Take the Wheel. Take the Wheel: Get the Best Car Deal

Transcription

1 Take the Wheel: Get the Best Car Deal

2 Seminar objectives Determine how much car you can afford Use a car inspection and test-drive checklist Negotiate the best car price Decipher financing options and warranties Don t forget about insurance

3 Ready set time out! Look at your credit history: Are you paying all debts on time? Is your credit report clean? (annualcreditreport.com) Or, are you living paycheck to paycheck? If so, adjust purchase expectations Meet with credit union staff to get finances under control before car shopping

4 How much car can you afford? Check your budget: List total income; list fixed and variable expenses Keep all monthly payments including rent or mortgage less than 40% of monthly take-home pay Factor in: Down payment, manufacturer rebates, value of trade-in, and money you can afford to borrow. What monthly car payment can you afford?

5 Get preapproved first! Get preapproved for a loan from your credit union before you visit a dealership Keep the amount to yourself until negotiations are complete Compare dealer offer with credit union rate

6 Factors to consider Quality, reliability (Consumer Reports great tool) New, used vs. certified pre-owned Highway vs. city driving (fuel economy, hybrid) Size and safety requirements (haul kids) How long do you plan to keep it? What s your budget? Don t forget insurance and maintenance.

7 Tips to get you started Educate yourself Shop around Is dealership conveniently located?

8 If you use the Web to shop around Check out the choices Check classifieds online Autotrader.com is a good resource Check local dealers Web sites for inventories Find current manufacturer rebates Check prices on our Groove Car site

9 Shopping tips Decide make, model, options, and color Visit at least three dealerships or car lots Take someone with you Prepare a list of must have options Consider gas mileage

10 Test-drive checklist Size and seating Visibility, comfort Radio sound quality Road feel and noise (turn audio off) Heating and air conditioning Don t forget to test drive beyond the neighborhood

11 Pricing on the window sticker Manufacturer s Suggested Retail Price (MSRP) Optional equipment Destination charge Market adjustments Total price or sticker price

12 Pricing not on the window sticker Dealer invoice price Rebate Dealer incentive Dealer s true cost Groove Car tells it all at your fingertips

13 What s it worth? Do your homework Know dealer s invoice price Know true market value price (current average selling price, minus popular options) Know value of your trade-in

14 Dealing with dealers: Negotiate the best car price Know preapproved loan amount per credit union Aim to pay < 5% over invoice price Don t settle for something you don t like Don t let emotions show Don t let dealers pressure you Don t be afraid to walk out

15 More negotiation tips Talk about invoice price, not MSRP or list price Don t talk about trade-in until price is set Negotiate price first, then payments If manager s approval is required to offer a better deal, say you ll wait just a few minutes no more

16 New car warranty Ask: How long? (example: 3 years/50,000 miles; 8 years/80,000 miles) What does it cover? (examples: bumperto-bumper, body rust, normal wear) Maintenance agreement? Is a dealer network readily available with service/warranty?

17 Full warranty on used car Anyone who owns the vehicle during warranty period is entitled to service Service provided free Replacement or full refund given if dealer cannot repair a covered system or part You only have to tell dealer that warranty service is needed to get it

18 Do you need the new-car extras? Don t pay for things you don t need. Examples may include: Rustproofing Fabric protection Paint protectant Etching your VIN on windows to deter thieves Service contract (extended warranty)

19 Thinking about a service contract? Ask Does it duplicate warranty coverage? Who backs the service? What does it cost? Will I pay a deductible? How often? What s covered? What s not? How are claims handled? Are parts new or reconditioned? What s the length of the contract? Take the Wheel

20 Deciphering financing options With rebate, you forego the low-interest-rate loan But, adding rebate to down payment makes credit union financing even more attractive 0% financing sounds great, but Only available for buyers with pristine credit Usually short-term loans, slow-selling cars You re unlikely to negotiate the price

21 Rebate vs. 0% Financing Comparison Amount Borrowed $24,000 w/$2,000 Rebate or 0% Financing Option Payment Term Total of Payments MHFCU & Rebate Savings 0% Financing $ $24, $ Rebate 6.99% $ $26, $2, Rebate 2.99% $ $23,714.40

22 Upside-down loan What is it? Owe more for car than it s worth Common with five- or six-year loans Alternatives: Don t finance for longer than you plan to own it Make down-payment of 10 to 20% Choose shorter-term loan, if possible Buy vehicle that will hold value longer

23 Term and Monthly Payments Amount Borrowed Interest Rate Term Monthly Payment $22, % 48 $ $22, % 60 $ $22, % 72 $340.13

24 Is leasing right for you? Factors to consider: Don t own the vehicle Monthly payment each month Drive new car every two or three years Low mileage Who will be driving the vehicle

25 FTC: Lease shopping tips Negotiate all lease terms Understand end-of-lease and extra charges Does manufacturer s warranty cover entire lease? Consider gap insurance Covers difference between what you owe and what the car is worth if stolen or totaled Read dealer contract carefully extra fees tacked on?

26 Tips for buying used Hire mechanic to inspect vehicle Ask for car s maintenance record Take a test drive (hills, highways, heavy traffic) Contact repair shop where most work was done. Regular maintenance done? Repairs completed or not done yet? Run Vehicle History Report Totaled, salvaged, rebuilt, flooded, failed inspection, odometer rolled back?

27 Used car inspection checklist Exterior dings, scratches Interior worn or clean Spare tire and equipment Hubcaps and moldings Electrical items function properly VIN match with contract Accessories clock, light, stereo function properly

28 FTC s Used Car Rule Dealers must post a Buyers Guide in every used car they offer for sale, which tells: Whether it s sold as is or with warranty Percentage of repair costs dealer pays under warranty Get all promises in writing Keep Buyer s Guide for reference after the sale Major mechanical and electrical systems on car Have it inspected by independent mechanic

29 If you buy from a private party Private sales not covered by Used Car Rule Use Buyers Guide list of auto s major systems as shopping tool Seller must live up to promises in contract Sales are as is usually not covered by implied warranty Some warranties and service contracts may not be transferable

30 Auto insurance coverages Liability Uninsured Underinsured Medical Auto collision Comprehensive Miscellaneous

31 Save on car insurance Shop around rates vary widely Take defensive driving course Ask about membership discounts Buy car with safety features ex. install car alarm Keep driving record clean Keep credit report clean Consider gap coverage Policy discounts

32 Insuring a teenage driver Shop around for teen-driver prices Choose their car carefully (safe, used) GPA of B or better: 5% to 10% discount Consult with insurance agent when teenager gets permit Maintain a good driving record

33 Soured by a lemon? To get refund or replacement for defective new car: Keep good records Provide the right notice Use arbitration program where required Follow state laws (carlemon.com)

34 Car Buying Summary Fits your needs Fits your budget You control the process not pressured Priced a little over dealer s true new-car cost, or Priced at reasonable used-car price

35 Checklist: Are you ready? I have a good credit history and know my credit score I plan to get preapproved before car-shopping I know how much car I can afford I know what kind of car I need and want I know how to research safety and reliability ratings I know how to find dealer invoice and other prices I understand various financing and warranty options I know what to look for on a test drive I know how to negotiate the best price