Why You Should Focus on the Total Cost of a Car Instead of the Monthly Payments
When buying a car, it can be tempting to focus on the monthly payments. After all, that is what you will have to fit into your budget each month. Focusing on those monthly payments instead of paying attention to the total cost of the car can be a mistake. You need to focus on the total price before even considering the monthly payments when buying a vehicle.
Monthly Payments are Flexible
If you tell the car dealer how much you can afford to pay each month, chances are they can set up the loan to match your requirements. But, finding the “right price” doesn’t necessarily mean you are getting a good deal. They extend the loan term length in order to offer you a low monthly payment.
While this low monthly payment may make it seem that it’s in your price range, the long-term length is costly in the long run. You will likely end up paying thousands more in interest for the vehicle than you would have with a more reasonable term length. It also increases your chances of ending up being upside down on the loan down the road – in other words, owing more on the car loan than the vehicle is actually worth.
The Total Price is Fixed
While monthly payments can be flexible to seem enticing, the total price is fixed. The price is simply the price – there is no way for the dealer to trick you into thinking it’s lower than it actually is. Focusing on the final price allows you to ensure you’re paying what is fair for the car while staying within your budget.
How to Handle the Negotiations
Of course, the monthly payment is an important factor to consider when you’re purchasing a car. You just want to make sure you handle it at the appropriate time during the negotiations process.
Start by negotiating the total price of the car. No matter what the dealer says, refuse to discuss the monthly payments until you have reached a fair total price. Once you have determined the overall cost of the vehicle, then it is time to start calculating how this will work out for your monthly payments.
If the monthly payments are too high after these calculations, it’s time to negotiate again. However, you do not need to negotiate the payments – the dealer will simply extend the loan term to bring the monthly cost down. Negotiating the total price will also lower what you have to pay each month.
Clark County Credit Union in Las Vegas offers auto loans to our members with low rates and better payments. We will help you find the right terms for your needs and provide quick loan decisions. When buying a new or used car, we make the process quick and convenient. Contact us today at 702-939-3115 for more information.