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Things to consider when buying a USED car

How do I know if I am getting a good deal?
Be sure to do your homework before purchasing a used car.  There are several independent resources out there that will give you reviews, costs, option upgrades and model comparisons.  Review sites such as www.edmunds.com and www.NADA.com to research the cars you are considering.   These sites will provide unbiased information and pricing for the cars you select.  Sites such as CARFAX.com will give you history of the car and any major mechanical or structural issues the car may have due to an accident.  These reports will let you know if the car comes with a salvaged title. 

What does a salvage title mean?
Be aware that Genisys Credit Union and many other financial institutions WILL NOT finance a rebuilt or salvage title. This means the car has been damaged or deemed a total loss by an insurance company that paid a claim on it.  A car is deemed "salvage" when the insurer determines that the repair or replacement cost is in excess of its market value at the time of the accident.  In the state of Michigan, the issuance of a salvage title does not mean that the vehicle is also deemed a total loss.  Michigan issues a salvage title when the damage equals 75-90% of the pre-damage value; if the loss is 91% or greater the vehicle is eligible only for a "scrap" title.  If the vehicle is rebuilt to a road worthy condition and has passed State inspection, the difference in price is 35-50% of fair Kelley Blue Book value, a source similar to NADA for vehicle valuation.  These cars have "rebuilt" or "rebuilt salvage" annotation in the title and can be registered and operated just like a new car.

What is the buying process when buying from a dealer?
When buying a new car from a dealership the process is relatively quick and easy.  It’s always a good idea to get a pre-approved auto loan from the credit union first.  If you don’t, avoid rushing into dealer financing and check with Genisys.  Taking the time to get the best financing can save big dollars in the long run.  Once you have found the perfect car for you and your budget and the dealer submits all pertinent information for financing, it will typically take us less than one (1) hour to return the approval back to the dealer.  This is assuming no additional information is needed from you such as proof of income or co-signor information.  If you’ve been pre-approved before shopping, you can be ready with your loan when you’re ready to buy your vehicle.  When the dealer receives the approval they will need a couple things from you such as proof of insurance and any monies such as title, tax, plates, and add on products that are not being rolled into the loan.  Next the car will be prepped for delivery to you.

What is the process involved to place a lien?
When you borrow money to buy a car, the lender will require a lien on the title of a vehicle.  This lien establishes the lender’s rights to the vehicle as collateral for the loan in the event payments are not made according to the terms of the loan contract.  When a used car is purchased at a dealership, there is nothing extra for you to do.  The dealer will handle the placement of the lien with the lender.  

However, if the car is purchased from a private owner, it is your responsibility as the new owner to place the lien of the financial institution.  Typically, the seller and buyer must go to the Secretary of State (SOS) or Department of Motor Vehicles (DMV) to have the title switched over to the buyer’s name.  If the title is already free and clear, you can place Genisys Credit Union as lienholder when transferring the title at the SOS or DMV.  If there is another lienholder on the title, you will need to wait until the lien release is sent by the other lender (sometimes it is sent to the original owner first).  Once the original owner has the release of lien in their possession, this document should be brought to the SOS or DMV to complete the transfer of title and have the new lender’s lien placed.

If I am buying from a private owner, how should the exchange of monies be handled?
The exchange of monies from a private owner should be in the form of a cashier’s check which is guaranteed funds to the seller but also a traceable record for the buyer.   If the seller stills owes money on the car, the cashier’s check should be made out to the seller’s lender.  If the seller insists on cash and the car is owned free and clear, the method of payment should still be a cashier’s check as it provides a traceable record for both parties involved.  For private sales, it would be best to have a bill of sale with the details of the car, payment and statement of clear title and the document should be signed by all parties. 

What is GAP and when do I need it?
GAP stands for Guaranteed Asset Protection.  This insurance covers the ‘gap’ or the difference between what is owed on the car and what the car is worth should you have an accident which causes the insurance company to “total” your car.  This means they will write you a check for the determined value of your vehicle.  Without GAP insurance, you may end up having to continue making loan payments on a car you can’t even drive. For example, suppose that you finance a new vehicle, and two years later you have an accident that results in a total loss. The car has decreased in value. If you still owe $20,000 for a car that is now only worth $15,000, you still owe the lender a ‘gap’ of $5,000. GAP insurance will pay for that difference.

The cost of a GAP policy is generally a few hundred dollars, and can be added into the loan amount.  Genisys Credit Union offers affordable GAP policies when you finance with us.  Talk to a Genisys loan representative to get more information and be sure to include this in your financing option comparisons.


Is getting an Extended Warranty a good thing?
This is not a cut and dry answer.  Extended warranties can be beneficial and possibly reduce your expenses down the road if your car ends up having expensive mechanical issues.   Financially speaking, the cost and coverage of extended warranties can vary greatly.  If you think an extended warranty is a potentially good option for you, be sure to check with Genisys to compare our coverage options and cost to dealer extended warranty packages.  Often, the credit union option is less expensive.  If you decide not to get an extended warranty, it is financially wise to make sure you have or are building funds in savings in case you do have repairs beyond your original warranty.


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