Top 3 Tips for Buying a New Car

Personal Injury Attorney Ben Schwartz shares his top 3 tips to protect yourself, and protect your family, if you are buying a new car.

Top 3 Tips for Buying a New Car

Hi, I’m Attorney Ben Schwartz,

Today we are going to talk about buying a new car. I am not a car salesman. I am not a car purchaser, not willingly anyway. I hate buying new cars. I hate the whole process, but as a personal injury attorney, the vast majority of what I handle tends to be car accident, personal injury and wrongful death cases. As a personal injury attorney, I want to talk about buying a new car because there are so many car accident cases that we see. We see people who have been injured in an accident. We look back at what went wrong and often times what went wrong was something that went wrong when they bought the car.

I want to talk about 3 different types of situations and 3 things you need to do to protect yourself, and protect your family, if you are buying a new car.

#1 – If you are buying a new car and it is new to you, but it is really a used car, you need to take that car to your mechanic and have your mechanic check out that car. If you call around to the different service stations in your area and tell them, I am going to be buying a new car, it is going to be used, but it is new to me. I want you to look it over and make sure there is nothing mechanically wrong with it. Make sure the engine is not blown, make sure that it does not need thousands of dollars in repairs in order to be roadworthy.

They should be able to give you a price and tell you for $100 or for $200 we can check out that car. We can go through a punch list and advise you what it needs and what it does not need. We can tell you if the tires have enough tread depth on them. We can tell you if the exhaust system is getting ready to have holes in the exhaust manifold. We can tell you if it needs X Y and Z or if it is going to be a good reliable used car for you.

If you buy a used car and you have not had it inspected by your own mechanic, shame on you. Many people buy used cars and they rely on the used car salesman and the used car dealership to quote-on-quote, do the right thing and put them in a safe reliable car. The job of the used car dealership is to sell the car. The job of the used car dealership is not to protect you or your family, that is your job. Get your vehicle inspected at a service station before you buy it, before you sign on the dotted line and make sure it is safe.

#2 – Get proper insurance coverage.

Often times people go to a dealership and they find the car and they test drive it. They are ready to buy it, they go into the sales office and they sign all the paperwork. The salesman says by the way, you need you to call your insurance company and have the car added to your policy. People make a real quick phone call, hey I am just adding this car, here is the VIN number. At that point, that should not be a rushed phone call. That should be a phone call where you take your time and you make sure, before you drive off the lot with that car, you have proper insurance coverage on the automobile. When I say proper insurance coverage, I really mean two things. One is personal injury protection or PIP.  In some states that is called no-fault and in some states it is called med pay. It is the insurance that pays your medical expenses and your lost wages after a car accident. Max it out, buy as much as you reasonably can afford.

The second insurance coverage is called uninsured motorist or UM coverage. It is what pays you for your personal injuries. If you are hit by an uninsured driver, if you are involved in a hit-and-run accident or if you are hit by someone who is only carrying very minimal insurance limits and your injury claim is worth more than the available coverage on the at-fault driver’s policy, you need to max out your UM, your uninsured motorist policy. Buy as much as you can reasonably afford.

#3 – If you are buying a new or used car, whether it is new or new to you, you need to decide if you are going to buy GAP coverage.

If you are buying a car and you are financing all or most of the purchase price of that car, you are going to drive the car off the lot and it is going to quickly depreciate in value. Because it is no longer on a salesman’s floor or a sales women’s floor, you are going to have a situation where you are “upside down” on the car. Meaning if you buy a car for $10,000, you take a loan for $10,000 from a bank or a lender and you pay the dealership the $10,000, when you drive off the lot with that car, it is not worth $10,000 anymore, now it is worth $9,000. It had been cleaned up. It had been detailed. It had been buffed and polished. It had some mechanical stuff done to it. It was in the greatest condition when it was on the lot, but when you drive off the lot, now it is a used car and so the value of the car depreciates. Now you owe $10,000 on a $9,000 car.

What happens if you are in an accident and the car is totaled? The insurance company for the at-fault driver, or your insurance company, is going to pay you the fair market value of the car. They are going to pay $9,000. They are not paying what you paid for it, they are going to pay you the fair market value on the day of the crash. You are going to be in a situation where you owe the bank the difference between the fair market value and the amount of what the loan was. If you buy the car for $10,000, finance it for a $10,000, drive off the lot and get in an accident and the insurance company totals it and pays you $9000, you personally are responsible for the other $1,000. You can not get it from the at-fault driver, it is coming out of your pocket. GAP insurance is there to pay the difference of the fair market value and the loan – the amount of the note. Buy GAP insurance if there is likely to be a GAP. Buy it when you buy the car. It is not expensive and you can pay for it as part of the sale price of the car. In other words, you can get financing to cover the GAP insurance. It will protect you so that if your car is totaled in an accident, you are not going to be in a situation where you have to come out-of-pocket thousands of dollars to pay off a note, so that you can get back to $0 just to go buy another car and get into debt again.

I’m Attorney Ben Schwartz, hopefully these three things will help somebody out in the community. Share this video with your friends and family who might be looking to buy a new or used car sometime soon. Give us comments, let us know what you think about this video. If you have tips for people who are getting ready to buy a car, leave them in the comments on our Facebook page. If you would like to email me with your thoughts and opinions or with questions for future videos, send me an email below.

Top 3 Tips for Buying a New Car

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