10 Car Buying Tips From a Credit Union Member

Video how to buy a car with credit union loan

I don’t remember much about my high school civics class, but I do remember the day during the last week of my senior year when my teacher spent class giving us his “life tips.”

These tips have stuck with me, even when a solid understanding of the political system has not. Here is a list of the car buying tips my teacher gave me, along with some others from my own experience.

1) Time the market

August to October is normally the time when dealerships receive new inventory and need to make room on the lot. This means fall is a great time to snag a lower price on a brand new car—if you are okay with last year’s model. You can also time your visit to the end of each month, in order to take advantage of sales staff pressured to meet a quota.

2) But if you want a really good deal…don’t buy new

A brand new car depreciates quickly, but buying a few years old means the rate of depreciation has slowed. You also save money on the purchase price which helps you to never owe more than your car is worth.

3) BYOF: Bring your own financing

Stop by your credit union and get pre-approved for the loan first. This way you know how much you can spend, what your monthly payment will be, and what your interest rate will be. This gives you purchasing (and negotiating) power. Plus, your credit union is likely to offer you a much lower rate than the dealer.

4) Get educated

You have to do your research ahead of time. Start by researching the car online at Kelly Blue Book and Edmunds to establish a good understanding of values. Then shop around—check out what prices that car has sold for in your area.

Read more  Where Can I Get a $2 Million Business Loan?

5) Shop your trade-in

You need to be educated on more than the car you are buying. If you have a car to trade in, do some research to ensure you are getting a fair price.

6) Sell your old car yourself

This is easier if you don’t have a loan on your current car, but do-able either way. You will nearly always get more selling private party than you will on trade-in.

7) Negotiate the vehicle price first

It can be confusing to negotiate the price of the car, your trade in, incentives and add-ons at the same time. A good strategy can be to take one thing at a time. Negotiate the price of the car, get it in writing, then move on to add-ons. Finally, talk about the price they will pay for your trade in.

DO NOT negotiate the monthly payment. Dealers will offer to extend your loan term to get you your magic payment number, but that only means you will pay more in the end.

8) Realize everything is negotiable

Often add-on fees are preprinted on auto contracts (transaction fees, etc…). But don’t be fooled into thinking these are fixed. Everything can be negotiated. You can negotiate to have these fees removed or lowered, or to have them take this fee out of another part of the deal by lowering the purchase price or giving more for your trade-in.

9) Shop over the Internet

It is possible to negotiate pricing and financing via computer. You can even ask for the car to be delivered to you and to sign the paperwork then.

Read more  How Assumable VA Loans Work

Internet salespeople tend to be compensated more for number of sales, rather than commissions on sales prices, meaning they are more motivated to close deals than to work for the highest price. Internet savings could be as much as $1,000 to $2,000.

Plus you can work the deal when and where it’s convenient for you.

10) Pit dealers against each other

Think of this as reverse eBay—the dealers are competing for you. Contact several dealers over the internet and make it clear you will go with the best price.

You must be very specific about the car you are looking for so they know you are getting equivalent comparisons.

BONUS 11) Don’t get suckered by the finance and insurance department

This is actually where dealers make a lot of their money. Many times, you feel victorious once you have agreed on the purchase price, but then you get to the finance office and get wooed by warranties and service contracts. Know what you need ahead of time, and stick to the plan-another positive of getting a loan pre-approved before you start shopping.

For any additional questions on car buying, or to start the pre-approval process, give us a call at 201-659-3900, or stop by your nearest Liberty Savings branch.

A feature-length version of this article appears in Guides to Money, the credit union website for young adults ages 18 to 30.