Car buying myths that could cost you — and what to do instead
Purchasing a vehicle is one of the major financial decisions many people make, and with it comes a deluge of well-intentioned guidance from work colleagues, family members, friends, and even TikTok 'gurus.' While a few advice are beneficial, others are just outmoded myths camouflaged as insight.
Many of these 'wisdom-laden' insights are entrenched in how the car industry worked many years ago. Currently, the market requires shrewder strategies, not just because of modernisation, but more because of the high cost of living that is experienced by people globally.
According to a recent article published by Money Digest , here's a breakdown of a few of the most tenacious myths — and how to navigate, dodge, or sidestep them. The 'always pay cash' trap
For most people, cash is king. But with a car dealership, that isn't always true. In reality, informing a seller that you plan to pay in cash can damage your negotiating power. And that is because dealerships usually make additional money through what is called a dealer reserve — an 'extra' they collect when clients get financing through them. This bonus characteristically increases 1–2% to the bank's loan rate, meaning financing can be more lucrative for the dealer than the conventional cash sale. See also Top 3 Places To Sell Your Used Phone in Singapore 2017
To retain the power in your hands, focus on negotiating the 'out-the-door price,' that is, the overall price including levies plus charges, before you discuss your planned payment scheme. Once the price is set in stone, you can choose whether to get financing through the dealer, bring your own financing, or pay cash directly.
In certain instances, financing can save you money, particularly if the builder is providing 0% APR transactions. These promotional deals can mean you can derive money interest-free, frequently making the total cost less than buying in cash. Just see to it that you have compared offers and made sure you're not being talked into a premium option or persuaded to get redundant add-ons. The 'dealer financing is a rip-off' assumption
It's convenient to set aside dealer financing as a trick, but that mentality could mean missing the chance to get real savings. Carmakers normally run promotions via their agreements that propose sponsored interest rates as low as 0% or 2% for eligible customers, rates that are usually better than what banks or credit unions can deliver. See also Olam Food Ingredients secures S$665.29M financing backed by SACE
Nevertheless, dealerships don't typically publicise these transactions openly, particularly if they can see that a buyer has not done their homework. That is why walking in with a pre-approved credit from your bank or credit union is a clever idea. It gives you the yardstick, a rate the seller must surpass to win your business. Smarter buying means better deals
The car market is growing and evolving fast, and so should your procurement approach. Whether it's how you pay or who you will finance the purchase, keen, up-to-date choices are the key to getting your money's worth and getting the most value from your succeeding automobile acquisition.
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