By Tracy Scott
Myths continue to circulate for a reason. There’s some truth in almost every single one. But, with auto buying myths, that small nugget of truth can create a blind spot which can wreak havoc with your finances. Paying too much for a vehicle can delay your plans of buying a new home, paying off other debt, or saving for college. The way you allocate your income will determine how quickly you reach your other financial goals.
If you hope to save money on your next auto purchase, kick these common myths to the curb.
Myth #1: Buying used is always a better deal.
You don’t need a salesperson to tell you that a pre-owned vehicle will have a lower sticker price than a new vehicle of the same make and model. However, several factors influence the final cost of the car. In addition to the manufacturer suggested retail price (MSRP), which is only a guideline, newer models often come with cash rebates or other buyer incentives that aren’t available with older models.
When it comes to securing a loan, your used car could cost you more. Depending on the financial institution, financing rates for used vehicles are often higher than those for newer models. Don’t forget that used vehicles often have higher maintenance and repair costs. Estimate the total cost of owning the car to determine whether a used or new model supports your financial goals.
Myth #2: The dealer will let me know how much I can afford.
Your definition of “affordability” and the car dealership’s interpretation will likely differ. A dealership’s finance department will assist you in qualifying for the most car your credit score, income, and their underwriting policies will allow. They are not concerned with your other bills and financial goals. Car buyers must look beyond the minimum monthly car payment and add the additional costs of gasoline, routine maintenance, and insurance to their monthly budget. The monthly expenses related to your car should not require you to completely overhaul your other financial goals.
Myth #3: Car research takes too much time.
Smart car shoppers educate themselves before they walk through the showroom doors. But, with simple Google searches like “how to buy a car” returning over 7 billion results, the idea of car research can be overwhelming. Instead of spending weeks searching numerous industry websites to determine a fair purchase price, reading reviews, and figuring trade-in values, AFFCU members can simplify the process with one resource, AFFCU’s Car Buying Service, powered by TrueCar®. Members using the free, no obligation service also receive guaranteed savings on new and used vehicles when purchased from a local, prescreened car dealership.
Myth #4: Car manufacturer reviews are the only ones that matter.
While visiting industry and car manufacturer websites can provide a wealth of knowledge about your prospective vehicle, taking a few minutes to review new and used car dealer reviews and ratings can also save time and money. Reviewers often comment on customer service, inventory selection, high-pressure salespeople, and the financing process. As with many online review systems, you are likely to find extremes, e.g., one star or five-star reviews, but little in between.
Look beyond the rating system to determine why the reviewer left the rating. If after several comments, you find a recurring theme, then consider the validity of the issue or praise expressed regarding a particular car dealership.
Once you recognize these common auto buying myths, your car buying experience will feel less like changing lanes in rush hour traffic and more like cruising down a country road on a Sunday afternoon. Ready to talk financing? Contact an Atlantic Financial FCU representative today to discuss which auto loan option is the best fit for your financial goals.