‘Is this not just common knowledge?’
A lawyer who advises on money matters has an important tip for car buyers who base their decisions on monthly payments. She suggests asking one crucial question to better understand the real cost of the car.
TikTok creator Money Lawyer Erika (@erikakullberg) shared this advice in a video. The video, posted on July 13, has garnered over 2.4 million views. In it, Erika acts out a scenario between a car dealer and a potential buyer.
The “customer” notices a Tesla she fancies. Initially, she tells the dealer her monthly budget for car payments is only $500. The dealer responds, “That’s on the low end. But for you, ma’am, we’ll make it work.”
After thinking it over, the customer reduces her budget to $400 a month.
The one question you should ask
The dealer goes to his manager and comes back with the “good” news that the $400 a month payment is possible.
As you might guess, reducing the payment to $400 a month stretches the payment term much longer.
Erika advises, “Always ask, ‘What is the total cost of ownership?’”
Total cost of ownership
According to Coverhound, the total cost of ownership is “the thorough financial estimate totaling the additional costs that come with owning a car; it includes all operating and maintenance costs until the vehicle’s life ends.”
That’s on top of the final price you agree on for the car.
Edmunds offers a similar concept with their True Cost to Own pricing system, complete with a calculator to help you figure it out.
Commenters on Erika’s video shared their thoughts about her advice.
“Is this not just common knowledge?” one person asked. “We need to change what we teach in school.”
Another commenter suggested, “Never tell them your monthly budget. Negotiate the price, not the payment.”
Someone else added, “That’s why it’s probably better to get preapproved by your bank or credit union before you go car shopping.”
