Rachel Cruze: 4 Things You Shouldn’t Say When Buying a Car

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In a YouTube video, Rachel Cruze reacted to another video from CarEdge, which featured CarEdge founders, father and son Ray and Zach Shefskatwo, giving money-saving tips for car buying. The CarEdge team shared what not to say to a salesperson at the car dealership and how to stay in control of a negotiation.

Because Rachel believes in buying cars debt-free, she wanted to share her thoughts and opinions on some of their negotiating techniques. While Rachel and the CarEdge team didn’t agree on everything, they did find some common ground. Here are some of the main points of the video.

Also here are 10 cars under $10,000 that Cruze said is worth buying.

Avoid Mentioning Your Monthly Budget

In the original video, the CarEdge team said that many car salespeople ask what you’re hoping your monthly car payment will be.

They cautioned that answering this question isn’t the best financial approach because car dealerships have several ways to manipulate your loan term to stay within your monthly budget. One of these is getting a car loan for a much longer period.

As the CarEdge experts explained, telling a salesperson your ideal monthly payment puts you at a disadvantage. Instead, knowing the total cost you’re willing to pay for the car is better. Cruze agreed with knowing the total price you want to pay for a car before you enter the dealership.

But, she reinforced her debt-free perspective. Cruze said that when you pay for a car with cash, you know your out-the-door price because you only bring a set amount of money you can afford. 

When you’re at the dealership, it’s tempting to stretch your budget or buy a slightly more expensive car because it’s hard to notice the extra expenses when they’re split up over years of monthly payments.

Don’t Disclose Your Down Payment at First

According to the CarEdge experts, don’t initially share how much you have as a downpayment. The dealership makes money from financing cars; the more cars it finances, the more it makes. Again, knowing the total price you want to pay for the car is key — including your down payment. 

If the dealership knows you have a large down payment, they might be less willing to negotiate on price. Again, their goal is to encourage you to finance as much as possible because that is one way the dealership earns money. 

Mention your down payment at the end of the negotiation when you’ve already agreed on your total price.

Refrain From Discussing Your Trade-in

Don’t tell your car salesperson you want to trade in your current car. If he or she asks what you want to do with your current vehicle, tell them you haven’t decided yet.

Many people can earn more from their current cars by making a private sale and dealerships know that. By not discussing your trade-in, you leave more room for negotiation. It also helps you keep your new car’s total cost in mind rather than being tempted to spend more because you can apply your trade-in value.

Get Ready To Say No to Extras

When you’re ready to purchase your car, you might have to speak with a finance manager. That’s where you’ll learn about extended warranties and other products. Be prepared to say no to these extras if you don’t want them, which can help you save even more.

Paying in Cash vs. Financing

The CarEdge experts and Rachel agreed you must go into your car purchase informed and confident about your purchase price. It’s about knowing how much you want to spend and staying true to that number.

Of course, Cruze said that you can avoid all negotiations about payment length, down payments and more if you plan to go in and pay with cash. She said that paying cash means that you’re likely to spend less, you’re less likely to justify upgrades and you won’t have the mental load of knowing that you have a car payment for many years to come. 

Cruze also explained that cars are depreciating assets and their value drops when you drive them off the lot. According to Edmunds, new vehicles lose 11% of their value the moment you leave the dealership.

Since its founding, the Ramsey Solutions team has favored paying cash for cars. This is one of the core beliefs and Cruze was informative and helpful in her reaction video. 

However, if you decide to finance a car, the CarEdge team had good insights that might be helpful if you decide to go the financing route.

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