Focus on the purchase price . . . not the payment.
The other day, my mom called me up from New Jersey and she was shopping for a car. She told me over the phone what she thought was she could afford on a monthly basis for a payment. That’s when I stopped her and said, “Never tell the dealership what you want your monthly payment to be when you negotiate a car price.” If you talk about monthly payments at the car dealer, that is when you get yourself in a trap. You always want to negotiate the price of the car. Once you negotiate the price, then you can really talk about the financing rate. You can always know what the financing rate is by looking at some simple calculations. Generally you want to know n, which is a number of months that you’re going to make the payment. You will know the price of the car which is your present value. You know the future value of the care will be zero, technically speaking, when the car is paid off. If you can get the dealership to tell you what the interest rate will be on your loan, you can calculate your monthly payment as easily as the dealership can for you. We do it for clients all the time. The trap you get into is if you negotiate yourself around the payment, then basically the car financing and the dealerships can work around the financing and create rates that are not advantageous for you. Always negotiate around the purchase price. Then you can deal with the payment. Best of luck with buying your car, and if you need any help, you can always visit Oxygen Financial or Call us at 1-800-355-9218.
TED JENKIN IS SECURITIES LICENSED THROUGH INVESTACORP, INC. A REGISTERED BROKER/DEALER MEMBER FINRA, SIPC. ADVISORY SERVICES OFFERED THROUGH INVESTACORP ADVISORY SERVICES, INC. A SEC REGISTERED INVESTMENT ADVISORY FIRM.
