Believe it or not, there are ways to improve your car deal even after the ink is dry on the sales contract.
While you can’t lower the price of your car, you can usually cancel the extras you might have felt pressured to buy in the finance office. You can also shop for a lower interest rate and cheaper insurance.
As a result of the pandemic and related supply chain problems, dealers have fewer cars to sell. Demand for cars is high, so they’re loading each sale with extra products.
“I’ve seen as much as $6,000 of crap added to a Honda Civic” sale, says Christopher T. Smith, a California attorney who handles auto-related complaints for the firm of Glassey Smith — and a former car dealer himself. “Many people sign without reading the contract and only find out about them when they get home and read the contract.”
You may very well have read the contract and signed anyway, as many dealers make these extras a condition of sale.
Common add-ons are the extended warranty — sold for between $2,000 and $7,000 for luxury cars — and gap insurance, costing as much as $1,000 at a dealership but available elsewhere for about $200, Smith says.
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Most insurance products — extended warranties, wheel and tire coverage, “protection packages” — can be canceled, Smith says. Other add-ons are in a “gray area,” such as alarms and maintenance plans, and will be more difficult to cancel or have removed from the car.
1. Request a refund
Most people finance their car so the extras are built into the loan, says Matt Jones, marketing director at TrueCar. Therefore, if you’re able to remove additional products, the refund is deducted from the loan balance. Your monthly payment doesn’t go down, but you pay off the loan more quickly.
If you cancel within 30-60 days, you’ll receive a total refund. If you wait longer, there might be a small processing fee and the refund will be prorated.
Before canceling an extended warranty, Jones says to “give it a good long thought.” The warranty is transferable and will sweeten the deal when selling to a private party. But if the warranty hasn’t expired and you’re going to trade in your car, cancel it “so you don’t leave any money on the table.”
The cancellation process
Not surprisingly, the dealership may not make it easy to cancel these lucrative contracts. The finance manager who sold you the extras “has a $200 incentive not to let you cancel,” Smith says. That’s because they’ll lose the commission they get for talking you into buying it.
Here are the steps to take to cancel your extended warranty and any other insurance plans you might have purchased:
- Review your contract. If you have the contract, look for the section on cancellation. In some cases you’re required to submit a written form and possibly have your car’s mileage verified by the dealer.
- Check online. Most manufacturers will have the terms of cancellation on their website. They can be hard to find but are often located in the FAQ section. If a written form is required for cancellation, it might be available for download from the website.
- Expect pushback. If you call the finance manager to cancel, they might try to drag their feet until their commission is secured, Smith says. Instead, go up the chain of command and contact the finance director or the dealership’s office manager.
- Document everything. Keep notes and records of who you spoke with and what needs to be done. Make copies of all the forms that are required.
- Set reminders. Don’t assume a friendly assurance from the dealership means that they’ll cancel the contract. Verify that your request has been met. In your calendar, set a date to follow up.
2. Refinance for a lower rate
If you financed through the dealership without first shopping for a loan, you might find you’re being charged an interest rate that’s higher than one you might have gotten on your own. The good news is that you can refinance your car loan at any time and possibly get a lower interest rate.
It’s easy to shop lenders to refinance a car and see the various rates offered. If your credit score improves, you can always try again later. Remember that the interest rate adds extra cost to the loan over time. Lowering the rate by even a percentage point will be a big savings.
3. Reassess your insurance carrier
When you buy a new car, it’s a good time to review your insurance coverage and carrier. You might need (or be required to have) higher coverage on your new car. Competing insurance companies might charge less than your current company and even add a new-customer discount to sweeten the deal. Comparing car insurance rates and coverage could be worth your time.
And while you’re checking for quotes, you can price out gap insurance and compare that with the coverage the dealer sold you. This will also mean you won’t have to pay interest on the insurance you were being charged in the car loan.
Before you commit to a new carrier, give your current insurer the opportunity to beat your new price, especially if you have a local agent.
10 essential money-management skills for children
How to help children develop money management skills
Parents who help their children understand and use money wisely can also set them on the road to being financially secure adults. As children grow into adults, having base savings to tackle expenses like a first apartment or higher education will make the unpredictability—and the expenses that come with that unpredictability—of life a bit easier to manage.
But a 2016 study from T. Rowe Price finds many parents miss chances in everyday interactions to help their children learn money skills. Making a few small changes to parenting habits may help more than you think. GoHenry compiled a list of 10 financial skills for children to learn how to earn, save, and spend money.
Often, money lessons can be incorporated into everyday activities. For instance, talking about which item on the shelf is the best value turns grocery shopping into a lesson on price comparisons. Or, showing children how they can divide allowance money between savings and spending illustrates basic budgeting. Such early discussions mold their money mindset as they grow. As young adults, from early experiences of earmarking funds between savings and spending, they understand the benefits of having part of their paycheck automatically deposited in savings.
Read on to learn tips and examples to help your child develop skills for better money management later in life.
Using a savings account and compounding money
Since children are not responsible for household budgeting and large financial decisions the way adults are, it can be difficult for them to grasp the concept of money. While planning for the future is typically not on the mind of most children, setting up a savings account early can help them be better prepared for the future. Parents can open a joint account—provided they can for a minor, which depends on statutory laws—where children can access the money in the account with the parents serving as the monitor. The main draw for a savings account would be for earning interest on money in these accounts, but with the COVID-19 pandemic impacting interest rates, earning interest will not be as fruitful as it was in generations past.
Beyond accounts, saving tangible money can have a greater impact on how children understand money. A 2018 University of Arizona study found that it helps children understand what money is, and the importance of saving, if they have hands-on experiences. Simply setting up a jar in the bedroom of a young child, and having them deposit coins helps them see what saving means. When they witness their coins pile up, children begin to learn that money can accumulate when it’s not immediately spent.
Avoiding impulse buying
Children learn the value of saving when they can also practice how to spend those precious pennies on something of their choosing. Take a trip to the store, and talk about how much the items they’re interested in cost. For young children who haven’t had much experience yet with arithmetic, it can help to link the numbers on a price tag to how long it took to earn or save that amount. “This toy is worth what it took to earn in one week’s allowance,” for example.
Choosing whether to purchase helps children develop control and learn to spend wisely as they mature. For older children who are inundated with temptation both in physical stores and online, ask them to wait one day before buying. With that 24-hour pause, they may decide an item isn’t worth their spending budget.
Saving for major life events, such as college
Developing saving habits early, and with goals in mind, can make debt seem less daunting in the future. Starting a college fund is especially valuable, not just because of soaring tuition costs, but because experts find children will feel ownership in their college education. Even younger children who earn money from allowance or their own entrepreneurial efforts can carve out a portion to put away for college.
By saving earlier for college, children can avoid taking on too much student debt. But, while saving will minimize debt in the future, with decreasing interest rates for bank accounts and rising tuition costs, it will likely not guarantee debt-free higher education—especially if a college degree ends up costing $500,000 by 2030.
Using a budget
Once your children have experienced accumulating money in their piggy banks, or adolescents begin earning money, parents can take a hand in helping them prioritize what they’ll do with those dollars.
Getting the best price for products
Grocery shopping with your children can be a great opportunity to teach them how to get the best value. Before you leave, clip coupons and explain that if you buy that featured item and hand coupons to the cashier, they’ll be able to save a little money for something else. And, when you’re searching shelves, point out the price of different brands for the same products. Calculating the cost per weight or ounce is another good lesson in pricing differences while also sharpening their math skills.
Earning money at any age
As early as they’re able to perform simple chores, like putting away toys in a bin, children can learn that money can be earned—even if the paycheck comes from their parents in the form of allowance. More than four out of five parents believe providing an allowance should come with some exchange of labor, according to a 2019 study from the Association of International Certified Professional Accountants.
Since many children are enthusiastic to earn money from their own efforts, they might also find opportunities for babysitting, shoveling snow, watering gardens, and more. Parents can help them scout out opportunities that may be open to them in their neighborhood. Part-time employment, like being a lifeguard or store clerk, becomes available when teens are legally eligible to work. Here again, parents can help them decide whether it’s worth it to take a certain position, or if they might make and learn more with their own gig.
Turning side hustles into businesses
Teens who are enthusiastic about a hobby or task might be able to turn it into a business. If your teens enjoy sports and like young children, they can think about beginning a summer sports day for neighborhood children or serving as a referee for local recreational sports.
As of early 2022, some 336 cities participate in ACTON business fairs. At these fairs, which are often located in parks or community centers, many children display their own businesses and sell their wares. Teens that are serious about making their business work may be able to tap a mentor through SCORE, a nationwide network of experienced volunteers who can help aspiring entrepreneurs with feasibility plans.
Learning the basics of investing
Early on, introduce your child to investing by taking them to the bank to open a savings account. Showing kids how a savings account earns interest can help teach them how different investments can yield different returns.
Of course, any investing lesson should include warnings about the possibility of losing money, too. Start by talking with your children about a possible company you can all invest in; perhaps it’s a company that provides a product or service they love. Then, trace the prospects of that particular firm by looking at the price chart for that stock.
Being smart with borrowing money
Trips to the store pose many teachable moments. In addition to comparing prices, explaining why you’re waving a plastic card at check-out—whether debit or credit—helps children learn the difference between paying now or later. Share why you might be choosing a credit card and explain the interest charges for delaying payback.
For example, you might not want to purchase a new computer in cash because you had other important expenses that month—such as utility bills or car payments—but you’ll have the funds next month to pay the purchase off. You might add how using credit impacts your credit score, which is like a report card that credit bureaus keep on individuals. These lessons show that borrowing isn’t inherently bad, but that you need to have a reasonable plan to pay everything back.
Dividing money between spending, saving, and sharing
Helping children with their money management skills pays many benefits. Besides imparting practical lessons like how savings can earn interest or credit cards aren’t a plastic magic wand, parents show children how values figure into money management.
Tell children why you support various causes or groups, and how you try to balance your money between what the family needs now and what will be needed later. Have children earmark their own dollars by talking through their personal priorities with you. Maybe they are concerned about the environment, and they want to contribute to a clean ocean fund. Or, by discussing what they spend money on weekly, they may decide forgoing a treat is worth it if they’re building a new bike savings fund. You’ll be showing that future needs and supporting worthy causes are as important as the gratification of spending now. The patience, generosity, and emotional control a child develops through an early, healthy relationship with money will pay lasting dividends.
This story originally appeared on GoHenry and was produced and distributed in partnership with Stacker Studio.
The article 3 Ways to Save After Buying a Car originally appeared on NerdWallet.