A Few Used Car Buying Myths Debunked

Apr 26, 2019

On a rising trend for more a decade, the average age of a car in the U.S. has reached nearly 12 years in 2019. Vehicles are being built to operate more reliably than ever before, and are likely to run far longer than expected in past decades. Gone are the days when people tended to buy a used car as a temporary solution when they couldn’t afford anything else, and so too are many of the norms that used to be associated with used-car shopping. We’re putting these outdated notions to rest here, along with some other common misconceptions, in favor of accurate information to put more money back in your pocket, and help get you into the car you really want.

Myth #1. A used car will always cost you more in terms of maintenance: The financial advantages of buying used no longer come with an expectation that these benefits will be at least partially offset by breakdowns and costly repairs down the road. In general, this is simply no longer the case due to the fact that vehicles manufactured in the last twelve years or so are so much better made than their predecessors. As explained in our July 2018 article “The Cars Most Likely to Last $200,000+ Miles,” cars are receiving fewer consumer complaints these days as a result of innovation, the use of higher-quality materials, stiffer government mandates and global competition.

Nowadays, you can you get a late-model car in excellent condition with many of the same features as a brand-new vehicle for a much lower price, while saving on depreciation, taxes and insurance premiums. As Credit Sesame points out, waiting only three years or less to buy a vehicle can trim thousands of dollars from the cost of the car. And as long as you apply some common sense and care over the long haul, you no longer have to compromise when it comes to durability, reliability and the level of maintenance required when buying used.

Myth #2. You’ll get the best price on a used car by paying cash: Many people mistakenly believe that if they offer to pay the entire cost of their car upfront and in cash, they’ll be offered premium value at the dealership. This misconception often goes hand-in-hand with the fallacy that you must always make a large down payment in order to buy a used car. The reality is that dealers make more money when you finance the car, so they are generally less motivated to offer discounts to a customer who buys the car outright in cash. Although you’ll save money on interest with an all-cash transaction, don’t expect that the dealership will reward you for it. As Credit Sesame explains, “Paying all cash can get you a deal on some things, but a new car isn’t one of them—unless an auto manufacturer offers cash-only incentives, which is rare.”

Myth #3. To determine whether a car is within your budget, focus on the monthly payment: This is a tactic that continues to work quite well in diverting the customer’s focus off the actual price of the vehicle, and whether it is truly within their budget. Salespeople may ask how much you think you want to pay per month for your ideal vehicle, then point out that they can get you into this car for that same amount.


Basically, what they are suggesting is that you extend the loan out so that you are making payments from, for example, 48 months to 70 months. Of course, this means the overall price of the car with be higher because you’ll be paying more money in interest over the long term. And as Instamotor points out, most loans are front-loaded on interest payments, so it’s easier to get upside down (owing more on a car that it’s worth) with longer term loans. You’ll also have a car payment for that much longer, which means there will be less money to put toward savings, investments or even just paying down your credit card debt. For a more comprehensive test of affordability, Credit Sesame recommends The Edmunds True Cost to Own Calculator, which includes factors such as depreciation, loan interest, taxes, insurance, fuel, maintenance and repairs. Other great resources that can give you a good sense of the value of a specific car are kbb.com (Kelley Blue Book) and TrueCar, which will tell you what others in your area have paid for a specific make and model, and provide estimated prices from a number of dealers near you.


Myth #4. A vehicle history report will tell you everything you need to know about a car: According to UsedCarInspections.org, Carfax and Autocheck admit that most vehicle accidents will never show up on a Vehicle History Report. Moreover, these reports won’t necessarily divulge existing or potential mechanical or electrical issues, or give you a sense of the quality of previous repair work. However, we still recommend taking a look at the report because it might alert you to vital information about the car, its number of owners, etc. All you need to perform a search on a car is the vehicle’s VIN or license plate number. You can access the report yourself for a fee, but a dealer may provide you with one when asked, or direct you to a link to a free report on their website.


For a more in-depth assessment of whether a particular car will be a good investment, or what problems you might need to address, be sure to get a pre-purchase inspection from a third party mechanic . In addition, choosing a certified pre-owned vehicle can offer additional assurances when purchasing a car from a dealer. These cars feel almost new and have a very low risk of mechanical problems as they have been inspected, refurbished and certified by a factory-trained mechanic, and carry certain advantages such as extended warranties and special financing.


Myth #5. There is an automatic warranty on used cars: To more savvy care shoppers, this one may seem a bit ludicrous, but many inexperienced car buyers believe this to be true. Just to be clear, a warranty is not automatically issued to you upon the purchase of a used car. Although a dealer may offer a limited warranty, it’s vital that the buyer understand exactly which components and/or systems are covered and for how long, as well as exceptions that could very well apply.

As UsedCarInspections.org points out, most warranties do not cover the majority of the mechanical and electrical systems. Under California law, licensed car dealerships are not generally required to offer warranties with the used vehicles they sell, but there are two important exceptions: State law requires that used car dealers offer warranties if either (1) the dealer is a buy-here-pay-here dealership, or (2) the vehicle is a certified, pre-owned vehicle. To learn more, read “Do Car Dealers Have to Offer Warranties,” here.


Myth #6. You’ll have to pay more to insure a red car: While not specifically focused on used cars, we’re including this one since it continues to persist. Just to set the record straight, owning a red car will not cost more to insure. Insurance companies are not concerned with the color of your car but instead with its year, make, model, body tope, engine size, etc. Of course, they also want to know your age, gender, credit history and other factors. The fact is, you may actually be able to get a red car for less money since this misconception can make these vehicles harder to sell.

Ready for a great deal on a pre-owned vehicle that you can purchase in a relaxed, haggle-free environment and with the added benefit of knowing that the car you choose has already been tested and certified in all major technical areas? Join SFPCU for our three-day pre-owned car sale with Enterprise Car Sales from April 26-28 at four Enterprise locations in San Leandro, Redwood City, Concord and Santa Clara. You’ll find a hand-selected collection of certified low-mileage cars, trucks, vans and SUVs in a wide variety of models. Finance your vehicle with SF Police Credit Union, and you’ll receive a 1.25 percent APR** discount. In honor of our 65th Anniversary, we’re also giving out $65 Amazon eGift Cards to those who finance an SFPCU loan during this event!* For details, visit http://bit.ly/SFPCUSpringEnterpriseCarSale.


*$65 Amazon eGift Card will be emailed by 5-17-19 by SF Police Credit Union to SFPCU members who finance an SFPCU vehicle loan through Enterprise Car Sales on April 26-28, 2019.

**APR = Annual Percentage Rate. Example rate of 1.64% APR with 36 monthly payments = $28.49 per $1,000 borrowed, assumes .25% discount for enrollment in automatic payments, a 1.00% off current SF Police Credit Union rate with a max loan term of 60 months, and .25% discount for SFPCU members who purchase a vehicle at Enterprise Car Sale locations on April 26-28, 2019 (fully indexed rate of 2.89% APR). APR is based on an evaluation of credit history, so your rate may differ. Rates, fees and terms are subject to change at any time, visit our website for current rates.

Used vehicles were previously part of the Enterprise rental fleet &/or an affiliated company’s lease fleet or purchased by Enterprise from sources including auto auctions, customer trade-ins or from other sources, with a possible previous use including rental, lease, transportation network company or other use. All vehicle inventory is available by visiting enterprisecarsales.com or a dealership where a Sales Consultant can help you find vehicles available in our nationwide inventory. Delivery of vehicles outside local area may require transfer fee

Providing Financial Solutions to Take Care of Our Own

  • Accessibility
  • Federally insured by the National Credit Union Administration
  • Equal Housing Opportunity
  • NMLS ID# 409710

APR = "Annual Percentage Rate". Actual APR is based on your credit profile and may be higher than the lowest rate available. Posted rates may include promotional discounts and other terms and conditions. APY = "Annual Percentage Yield". Rates are subject to change without notice.

The Police Credit Union proudly provides banking and loan solutions including checking accounts, credit cards, auto loans and more for police and other law enforcement agencies and their families  in the Bay Area and beyond. Visit us at one of our branches in San Francisco, Pleasanton, San Mateo, San Bruno or Oakland, CA or check if you are eligible for membership and apply online today.

Site Design by ZAG Interactive. © 2019 The Police Credit Union.