‘Never talk payments’: Expert says never buy a car without asking this question

A lawyer touting herself as an advisor on money issues has a tip for car buyers who are basing their purchase decisions on monthly payments. It involves asking one key question to get a better perspective on how much the car will actually cost.

TikTok creator Money Lawyer Erika (@erikakullberg) posted a video on July 13 to TikTok. It's since received more than 2.4 million views. In it, she playacts a scenario between a car dealer and a prospective buyer.

The "customer" spots a Tesla she wants. At first, the customer says her monthly budget for a car payment is only $500, to which the dealer responds, "That's on the low end. But for you, ma'am, we'll make it work."

However, upon further consideration, the customer downsizes that to $400.

The one question you should ask

The dealer confers with the manager, coming back with the "good" news that the $400 a month payment is doable.

As you might surmise, dropping the payment to $400 a month stretches it out to a much longer term of payments.

Erika advises, "Always ask, 'What is the total cost of ownership?'"

@erikakullberg Ask this before buying a car 🤯🤫 #lawyer #erikataughtme ♬ original sound - Money Lawyer Erika

Total cost of ownership

According to Coverhound, 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 time the vehicle dies."

It adds, "For automotive vehicles, the components of TCO are: depreciation, interest on your loan (financing), taxes & state fees, insurance premiums, fuel costs, and maintenance & repairs. The weightiest factor of total cost of ownership is depreciation. It accounts for nearly 44% of TCO, in a five-year model. The second biggest factor is fuel cost, especially with gas prices escalating seemingly every day. A close third is insurance premiums. Together, these top three factors, depreciation, fuel, and insurance, determine around 80% of total cost of ownership."

That's, of course, on top of whatever final price you arrive at on the car.

Edmunds offers a variant of that, a True Cost to Own pricing system with a calculator to help you figure it out.

Commenters shared their reactions to Erika's tip.

"Is this not just common knowledge?" one wondered. "We need to change what we teach in school."

Another suggested, "Never tell them what your monthly budget it. 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."

The Daily Dot has reached out to Erika via email and TikTok comment.

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The post ‘Never talk payments’: Expert says never buy a car without asking this question appeared first on The Daily Dot.

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