Car Buying

Let’s Be Strategic

Automobiles, recreational vehicles, and insurance rank the 4th most expensive type of purchase made by Americans, following a home, college tuition, and taxes. We’re applying a severe focus on automobiles as the rates are volatile and heavily dependent on the current market. In addition, rates can range from .99-to 25%, which causes a severe swing in monthly payments.

“Nothing is ever the same” and this certainly applies to purchasing a vehicle. With new companies like CarMax, Carvana and TrueCar, the traditional ways of buying are becoming extinct. However, the below will remain the same:

A. Research vehicles and features

B. Get preapproved for a loan

C. Prep your trade-in

D. Locate and test drive vehicles

E. Negotiate price and trade-in

F. Review loan docs

G. Close & take delivery

We “The Breadwinners” will assist in this process focusing on B (get preapproved for the loan), C (prep your trade-in), and E (negotiate prices and trade-in). These are the most important financial factors during the process. Let’s explore:

Getting approved for your auto loan doesn’t start at the dealer. In fact, the dealer is essentially the middle man to you and the lender. Auto dealers have “special relationships” with banks where they’re paid a fee for each approved applicant. In fact, when Finance Managers pull your credit, they’re sending it to each bank for approval. The Finance Manager selects the best rate they can make the most money on. Increased rates = higher payments. Obtaining your preapproval can be done on your own. Based on your credit score and profile, we’ll guide you through which lender to choose for the best rate.

Being strategic when purchasing a car will save you tens of thousands of dollars over your lifetime. Trading in your car will produce either positive or negative equity in which both will be applied to your new loan. Positive equity will be applied as a down payment to your loan, which would reduce your amount and payment. Negative equity will do the exact opposite. When purchasing a vehicle, always consider life with that car/truck for the duration of the loan. Things to consider:

A. Can I afford these payments if something happens at home?

B. Can I afford the maintenance and/or a major repair while still making my payments?

C. How long do I plan on keeping this car/truck?

D. How many miles will I put on this car/truck annually or when it’s time to trade?

E. What will this car be worth when I’m ready to purchase a new one?

Considering all of these factors will reduce the likelihood of having negative equity rolled into your new loan.

Negotiating pricing is a key element of getting the vehicle and payments you want. There’s always room to move and their 1st offer is never the best. Each used vehicle purchased by a dealer and resold contains some sort of “markup.” Our goal is to decrease their markup to secure a lower purchase price. Our goal is to negotiate higher trade-in values for your vehicle. This is where we’ll rely on industry data and other factors in our local market.