Buying a car is considered an absolute necessity for many people, but a trip to a dealer can be daunting, mainly because the business tries its best to convince you to buy a car, even if you are only window shopping. They’ll employ every strategy to get the best deal and the most money from you.
The same goes for the buyers. Everyone seems to have a strategy they believe will save the most money. However, are they strategies or misleading myths? Keep reading to find out whether they’ll save you money or they’re simply a waste of time.
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Buying a Used Car Will Save You Some Money
The myth: A used car doesn’t cost as much as a new car.
Used cars cost less because they have already gone through their depreciation issues. Other than that, it’s a fact that new cars cost more than used cars. When it comes to financing, though, a used car won’t save you as much money. From cash rebates to other incentives, dealers will use every trick in the book to get you to buy a new car. The best you’ll get is low loan rates from nation21loans.com on new cars.
It’s better to buy a new car because interest rates are on the rise. The gap in interest rates on new and used cars widens by the day, which means you can make substantial savings if you buy new. Combine that with excellent negotiating skills, and you can land the best deal on a new car.
Buying a New Car Will Save You Some Money
The Myth: Since the car is new, the probability of it breaking down is next to zero.
The argument here is that new cars offer reliability and dependency, compared to buying a used car. It’s true, but you’ll have to part with more money to purchase the car.
Did you know that some new cars lose up to 20 percent of their value once you drive off the lot? Furthermore, after driving the car for a year, the resale value will drop 30 percent. The myth extends to car maintenance. Some people argue that new cars will cost less in terms of maintenance compared to used cars.
While that may be true, it doesn’t mean that you should cross off used cars from your list. In fact, you can get the same car model after 3 years for much less than if you had bought it new. What’s more is you’ll get similar features that the new model has.
End of Month Is the Best Time to Buy a Car
The myth: End of the month means the dealer will do anything to close the deal because he has a target.
To some extent it’s true but at the same time a misleading myth. Car sellers often get their bonuses after a certain period (like monthly), based on the target set by the manufacturer. If this is the case, you can land a great deal by buying at the end of the month. That is if your preferred car is in stock.
But what if the seller has already hit their target? The answer is simple. The deal you’re hoping for on the last day of the month may not happen. The best way to overcome this myth is by purchasing your car once you feel ready. That means your finances are in place, and you have done extensive research.
Buying for Cash is Best
The myth: Buying with cash will save you money in terms of interest rates associated with auto loans.
This is wrong. You see, cash doesn’t offer any incentive to the dealer in any way. That is unless the manufacturer or the dealer offers cash incentives, which is rare.
Dealers make a great deal of their money when you finance or lease a car. Paying cash doesn’t leave a smile on his face or extra money in a dealer’s pocket. As a result, the dealer will try and work a financing option for you, but you don’t have to accept it.
Buying It vs Affording It
The Myth: If you can buy it, then you can afford it.
Finance experts at the dealership will try and find a way of fitting the car into your budget. “How much can you afford in monthly payments?” This is a frequent question that many buyers have to answer.
Depending on your answer, they will try and bring down the monthly payments to fit your budget and by doing that, it appears that you can easily afford the car. But this is a misleading way of looking at it. What the finance expert does is extend the monthly payment period. For example, if the initial payment period was 48 months, the expert will extend it to 60 months to bring down the monthly payments.
The guiding factor should be the final price including the interest. If the number isn’t within your budget, then avoid the purchase.
You vs the Dealer
The Myth: The dealer is a better negotiator than I am.
This is true and false at the same time. Let’s talk about the false side of this myth first.
It’s true that the dealer is more knowledgeable and experienced in this field than you are. Be that as it may, you can also arm yourself with knowledge about the car prices in the area after doing proper research. If you feel that you’re getting a poor deal, you can always walk away.
In the back of your mind, always know that you don’t have to buy a car at one dealership— There are others who might offer a better deal for the same car.
Now, on to the true side of the myth.
Dealers negotiate for a living. They negotiate on a daily basis, something you don’t, and that is where the difference comes in. Even with your research, sometimes it’s next to impossible to beat a team of experienced negotiators who want to sell a car. Two best ways to help yourself are to request the help of a relative or friend during the negotiations and look online for the Manufacturer Suggested Retail Price (MSRP).
The Best Deals are Online
The Myth: The best car deals exist online
Shopping online is great because you get access to a lot of information while doing your research. However, that is only part when it comes to buying a car.
Some of these online dealers and lenders hide other costs involved such as application and processing fees. Therefore, online deals don’t always mean that you’ll avoid other costs such as upgrades, interest rates, extended warranties, and trade-in prices.
Avoid Red Cars
The Myth: Buying a red car will cost you more in insurance.
This is an absurd myth because the color of the car is of little importance to the insurance company. Don’t get carried away by this myth that has made many buyers shy away from buying a red car. This has, in turn, and led to a significant drop in car prices of this color.
The insurance companies focus on the model, engine size, car’s age, body type, make and year the car was built, not on the color. This is on top of your gender, age and specific credit score.
Everyone wants to own a car, but the myths surrounding buying one can put you off. With most of these myths (ensuring red cars, the dealer as the better negotiator, and buying a car at the end of the month) debunked in this article, you can walk into the dealer’s shop feeling confident because you have the necessary knowledge.
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