The RAIN Method for Buying a Car

The average cost of a new vehicle today is around $30,000. Whether you desire the shiny, brand-new ride or if you are content with a reliable used car, you still want to get the most for your money. The actual process of finding, researching, financing, and buying a car does not need to be scary or intimidating. In fact there is an effective technique for making the right purchase. It’s called RAIN. RAIN is an acronym for Research, Ask questions, Investigate or Inspect, and Negotiate.

Research
In this step, you use information from publications like Consumer Reports, Kelley Blue Book, and other resources to make sure the vehicle you are looking at is a wise choice and a reliable investment. You also need to use the buyer’s guide to find pricing of the vehicles you are looking at. It is easy to find the sticker or retail price, but your goal should be to find out the wholesale price which is the price the dealership paid minus any rebates, hold-backs, or incentives. The wholesale price is the price you will use to negotiate when the time is right. Also, make sure you research more than one vehicle option. Having interest in numerous car options at various dealerships will provide a larger arena for negotiating a price.

Ask
You should contact the insurance company and find out the rates you can expect with the vehicle you are looking at along with a quote from your insurance agent. There are a lot of costs associated with owning a vehicle and insurance is a major one. You should also ask the dealership for information regarding the average cost of upkeep. This information is critical as you examine the overall costs of the purchase you are going to make.

Investigate or Inspect
If you are considering a brand-new car, you should go to the dealership and investigate it. Be sure the salesperson knows that on this trip you plan to test drive only and that you are not ready to make a deal quite yet. This is your opportunity to get a feel for various car options. As you investigate your potential purchase, think about if each vehicle meets your needs, handles well, and if it will keep you happy in the long run.

If you are in search of a used vehicle, the inspection process is very important. Even if you have limited knowledge of automobiles, everyone can conduct a basic inspection. Check out the exterior and interior of your vehicle options. Make sure you take each car for a test drive so you can see how it handles, how it accelerates, and how it brakes. When your inspection is complete and if you are serious about purchasing one of the vehicles, take it to a certified mechanic for a full-car diagnostic. It may cost you $100, but it gives you a detailed report of the car’s condition along with a list of problem areas and the costs to fix those problems. Also, a full diagnostic will help with your last step of negotiating price. Remember to make sure you have more than one vehicle option – each from a different dealership. This will also help with negotiation.

Negotiate
For many, the negotiation process is intimidating. Everyone wants to get the best deal – including salespeople. A good way to take the pressure off of you is to inform each salesperson that you are interested in more than one vehicle at different dealerships and that the dealer with the best offer will get your business. Take all numbers that each dealership gives you and see which offer is the best.If you are not happy with the offers, share your thoughts on what you consider to be a fair price based on your research. If the dealer says no, move on. 

Purchasing a vehicle is probably going to be the second largest expenditure in your life. Being prepared is key to getting the best deal. Following these steps will help you tremendously. Always remember, DoverPhila Federal Credit Union can provide not only the best financial deal for you, but they can also provide support, guidance, and education. 

Three Things to Know Before Purchasing a New Car

When purchasing a vehicle, there are many things to consider before taking the leap such as the pros and cons to buying new cars versus the pros and cons to buying used cars.

Before purchasing a vehicle, think about what the daily use of the vehicle will be, the amount of trunk space you will need, and how much seating space you should have. Make sure the options you are considering are practical reflections of how you will use the car. You may love the look of a larger vehicle, but do you have a need for that much seating? If you do not need that much space then that particular car may not be right for your daily commute and errands.

After you have considered the personal aspects of which car to purchase, move on to the less subjective parts of the process such as depreciation, cost-to-own, and affordability.

Depreciation
Most cars depreciate at about 15% per year. With new cars, there is about a 20% depreciation rate as soon as you drive off the lot. You should consider this before you decide to buy a new car, especially if you cannot afford a large down payment. Chances are you will be upside down on your car loan almost immediately if you’re financing the entire cost.

Cost-to-own
Consider the true cost to own the car you are considering. There are always costs when owning a vehicle such as insurance, fuel, maintenance, and more. Maintenance costs vary by manufacturer and model. Some manufacturers have better reputations than others when it comes to maintenance. Some new cars come with “free” maintenance plans for the first couple of years or for a certain number of miles.

Affordability
Shop around. Do not guide yourself solely by what the dealership is willing to lend you. People are often blindsided by an attractive low monthly payment that is usually tied to a super-long loan term – do not be fooled. Consider all aspects of financing so the total amount you are going to end up paying for that vehicle when it is all said and done is something that is affordable. That’s what matters.

Before you even step on the lot, visit DoverPhila Federal Credit Union. As a not-for-profit financial cooperative, we offer low loan rates and flexible terms that fit your lifestyle, and we are happy to explain the lending process and answer any questions you may have about loans.

How GAP Insurance Benefits You

Did you know that a new car can be worth 30% less in 3 months than the day it was purchased? Car owners often assume that if their car is totaled then it will be replaced with the amount they paid for it, or at least the amount they owe on their auto loan or lease. Unfortunately, this is not true – but for some auto owners, there might be a solution. It’s called GAP Insurance.

Guaranteed Asset Protection (GAP) Insurance offers valuable protection for your auto loan or lease by covering the difference (GAP) between the balance of what you owe on your car and the current market value. In most instances, GAP will also pay your regular insurance deductible.

Here’s an example of how it works! You recently purchased a new car for $21,000. Your down payment was $1,500 and your auto payments are $350 per month. Six months later, you are in an accident and you total your vehicle. Your insurance company pays you the current market price (actual cash value) of your car, which they deem as only $15,000. With your down payment and your six monthly auto payments, you still owe $17,400 on your car. The value your insurance company is giving you is lower than the amount you still owe on your loan or lease payoff. The difference, or gap, between the two is $2,400. With Guaranteed Asset Protection, you receive help with this financial gap. Without the insurance, the $2,400 comes out of your pocket.

If you find yourself in a situation where you owe more on your vehicle than what it is worth, made a low down-payment, have a high interest rate on your loan or lease, or rolled over other costs into your car payment then you should consider GAP Insurance. It’s a great resource!

At DoverPhila, we offer this valuable protection at a very inexpensive cost and if you are not satisfied then we will return your premium if you cancel within 60 days. Also, as an added benefit of purchasing GAP through DoverPhila, you are provided with the Auto Advantage Program that includes an Auto Deductible Reimbursement (ADR) benefit for up to five (5) years. ADR provides members with reimbursement of their primary auto insurance deductible (up to $500) per loss (limit of two losses per year) when a claim is filed and paid by the auto insurance company for a covered vehicle titled to the primary borrower. Along with ADR, members also receive Personal ID Restoration Consulting and Warranty Registration Service.   

For more information on our Guaranteed Asset Protection Insurance and its benefits, contact our loan department by calling 330-364-8874.