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Car Buy Myths & Car Buying Tips

-PRINTER FRIENDLY VERSION-

THE MYTHS

Myth #1

Financial Institutions will not finance a car with a lot of miles.

Fact – Financial Institutions pull the vehicle value through NADA. This amount given through NADA accounts for the number of miles on the vehicle and gives an accurate value. If the car has a value, then the car can be financed.  Get an NADA value for your vehicle now!

Myth #2

Financial Institutions will not finance an older vehicle.

Fact – Financial Institutions pull the vehicle value through NADA. This amount given through NADA accounts for the age depreciation and gives an accurate value. If the car has a value, then the car can be financed.

Myth #3

A Warranty from a Financial Institution is not valid everywhere.

Fact – The warranty sold at Financial Institutions is accepted at any licensed mechanic who accepts credit cards. This includes all major dealerships. A warranty may be financed into the loan or sold separately.
 

Myth #4

Your car isn’t worth that much.

Fact – You may be given a low offer for your trade. Used cars are just as valuable as new ones. Used cars will not depreciate at the same rate as new cars. There is a large market for used cars, and you should get the fair value from your trade-in. Have your credit union give you the NADA value on your trade before you go shopping for a new vehicle.
 

Myth #5

You can lower your interest rate if you purchase a warranty.

Fact – Often, you will find lowering an interest rate may not save you money. You should fully evaluate the cost for all products not just the rate. New Orleans Firemen’s FCU offers payment protection products, GAP, and warranties to help protect your purchase. You can finance all of the products into the loan. Only warranties can be sold separately.

THE TIPS

Tip #1 - Time is Money

The longer you take to ensure you get the vehicle you want, the more money you will save in the end. Research the vehicle you want to buy and compare prices to make sure it is a car you can afford. Before you are fully ready, test drive vehicles to see what the best car is for your money. Try not to purchase the vehicle on the same day you are shopping around.
 

Tip #2 - The Amount on the Sticker is the asking price

You will often find that the “asking price” is more than the actual NADA value. Typically, Financial Institutions can only lend up to 100% of the NADA value of the car (depending on your credit score). If the car is priced too high then you may have trouble getting financed or end up with a car note that is too high to pay. The asking price is negotiable. Have your credit union give you the NADA value before you buy. Once you are fully informed, make an offer. Many times the price will drop. Enterprise Auto sells used vehicles with no-haggle pricing. This means that the car is already priced at or below
the Blue Book value.
 

Tip #3 - GAP (Guaranteed Assets Protection) Insurance 

You can purchase GAP insurance with anyone you finance you car with. This product can only be sold by the company who is financing the vehicle. It is not sold separately. This product cannot be added after the loan has been booked. The price for GAP can vary depending on where you finance your vehicle. It can range from $350-$900. New Orleans Firemen’s FCU offers GAP insurance for $350, much less than the competitors.
 

Tip #4 - Down Payment 

You should never announce how much you will be putting down when you are negotiating a price for a vehicle. There have been many cases where down payments have been lost in the numbers on an invoice. Always take your cash to your financial institution for them to add to the check for the seller. This way, you can always account for the down payment.
 

Tip #5 - Approval Amount 

You should never announce how much you are approved for. Once you say “I am pre-approved for $30,000”, the seller may make the pricing of the vehicle as close to $30,000 as they can. You want to make sure the value of the vehicle you are purchasing matches the pre-approval amount of your loan.
 

Tip #6 - Trade in Vehicles 

Make sure you know the value of your trade, so you can get the most out of your asset. The more you get for your trade will lower the amount you have to finance. Have your credit union give you the NADA value on your trade-in. Clean retail is what you can try to sell your car for instead of trading it in. Enterprise Auto will give you trade-in value from Kelley Blue Book based on accurate condition rating and mileage of vehicle.
 

Tip #7 - Fair Purchase Price 

As a general rule, you should try to purchase your vehicle at or below MSRP after Tax, Title, and License fees have been added. This does not include down payments or trade-ins. If you can’t get down to the MSRP, you need to check the price of the car through various resources. You can call your credit union to get the MSRP prior to purchasing the vehicle.
 

Be a Smart Shopper with Free Helpful Resources. We have partnered with Credit Union Services, LLC to give you the tools you need to get the best deal! Find out about rebates, pricing, buying tips and more. Visit our auto loan page to learn more. Get pre-approved today!

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