“I think I got a really good deal on my new car, but I’ll be paying on it for six years. I negotiated a great price though.”
The difference between the really great price and the cost of the vehicle is where the difference lies. Most people look at a purchase and see the price tag. We all comparison shop for bargains and try to get a good price when it comes to major purchases, even using coupons for groceries. We don’t often know the cost of things.
The difference between the price of a new vehicle and the cost, or the price of a new home and its cost lies in the finance charges and fees. When you sign on the bottom line of all of those loan papers and agree to pay for a vehicle for four, five or six years the lender adds up the profit.
Just what does it cost to purchase a new vehicle? The sticker price says $21,000 for example. That’s the price. When you go into the office and start signing papers, you find there are finance charges, closing fees, taxes and license fees. Those are all added into what becomes the cost at the end of the term of your loan. If you negotiated for your vehicle based on the overall cost based on the end result, do you still think you got a great deal?
The same goes for purchasing a home. If you went to a Realtor and they gave you the cost of the home rather than the price and you negotiated based on the cost; which includes finance charges, closing costs, property taxes and in some cases association fees, would you be inclined to purchase elsewhere?
By comparing the total cost of purchases, especially those major purchases, you can also make decisions that will help you save for what you really need rather than what you want at the moment. Call an AC Financial Adviser for more on making sound financial decisions at 800-564-3136.
