While it may seem more costly in the beginning, buying brand new is actually more cost effective in the long run. This post will debunk common myths associated with buying a new vehicle.
Myth #1 – New Vehicles Depreciate Instantly
It’s usually the first thing you hear about buying a new vehicle. And, it’s partially true. A new vehicle does depreciate once you drive it home. However, depreciation doesn’t matter if you plan on owning the vehicle for a long time.
If you’re buying a car that you intend to drive for 10+ years, depreciation has no effect on your costs. Depreciation only matters if you plan on selling the vehicle right away. In fact, buying new means your total cost of ownership is actually lower overall.
New vehicles usually qualify for lower interest rates than used vehicles do. Manufacturers are often able to offer 0% financing which means you pay no interest over the course of ownership. You can never finance a used vehicle for 0%. Standard financing rates for a used vehicle are typically around 8-9%.
While a used vehicle may cost less than a new one originally, that difference in price quickly becomes less when you include the interest you’ll eventually pay when you finance a used vehicle.
Myth #2 – Salesmen Try To Sell You Things You Don’t Need
There are honest and dishonest people working in every industry, not just the car business. It’s important to remember that there are always more good salespeople than bad ones and that you can protect yourself by knowing the difference between the two.
- A good salesperson will ask you questions about yourself. By learning more about your lifestyle, they can determine what type of vehicle will meet your driving needs.
- A good salesperson will take note of your budget and do their best to keep you within your financial means. They may suggest a more expensive vehicle if they believe it’s a better fit, but a good salesperson will never push a vehicle on you.
- A good salesperson will know their stuff. They will be informed about both the brand and the vehicle you’re interested in.
- A bad salesperson won’t ask you questions. They’ll do all the talking and won’t take the time to learn about you or your driving needs.
- A bad salesperson will continually suggest vehicles that are beyond your price range.
- A bad salesperson won’t talk confidently about the brand or the vehicle. They’ll use “flashy” words but their information will lack substance.
There are always going to be bad salespeople who will act in their self-interest. It’s important to remember, though, there are great salespeople out there, too.
It is in a salesperson’s best interest to make you happy! When you leave a dealership feeling satisfied with the process and excited about your new vehicle, they’ve done their job.
Myth #3 – It’s Better to Finance Through a Bank Than a Dealership
Banks are only able to offer you their interest rates. Dealerships, on the other hand, not only have the option of financing you themselves, they also can work with multiple banks and lenders. This means you have options.
Go Auto is a perfect example. We have own in-house finance company. This means two things.
First, we can finance you directly, with our own money. We don’t have to deal with the banks if we don’t want to. If you have bad credit and the banks have denied you in the past, Go Auto can skip their approval process entirely and finance you on our own, regardless of your credit.
Second, having our own in-house financing team means we can shop around for rates. By working with a long list of lending institutions, we’re able to find you the best rate possible.
Local banks can’t offer you 0% financing because there is no incentive for them to lend you money. Banks make no money on 0% interest loans. Dealers, on the other hand, are in the business of selling vehicles. That means they can offer competitive rates and financing deals (like 0% which means you’re borrowing the money for free!).
Myth #4 – You’re Getting Ripped Off When You Trade Your Vehicle In
When you trade your vehicle in, the amount agreed upon immediately comes off the price of your new vehicle. Not only does it save you money on the price of the vehicle, it also saves you in interest. Plus, it costs you less in taxes, because you’re only taxed on the price of your new vehicle minus the cost of your trade-in.
There are other benefits to trading in your vehicle and you can read about them here.
Myth #5 -The Salesperson is Playing Games
It’s a common belief that when a salesperson goes to speak with their superior, they’re really just “faking you out.” That’s an outdated wives tale.
Salespeople do not act independently. Like any other industry, they report to a manager. That manager has the authority to approve certain financial decisions. When a salesperson leaves to approve something with their manager, you can trust this is a sincere move.