I have been in the car business 15 years. Understand what you are paying for.
- As far as purchasing a vehicle, I believe the first thing you should start out with is a pre-approval. In that essence at least you know the interest rate you will be paying for that vehicle.
- Secondly I would make sure when you have negotiated the price that that is a final price pre-tax as tax is based upon where you live. Next, once you get into the finance office office you need to verify the price you are paying on top of that look at any items accessories for example extended warranty contracts and gap coverage. Gap usually makes sense unless you are putting forty to fifty to sixty plus percent down.
What is GAP insurance?
If you pay full MSRP for a new vehicle and do not put any money down and finance all of your taxes as cars do depreciate with time and wear, if you were to get in to an accident and total that vehicle, insurance is responsible for market value for that vehicle which does not mean that is the amount that you owe so GAP therefore would pay the difference between that number. For example as well, if you were to put 50% down on that transaction, it probably wouldn’t make good financial sense for you to cover that as your down payment already has.
Make sure that you’re protecting the investment and the time that you’re going to keep that vehicle. For example, if you are leasing a car for two years there’s probably no need to put a 7 year warranty on that vehicle. Little things like that can end up saving the consumer quite a bit of time and/or money in their purchase of a new automobile.