Here’s a big secret that could save you some money: auto financing is not just about the loan. When you control the financing, you control the deal! In this blog I’m going to share how you can walk into a car dealership with confidence and get the best deal without falling for any expensive tricks.
When you’re making a car-buying decision, several factors come into play: the price, trade value, warranty, after-market sales, fees, and financing. Many people don’t realize that the finance process, often an after-thought, actually determines the outcome of the entire deal. The finance process is typically where most dealers make their profit.
Research shows that consumers who enter into their auto-buying transaction with pre-arranged financing (ex: loan pre-approval) are happier than those who use dealer-controlled financing. When you have a keen understanding of the numbers throughout the process, you can solidify choices, prevent surprises, and avoid buyer’s remorse. Getting a loan pre-approval also helps you protect your identity, because you won’t need to share your personal financial information with the dealers and their partners.
Before you even start car shopping, there are some important numbers you need to know:
Once you know these numbers, MVCU’s Auto Advisor can help you identify appropriate vehicles and a loan term that meets your needs and budget.
Dealers often entice car-shoppers with hopes of a low rate, because what they really want is control of the loan. When the dealer controls the loan, they control the deal, and can sell more products by bumping up the payment a little or extending your loan term. You might hear them say “It’s only the price of a cup of coffee a day” …but $2 a day for 4 years is really a $3,000 decision! If they talk you into a longer loan term, you’ll pay even more in payments and interest. A win for them– not for you.
Let’s compare two scenarios for a typical $15,000 5-year loan:
The lesson here is that you’re far better off when YOU control the deal/loan.
Do you want to protect your car with an extended warranty and protect your loan with GAP insurance? After you’ve selected your car and negotiated your trade-in, you’ll be directed to the dealer’s finance office. The finance manager will present you with several options (that sound important and compelling) that are available for additional costs.
Some of the most expensive options include paint and fabric protection, tire and wheel protection, extended warranties, and GAP insurance.
While paint, fabric, tire and wheel protection are pretty straight-forward, GAP insurance and extended warranties may require more thought. If you choose to go it alone at the dealer, keep in mind that all these product prices are negotiable. Most finance managers are paid on the number of add-ons they sell as well as profit (so they’d rather sell these products at a discount than not sell them at all).
Considering GAP Insurance?
In my experience, GAP insurance costs about half as much from your credit union than from dealers, and it’s twice the product. Your MVCU service representative or Auto Advisor can explain the considerable differences between the two so you can make an accurate decision.
Considering an extended warranty?
Purchasing an extended warranty is a big decision with several factors: Who is underwriting the warranty? Is it the manufacturer, dealer, or the credit union? What’s the term of the warranty (years and/or miles)? Is there a deductible, and what’s covered? In my experience, extended warranties offered through the credit union are a much better buy. And MVCU’s Auto Advisor can help you determine if an extended warranty makes sense for you, while comparing the many options out there.
We get it– you’ve been bombarded with low rate and low payment car ads. But now you know there’s so much MORE to financing your next car than just the rate. The better prepared you are, the better you’ll do at the dealer. If you’re considering the purchase or lease of a new or used vehicle, talk with our Auto Advisor team BEFORE you go shopping. We are here to help ensure you get the best deal (with the least amount of stress), a loan that works for you, and have a pleasant experience! What’s better than that?
*These numbers are used as an example only and are hypothetical. Contact us directly for current rate information: visit mvcu.com or call 800-356-0067.
The insurance offered is not a deposit of the Credit Union, is not protected by NCUA or any other type of deposit insurance, is not an obligation of or guaranteed by the Credit Union and may be subject to risk.
Auto Advisor works with certain dealerships within their authorized network.
Category: Car Ownership
Here’s a big secret that could save you some money: auto financing is not just about the loan. When you control the financing, you control the deal! In this blog I’m going to share how you can walk into a car dealership with confidence and get the best deal without falling for any expensive tricks.
You’re ready for some new wheels, but should you buy new or used? There are passionate arguments on both sides, so you have to take your needs, wants, and budget into account while making this important decision.
If you’re ever in a car accident, GAP insurance could truly save the day when it comes to protecting your finances. This type of insurance covers the “gap” between how much you owe on your auto loan and how much the car is currently worth if your automobile gets totaled. Here’s what that might look like in real life…
If you’re in the market for some new wheels, you may be confused about leasing. Is it better to lease or buy your next car? There are passionate arguments on both sides, so you have to take your needs, wants, and budget into account while making this important decision. Below are some pros and cons of leasing– we’ll leave it up to you to decide which is best for you.
Besides the Super Bowl, February is known as a huge month for car sales. If you tune in to watch the big game, you’re likely going to see a ton of car commercials. Car commercials and car advertisements are a great way to learn about what’s available on the market. However, just like any other product, if the ad seems too good to be true… it is. Here are some things to look for when watching or reviewing an automobile advertisement:
February is a BIG month for car sales! You’ll find many Presidents’ Day special deals from the auto makers, car dealerships and financial institutions. Before you shop for your new car, here are some smart strategies to help you drive home with the right car and the best deal!
Even if you’re a fantastic driver, you’re surrounded by other drivers every time you hit the road—and they may not be skilled, alert, focused, sober or even awake! Did you know that MILLIONS of car accidents happen in America each year?
This type of insurance covers the “gap” between how much you owe on your auto loan and how much the car is currently worth if your automobile gets totaled. For example*, imagine that you purchased a new car and took out a loan for $31,000. Unfortunately, after 2 years, your car is totaled in an accident. Based on your loan, this is how the math would work:
Traditionally, February is a BIG month for car sales! You’ll find many Presidents’ Day special deals from the auto makers, car dealerships and financial institutions. Before you shop for your new car, here are some smart strategies to help you drive home with the right car and the best deal!
Car buying has never been for the faint of heart. Now, though, there’s a new challenge: inventory! On top of the usual wading through dense disclosures in ads, haggling at the dealership, and securing financing, you have to work a lot harder to find a car!
Life is busy. Not enough hours in the day, right? But even when you’re not busy, it would be nice to enjoy what little down time you have. So when shopping for a new car feels like ONE MORE THING on your to-do list, let the experts check it off for you!
