Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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And where will you drive your new car...to the breadline?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
tidester, host
SUVs and Smart Shopper
2013 Mustang GT, 2001 GMC Yukon Denali
The sales people will not like hearing this but it is the TRUTH!
THE SKY IS FALLING, THE SKY IS FALLING!!!!!!!
Thanks for the update Chicken Little
Sometimes my offer is accepted as I'm headed for the door....sometimes it's when I get into my car to drive away. Usually, the sales manager comes over while I'm still sitting there and asks if I'm buying right now if they accept my offer. The answer is "yes". Many times I'll get a call from a dealership I've visited an hour, a day, or a week before, to have me come back in to negotiate. I don't know why they do that. I make it very clear up front I'm only making one offer.
Try telling that to folks who would love to be able to buy a Shelby at MSRP.
2013 Mustang GT, 2001 GMC Yukon Denali
Thank you for understanding (from my vacation)
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
Review your vehicle
My wife and I are looking to buy a car. The dealership we prefer to buy from has a brand new sedan we like, as well as a pre owned SUV that we also like. Both vehicles are of the same brand.
We could care less about gas mileage (as it will only see about 6,000 miles a year), and either vehicle would fill our needs. The SUV is a couple years old, and slightly used (with a ton of warranty left).
We are going to test drive both today, and I have already researched both, and know what I am willing to pay. Assuming we like both vehicles equally after the test drives, how hard is it to negotiate on 2 cars at one time, in order to see which one we "can get the best deal on" (from our perspective anyways)?
No trade is involved, and I have pre arranged financing - but will allow them to try to beat it. I also don't want to be looked at as a "stroke" because I am there looking at 2 such totally different vehicles, but in reality am prepared to buy either, provided the test drives are fine, and the price is to our liking.
Why would they do that? Thats what there here for. So why don't you go start a forum, spend the money and time to attract 50K members, and then you can spout your canned answers all you want. But until then quit riding the coat tails of the nice people here and quit your spamming.
Thank You
-Moo
Not looking to buy two cars...simply looking to negotiate a price for each one, and then buy ONE OR THE OTHER.
Accordingly, it seems to me that the way to approach this is by focusing on the SUV as there are more variables involved with it (bad market/high gas prices/unknown dealer cost). Decide how much you're willing to pay for it and compare that figure with the likely cost of the sedan. In other words, at some number or less (say, 18K or whatever, you'll go with the SUV. Or vice versa. Then make your offer.
In this case, we are shopping for a ride for my wife, and that changes EVERYTHING - she wants to go through ALL of her options before deciding.
What? Families? If
the serviceEdmunds wanted you to have a family they would have issued you one.2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Or maybe Edmunds is working on one for use with patrons who are unruly?
2014 Malibu 2LT, 2015 Cruze 2LT,
If you are offered a $25,000 car to drive for 5 years at $166 a month would you take the deal if I told you would only get $15,000 for the car after 5 years? I would jump all over it and pay cash, Where can you drive a $25,000 car for $166/month ?
NOw if you finance that cost goes up maybe to $200. Still not a bad deal. I see people buyng $5,000 cars paying cash and driving them for three years. Thats an even better deal IF you can get three years out of it.Spend more then $1000 in repairs and you could have had the NEW $25,000 car cheaper.
Add up the total cost of the car including all payments Then subtract the WHOLESALE residual cost of the car from ALL the money you put into it.
Divide the left over by 36/48/60 and theres the REAL cost per month. If one decided what is comfortable cost per month its much easier to decide new vs used, Luxury vs Economy.
Its kind of like leasing except even there your cost to own is skewed by money factors, fees na CAP reduction costs.
Now find me a $25,000 car that will be worth $15,000 Wholesalw in 60 months and I'll buy it.
Is it less expensive to put $4000 into a new engine or transmission in an otherwise good car then spend $20,000 for a new one?
Most repairs do not cost that much. A few hundred there a thousand here. STILL lower then a $300 a month payment for years. ESPECIALLY today's cars. People would have one believe they are complicated and costly to fix. But they are in fact MORE reliable and routinely go well past 100k miles without major repair work being needed.
Why do you think they get $12,000 for Lexus' with 100k miles on them? I would not buy one but apparently there are those who will.
Buy new if you have to keep up with the neighbors or like the smell. Saving money is not a good reason to buy a new car.
Again if done right there is nothing wrong with it. Just don't let them play games with the down payment and/or term and all they can do is work the price.
If you are offered a $25,000 car to drive for 5 years at $166 a month would you take the deal if I told you would only get $15,000 for the car after 5 years?
Not enough information there to make a call. but for a $25,000 car $166/month will pay only a little more than interest. Even on a zero interest loan it would take over 12.5 years to pay for the car and you most likely always be upside down on the loan. Even if you could get $15K for the car after 5 years you would still owe more than its worth.
Spend more then $1000 in repairs and you could have had the NEW $25,000 car cheaper.
No not really, Pay the $5K for the car and $1K in repairs you would have paid $24 more than for that new $25K car but you have a car thats worth something that you owe nothing on. With the $25K new car you would have spent $24 less but have a car that you actually owe money on, and you most likely owe more than its worth. In short its better to have the used car (using your example).
Add up the total cost of the car including all payments....
You also have to take in the time value of money into the equation your approach is to simplistic.
In short your logic is poor.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Not always true. You have to remember that as a car gets older repair bills tend to go up. Typically your car will usually require more in repairs from 175K to 200K miles than it takes from 15k to 175K miles. So buying a new car that will be under warranty for 30k+ miles and should run practically trouble free for 100K+ miles in the long run will be less expensive than keeping a high mileage car running as long.
Is it less expensive to put $4000 into a new engine or transmission in an otherwise good car then spend $20,000 for a new one?
That $4 grand will pay 9 months of payments on a 48 month loan for that $20K car. Now the question is if a car needs a new engine what other work does it need or will it need in the next 9 months or after that. If the tranny goes thats another several months worth of payments. And thats not even counting the inconvience and trouble involved in getting that car repaired.
I do agree that once a car is paid off that you should keep on driving it. However sooner or later the cost of repairs and the cost of the time and trouble of repairing your car will exceed the payments that a new car will cost.
Then there is peace of mind that a brand new car gives that a car with 200k miles cannot.
Finally you really shouldn't spend more to repair a car than what the car will be worth after its fixed. So if that car after getting that $4K engine is only worth $2K then its not worth fixing. Spend the $4K for a down payment on a new car.
Most repairs do not cost that much. A few hundred there a thousand here.
Until that "here" and that "there" becomes every four months, then every three months, then every month.
Why do you think they get $12,000 for Lexus' with 100k miles on them?
Its not what you are saying. The only reason they get those prices is snob appeal, nothing more, nothing less.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
LoL! Of course, Kirstie meant "electronic" but I'm not allowed to discuss our patented remote transkeyboard zapping system ...! :shades:
tidester, host
SUVs and Smart Shopper
Not enough information there to make a call. but for a $25,000 car $166/month will pay only a little more than interest. Even on a zero interest loan it would take over 12.5 years to pay for the car and you most likely always be upside down on the loan. Even if you could get $15K for the car after 5 years you would still owe more than its worth.
If you read correctly I said nothing about interest. If oone pays cash for a $25,000 car and gets $15,000 cash after year five it cost them $167 per month to drive, In 5 years it would be PAID OFF! And you are a CPA? OK Add 6.5% interest and its $239 a month to drive for five years including the $15,000 at the end of the payment period. Come on Mr. CPA do some math. Feel the logic.
As far as repairs go one would have to spend $4200 a year on repairs to equate to a $350 /month payment,( not to mention the down payment and fees ALREADY paid) I know of no car with 100k that needs $4k a year work, Its always less expensive to fix a high mile car then buy a new one. As a CPA one would think you would understand economics better then that.
So all these people driving vehicles with pver 100k and paid off are spending an average of $300+ a month to keep them running? I highly doubt it.
NORTSR
:surprise:
-Moo
But interest has to be taken into account one way or the other.
If oone pays cash for a $25,000 car and gets $15,000 cash after year five it cost them $167 per month to drive,
Or if I take out a 5 year note on the car it would cost me $156 using your standards. Why? Its simple by investing that $25K and using the proceeds to pay off the loan after five years the loan will be paid off and I will have the car worth $15k plus about $625 in my investment account. (presuming 6% interest on the loan and 6.75% after tax interest on the investments).
See you lose interest earned when you pay cash, its called opportunity cost.
Anyway your assumption that the car will be worth $15K after 5 years is very poor indeed.
As far as repairs go one would have to spend $4200 a year on repairs to equate to a $350 /month payment
You cannot just say "ok $350 a month times 12 months means I would have to spend $4,200 a year in repairs to make repairing the car not worth it". You have to take into account the inconvinence of getting the car repaired. Suppose I need something done with my car? I have to take it to my mechanic and either wait there or have someone pick me up and drop me off to pick it up. Plus there is a period of time that you will be without a car. You have to give a monetary value to that and add that to the cost of repair.
Depending on the frequency of the repairs I would say that between $2-3K would equal out to $350 a month car payment. Thats one sensor going out per month. or one transmissin needing replacing in a year or your engine replacement for two years.
Then you have to think about the inconvinence of a needed repair that make your car undriveable? How much does that inconvinence you if your driving to work? Picking up the kids? If its 10 below and your in the middle of nowhere?
You have to stop thinking just the monetary aspects of this.
Finally there is the concept that you really shouldn't put more into the car than it is worth. Suppose your high mileage car is worth $3K and over the course of time you put $3,200 into it to keep it running, is it worth it?
As a CPA one would think you would understand economics better then that.
Evidently I do understand it better than you, Economists have something called opportunity cost. Thats the costs of what you have given up in order to do something, those cost can be non monetary. I do think I have explained it above.
So all these people driving vehicles with pver 100k and paid off are spending an average of $300+ a month to keep them running?
You don't need $300 a month in repair bills to make it worth it. being stranded just once at the worst possible moment that a $100 repair would fix can be a very good motivator to buy a new car.
FWIW my sisters toyota with way less than 100K miles goes into the shop about every three months with some issue. that alone would make me drop it like a bad habit regardless of what it was costing me. getting rid of the hassle would be worth it.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
*Clicks Remove Track button
I find your arguments compelling. The thing I find interesting with most of these posts is most people's firm position they they are right, all others are wrong. The positions taken on this arguments all make certain assumptions. The validity of the arguments depends on the accuracy of their assumptions.
My total cost per year of driving car A is the purchase price + all expenses of the car during the period I own it - insurance, gasoline, taxes, repairs, maintenance, tires, et minus the price I get for selling it. If payments were made the total dolaar value of all payments beig the true " price" as it factors interest. Divide this toal large number by the number of years or months you owned it. This is the cost per month. Sometimes the higher "price" of a car is cheaper in terms of toal expenditures than a less expensive car after factoring in all the previously mentioned factors, particularly depreciation. Snake is right than when buying if you can finance the car for less than you'd earn elsewhere after taxes (unlikely if not a factory financing deal, but possible), you should finance and leave the money invested if you have it. You do of course have to consider that often you have rebate vs, finance desicion to make, usually the rebate wins.
I buy cars that have low depreciation (relatively speaking, they all stink) like hondas or toyotas and have excellent long term reliability. My prior car was a 2001 subaru forester thast i bought new for about 22k as I recall it.I just sold it privately for 9k. It was in perfect shape; I had one repair done on it under warranty, did the brakes at 85k miles, and got new tires at 60k miles. I also did all factory scheduled maintenance. I have all records and can tell you with certainty that my total cost was $18,700 over 83 months (not including gas). This comes out to $225 a month or $2700 a year. Bear in mind this was with a brand new car, I never had to endure unreliabilty. Many may embrace buying used cars, but in my experience if you have the experience I had buying new is not necessarily the horrible burden some think it is. If I bought a used car for 2700, using the above I'd have to have 0 additional costs for one year aside from the cash purchase price to be even with the above scenario, and then die being worthless after one year. I expect that on a car woth 2700 there would be additional costs.
I was also an economics major. Snake is right one must consider every single cost of the car nad the opportunity cost - (what else could you have done with the money besides what you did do)?
Car dealers have trained americans to think in terms of "payments." Don't think about it this way. If you buy the car for the lowest price at the most advantageous interest rate (if any), the payment will take car of itself. If you have to try that hard to extend the years of payments, the car is too expensive for you. You'll get a lot wealthier with your money invested than you will with it bleeding (a car is not an investment as dealers would tell you). That said, if you need a car consider ALL costs of ownership, not the price. A 20k honda wil cost you a hell of a lot less than a 15k chevy.
Expectantly yours,
Moo
As for payments it is an ok way to negotiate just as long as you avoid the pitfalls. Maintain a set term of the loan and be firm on your down payment and they only way they can bring down a payment is by bringing down the price (presuming interest rates remain the same). Of course research as to what payments a certain price will result in is needed.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
But seriously... One thing stood out...
*****
Now find me a $25,000 car that will be worth $15,000 Wholesalw in 60 months and I'll buy it.
*****
Easy. Mini Cooper S with none of the bling and every performance option that you can fit, with a manual transmission.
You'll actually get closer to $18K back after five years. This is the exact car enthusiasts want used.
If someone has $12k to put down on a car which is highly unlikely for most middle class buyers they should find a car that costs $12k and buy it. Make payments to them selves on a 36 month schedule in an interest bearing account for as long as they drive the car. Use that money for any repairs an maintenance as well. At the end of 5 years, buy another. The longer tye drive the car the more they will save. Eventually they will be cash buyers of a new car. By then they will realize they don't need to ever buy a new car and won't want to put that much into one.
That has worked for us and we always have a slush fund to pay for repairs and buy replacements without needing to finance, as well we are NEVER upside down.
It should be illegal to roll over previous loan amounts onto new cars. I suspect like the housing industry there will be a time when few will be able to buy a new car because of the short term thinking of the sales machine. The banks will get much tighter on credit as is happening already and they should.
Payments should NEVER be negotiated. Only the cost of the car. Too easy to make payments lower which ALWAYS results in more money being spent. Rarely does the dealer lower the price of the car to reduce payments. More likely to extend the loan or try to sell a fleece.
Part of the research should be what the monthly payment will be over the term of the loan, based on the offer you make. Even interest rates can be nailed down before you walk in the door of the dealership. A quick call to your lending institution will yield your payment in about 5 minutes. If the dealership can beat it....all the better. There should be no surprises when you hit the F&I office.
Those that don't do their homework before walking into the dealership, always seem to be the ones who cry foul when they walk out the dealership's door.
While I can guesstimate what the wholesale will be on the new vehicle 3,4,5,6 years down the road, that number will always be a little fuzzy. You won't really know it until you try to trade/sell the car. Who knows what the market will be well into the future for my ride.
I look at projected depreciation schedules. I look in the newspaper car ads. I look at what dealership's try to sell their used wares of a particular model. I look at the condition of my trade to figure if it can be "certified". I hit up KBB and Edmunds. I ask my bank what the loan value is.
It's still an inexact science. It's worth what someone is willing to pay for it, at that particular time. IF you're going to trade, it never hurts to shop it at several dealerships as a trade to get you somewhere in the ball park.
I just read an article about the Hyundai Sonata in C&D. They really liked the car (especially at its price point), but it's one demerit came on the resale side. Compared to a comparable Accord, they estimate the Sonata will depreciate $2,500 more over 3 years. I think they're being optimistic.
As they point out, as good as the Sonata may be, a used Hyundai has a stigma that's hard to overcome. That said, it's lower initial purchase price may very well offset it's lower resale, too.
Yes it is worth putting $3K into a $2k car if one gets another few years out of it. rather then going into debt. 100k cars don't break down as often as you would think. I don't see a whole lot of cars on the side of the road needing repairs.
There is no way repairing a car even to the tune of a new engine is worth going into debt $20,000. A car salesman would argue with that of course. They have to. Even with "opportunity" cost it makes no sense to buy a new car. Used cars are plenty reliable.May have long warranties as well.
Even paying car rental fees during repairs is less expensive then paying $25k for a $20,000 car over five years. Then doing it all over again.
People need to understand they will never get good advice from those who sell cars for their livelihood.
You sound like a consumer not a salesman. It really is amazing how some people will listen to salesmen when coming for car buying "advice". If thats not the fox guarding the hen house I don't know what is.
You would think people NEVER take in new cars for service. LOL
In fact it is MORE inconvenient to take a new car in and longer waits because you HAVE to go to the Dealer to do so.
New cars have issues too. Nit picking issues that many dealers will brush off as "they all do that" Not a great thing to hear after going into deep debt for the next 72 months!!! And the "recalls". Not fun.
The abosolute cheapest way to buy and own a car is to pay cash for a 4 year old car. The biggest hit in depreciation has been used up. There are usually many trouble free miles left on it. The troubles that will be had are hardly worth paying another $10,000 up front for. Maybe Snakeweasal's time is worth that who knows. I will put up with many inconveniences to save $10,000 plus interest on the same. Most people have two cars anyway. Even considering a rental during fixes will not cost as much.
What some people fail to realize is every car on the road they see is a USED CAR. Not "Pre-owned" but USED. I sure don't see the highways and byways littered with broken down vehicles considering the thousands I see everyday. Do you?
I have owned one new car in my lifetime and now thsat I can easily afford to buy a new car every year I cannot see the financial logic in doing so. We drive cars until they no longer have a practical use. Besides I am one of the few who hates the smell of new plastic in a new car.
Heh. You beat me to it. I've been gone for a week, though and don't like to double-post to catch up.
You also missed a few other points about used:
1 - your assest is liquid. In an emergency, you can sell the car - say you get a job overseas or whatnot.
2 - you have a lot less money tied up, which means a much better credit rating.(no credit history at all situations aside)
3 - Insurance, registration, taxes, and so on are all a fraction as much with a used car, compared to the same vehicle new. That people miss this so routinely is amazing, frankly.
4 - When you sell that 12K car, you're looking at 4-6K in residual value(selling private party is a snap if you have a Auto Club membership - 30 minutes or less) This means that you need only save up 8K - or borrow 8K for the next one versus 20K or more. If you put aside payments, you'll essentially be paying cash. In effect, your total cost to own per year is maybe $2K a year over 5-6 years, everything other than fuel included. Initial taxes and registration on a new car can easily be double that in some states(3-4K is very common, which borks the equation even more in favor of used)
*quietly muses on his position in life, realizes it is all futile, starts surfing reality tv shows*
*starts reading again with renewed wonderment*
moo
I've got 3 cars with two drivers. I don't owe anything on them, but I do have around $85K worth of iron sitting in my garage. So, I'm certainly not being very efficient with that part of my disposable income. I'm real inefficient when it comes to owning a boat, too. But, I do. Those are things I like. It's where I decide to spend my money. Does it bother me? Nope!
It's always better to pay cash than it is to finance...that is, unless there are some finance deals that the manufacturers are supporting (current 0% GM deal comes to mind).
To me, it's crazy to finance a car at anything over 36-48 months. But, troll around these boards and look at all the people jumping into 60-72 month contracts and I guess I'm way behind the times.
Nothing wrong with buying used cars. You certainly save a lot in depreciation. I just prefer new. I'm well aware of the depreciation hit I take.
My mother used to say "its a used car for a reason" I don't know how many people I know just happened to have bought someone elses problems. A used car is only as good as the care it was given since new. Had a friend buy a used Honda with some 65K miles, at 70K miles it was apparent that the car should have been crushed into a cube. Turns out there was much work done on the car due to an accident (carfax didn't show it).
Yes it is worth putting $3K into a $2k car if one gets another few years out of it. rather then going into debt.
I would say not, if a car is old enough to be worth only $2K then its old enough to start nickeling and diming you. Over the next few years you might put more money (including monetary value of time and effort) into keeping it going. You have to know when you snagged something and cut the line.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You know with all my new cars I have had I never had to take one back to the dealer. Ok one I took back for warranty work but that was after I had put over 120K miles on the car. Come to think of it I have had only one car have anything other than routine maintence done on the car prior to 100K miles and that was due to someone making a left turn right in front of me.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The list goes on and on.