars).
Equally as important as the price you pay for a new vehicle is the financing options you choose. The right financing option can save you hundreds, even thousands of dollars over the life of your loan.
Most dealers develop relationships with several banks to provide financing for their customers. The banks pay hundreds of dollars to the dealer for each loan they make. To cover the costs, the rate on the loan you get at the dealership is often higher than what you might pay by going straight to a bank like Farm Bureau Bank. Farm Bureau Bank doesn't make loans through dealers because it helps save us costs that can be passed on to its members in the form of lower interest rates.
One strategy to consider is to get pre-approved for financing. This gives you the power of a cash buyer—and you avoid haggling over interest rates. Also, consider insurance costs in advance. You don't want to be surprised by a change in premium after the purchase.
If you have already purchased a vehicle and obtained financing with another financial institution, don't worry. Chances are we can refinance the loan at a lower rate and save you even more money, many times hundreds of dollars over the life of the loan. Remember, it costs you nothing to refinance a vehicle loan.
With the Farm Bureau Bank, members can obtain financing options for their cars and trucks over the phone using our simple, convenient process. Convenient rates, flexible terms and 100 percent financing are just a few of the features of the Bank's vehicle loan program. For more information call your country office or visit online at www.farmbureaubank.com.
