Top 7 Myths of Buying a New Car

Posted on 15 September 2014 by Tony Santos

buying-new-car

We have all heard of the supposed dangers of buying a brand new car. The main argument against it is usually the depreciation of value as soon as you drive it off the forecourt. A lot of these so called ‘facts’ have been made up to scare off potential buyers over the years and today we will try to shine a light on some of these. Here are the top seven myths of buying a new car.

7) You Will Pay Too Much for Car Insurance

This one is a completely baseless myth that we should be taught to ignore. The price of car insurance is based on too many factors to make this a common truth. Insurance prices are based on factors such as engine size, horsepower, class of vehicle, what you want/need for coverage and many other factors. If you are buying a high end sports car of course you will be paying a premium for performance car insurance. Just remember to do your research before buying.

6) New Cars are Worry Free with a Warranty

While this may be true for a lot of issues on a new car, those basic warranties don’t cover wear and tear or issues that are not a result of a defect. Also, if you buy a used car that is only a few years old, chances are it will still have some warranty coverage. Manufacturer warranties do transfer with the title of the car so make sure to check this with your car salesperson.

5) Hide Your Trade-In Vehicle

This is probably the best way to make sure your deal falls through when buying a new car. The process for the sale of a car changes when a trade is involved, especially if you are planning to use a finance option. The dealer needs to be able to show the finance company that they are offering you a certain percentage of the blue book value of the car, so hiding the fact you have a trade is just going to put you right back to square one. Be up front from the get go for less headaches.

4) Paying Cash Will Get You a Better Deal

This actually may result in the exact opposite when purchasing a new car. Dealers are more likely to give you a better deal when financing because they get a certain percentage cut from the finance company when putting the deal through. They prefer you to finance and by accepting cash they are actually limiting their earning potential.

3) Dealers Make a Huge Profit on New Vehicles

You can’t be any further from the truth with this myth. New cars in this day and age come to the dealership with minimal markup room available and sometimes they actually lose money on the sales. The dealer makes more money off of back end purchases and used inventory than they ever will with the sales price of a new vehicle.

2) Demand the Lowest Price Possible

This tactic may have worked years ago but it shouldn’t be used when buying vehicles today. With the small amount of profit involved in selling a new car, you are most likely getting the best price possible anyway. Where you really should demand better pricing is if you are buying an extended warranty or loan insurance, as these are areas which tend to have a higher markup.

1) Your Car Depreciates Immediately

Now this is a bit of a ridiculous attitude to have with a brand new car. Your car will depreciate a lot in the first year of ownership but it does not immediately happen. By the time you drive off the forecourt the vehicle is most likely not in your name yet or reported as sold and is technically still a new vehicle. The depreciation would occur if you immediately want to trade it in on a different vehicle and the dealer would need room to make a profit from the trade in.

Categorized | Car News, Car Tips, Featured

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