Purchasing Strategies - Questions & Success Stories

sondra3

O.K. Here's what to do. Go w/ the best economics. This seems to be your #3190 observation to keep the vehicle. Does the car have any problems at 70k? Relax a little, you are thinking correctly. Hope this helps.

blufz1, Thank you - hearing that makes me feel better. I do tend to get overwrought and over think everything!

Does the bank know you are over on your miles? Hopefully not..

If not, and if you are considering purchasing the car, ask them to make you an offer.. Tell them you want to buy it, but not for anywhere near the residual amount... They might knock $2K-$3K off the price, and give you a good rate on a loan.

If they know you have a large amount to pay, if turning it in, they won't budge, though...

It was Chrysler Financial that loaned the car to me... Wouldn't they just ask what the mileage is and be able to calculate themselves the penalty I owe?

dino001

The idea is - do not volunteer it until it is necessary.

kyfdx

If you are trying to negotiate a purchase price, then they don't need to know.. because, you are buying the car.. no mileage penalty..

But, if you tell them about the mileage, and they know you are in a pickle, they'll be less likely to bargain, as they know they'll get a big check if you turn it in.

sondra3

I just called Chrysler Financial and tried to negotiate a lower price to purchase my vehicle. They said the purchase price of my Grand Cherokee is non negotiable, period.
(I did not say anything about mileage).

They did offer to refinance it for $362.90/mo. for 4 years, or $327.60/mo. for 4 1/2 years. That's with an APR of 6.49 w/taxes factored in. BUT - I don't think I want to refinance it, I think it's better for me to buy it outright rather than pay additional interest of $2300 in the longer run.

robr2

I just called Chrysler Financial and tried to negotiate a lower price to purchase my vehicle. They said the purchase price of my Grand Cherokee is non negotiable, period.

I presume you only spoke with the customer service rep. Ask to speak to a supervisor or manager. They're more inclined to review it.

Get some ammo regarding trade in value based on the negotiated mileage, not the actual. Basically show them that they might get less than they expect at auction and see if they'll drop the price. Even banks like the path of least resistance.

sondra3

Robr2 - I will call again just to try with the manager. But before I call, it says on my contract 12,000 miles/year... do you really think that with their assumption that the car has 36,000 miles on it or less, they will be inclined to make me a deal for purchase? (Cars.com lists an approx. range of $14200-16,000)

uvakim

What are the most important things to do to confirm a deal is legit when negotiating over e-mail? I'm three hours away from a dealer who is $1,000 lower than everyone else (and everyone else has bowed out). So, I need to wait till Saturday to check out the car.

esteeze

What are the most important things to do to confirm a deal is legit when negotiating over e-mail? I'm three hours away from a dealer who is $1,000 lower than everyone else (and everyone else has bowed out). So, I need to wait till Saturday to check out the car.

I've got a similar deal I'm doing with an out of town dealer, where the primary communication is via email.

You'll probably want to use voice phone and FAX as much as possible to confirm as best you can. The dealer may ask for a credit card # as a deposit as a show of good faith until you can physically be there, sign the papers, and exchange the funds in person.

robr2

Your best bet is to post it over on real world trade in values and ask what it's value is based on 36K miles and the actual miles. They'll tell you what it's worth based on auction information which is what Chrysler credit will base it's decision on. Compare that to the $15,500 buyout amount and make them a reasonable offer somewhere between the two.

Taking it back and sending it off to auction will cost them about $500 as well so they might be willing to look at a your offer.

The $4500 mileage charge is the killer. IMHO, you'd be better off to keep it and drive it until it dies.

asafonov

Are you suggesting that because you think I may be deluded? (which I may be, lol)?

Of course not. But it appears that you are not in the car dealer business, and thus may not have a realistic idea of what a car will bring on resale, whether in a private sale or as a trade-in (I am not expert either, so I am suggesting to ask the experts.)

The information you get in response (and responses on that thread are usually very timely) may help you decide whether to purchase the Jeep in the first place, and whether to sell it right away if you do.

To put the numbers on it, if the actual value of the Jeep is under 11k (I am just making up a number), the purchase price is 15k, and the over-mileage penalty is 4k, you may be better off turning it in and paying the mileage penalty.

dino001

To put the numbers on it, if the actual value of the Jeep is under 11k (I am just making up a number), the purchase price is 15k, and the over-mileage penalty is 4k, you may be better off turning it in and paying the mileage penalty.

Provided no additional charges will be assessed. Many lessors have standards/guidelines for wear and tear - you should get one so you'll know if you need some fixing before turning it in. It is usually cheaper to pay to pull that ding out than let the bank take care of it.

bendogg705

You're really looking at this the wrong way. You say you don't want to buy the car for 15500 because its not worth that. However, the reason its not worth that is because YOU put the extra miles on it. YOU are responsible for the extra depreciation. You are just trying to get out of paying for it. Just a glance at Kbb.com shows the suggested retail value of the truck (at 36000 miles) at about 17K, with a trade in about 12K, so if you had to buy it used with 36K miles on it 15500 is not that far off. You should just think of it as buying it this way except that you already drove it 40,000 more miles. If you don't want a car with 70K miles on it, pay the extra mileage charge and think of it like you bought a lease with more miles on it.

dino001

It's not me - it was Sondra. And I agree with you, as probably everybody does. The thing is we try to give our thought how to minimize the "overage". One of ways is may be assume the ownership rather than turning the car in, as the backend mileage fees are usually overly high. If she had thought about it before, she would have never leased or she would have bought more miles upfront. The milk is spilled now - it's about how to wipe it so least amount of paper towels would be used

bendogg705

yeah, I meant Sondra. Sorry. Don't post much here.

[Deleted User]

Sorry. Don't post much here.

Well come on slacker!!! Get those fingers moving and contribute!!!

metro123

My advice would be to trade the car in and roll the negative equity into your new loan. Do not lease again but buy something inexpensive with some rebates to eat the negative equity. In my neck of the woods they're giving $4,500 in cash back and rebates on the '07 Liberty.

robr2

My advice would be to trade the car in and roll the negative equity into your new loan.

IMHO, lousy advice. Rolling negative equity into another Jeep will just come back to bite her again in a few years. I think she's better off buying it at a reasonable price and driving it - it'll depreciate less than a new vehicle.

dino001

The only problem with that strategy is extra interest compounded on the loan from the negative equity and very slow equity building on the new vehicle.

Sometimes it pays off to actually pay the dues earlier rather than later. It lets you keep it real - you take a hit now, but get options later. Postponing it may widen losses in the future and narrow the choices.

metro123

You're kidding right? Either way she's going to be upside down, better to be upside down on a brand new car with warranty and gap insurance than an old 70K mile Jeep. I mentioned the Liberty as an example of a car with a large rebate to help eat the negative equity.

sondra3

To put the numbers on it, if the actual value of the Jeep is under 11k (I am just making up a number), the purchase price is 15k, and the over-mileage penalty is 4k, you may be better off turning it in and paying the mileage penalty.

Asafonov - I think I may do just that, turn the car in and pay the penalty. I think I'll have a hard time selling it after I purchase it because hey, people can go get warrantied, similar cars with better mileage for same price. I like the car but if I buy it with 70K miles, with all the driving I do, I'm concerned that I'm gonna be facing all kinds of issues (hey, it's not a Lexus engine etc. in the next 30K miles. Maybe not, but yes I'm concerned.

I haven't read the posts after Asafonov's above - will do that now.

sondra3

My latest thought is to pay the penalty, turn it in and then purchase a car - a used Lexus (like the RX 330) with low mileage. There are 2004 Lexus RX 330's with 30K miles or less for about $28K. Lexus is offering a big incentive starting May 1 (not sure what it is exactly, have to find out) and a member of my family has 2 so they said they'd offer a loyalty incentive too. Plus the used Lexus certified cars are warrantied for 100,000 miles.

I just know from family experience that the Lexus's last forever, is still an attractive car with an extremely comfortable ride and decent (but not optimal, of course) mileage for its engine size and suv. Another reason I'm considering this one is I've driven one in Colorado winters (father's car) and it is impressive in snow and ice - better than my Jeep Grand Cherokee.

It's not the cheapest replacement car but it's a smart one. I'd look into Honda etc. but I've been driving sporty cars my whole life and am having a hard time with the idea of going 'back' in terms of style. *lowers head in shame*

In any case, I still think I'm screwed (my bad) no matter what, and I'm looking at all of this as starting over and learning something from it. I'll probably never lease again unless it's a company car. Remember though, I didn't know I was going to have to travel so much.

You guys are great and I don't know what I'd have done without all of your input. Keep it coming.

I'm bracing myself for the turn-in process though... ugh. (Hopefully not too much wear and tear on my Jeep!)

Kirstie_H

My thoughts -
Rid yourself of this lease. Wash your hands of it. If you can pay the mileage penalty in cash, then just do so and be done with it. It doesn't sound like you love the Jeep, and it also sounds like you're comfortable with a reasonable monthly payment that is not mileage-dependent.

Buy something you really like and that you can afford, and keep it for awhile. Like you said, it's a learning experience and as long as you don't repeat it again, you have actually learned the lesson that many fail to learn. Everyone makes mistakes, and as long as you're not looking for the Financing Fairy to bail you out with no consequences, then it's not the worst financial decision that one can make.

mikefm58

My thoughts exactly, start fresh, and chalk the mileage charges up to lessons learned, in the grand scheme of things it's actually not that expensive. And it sounds like it's affordable.

If you did buy it, you would end up second guessing all the time and end up hating your decision, especially if you had a breakdown and were stranded.

bobst

Option 1: Pay $15K and you own the JGC with 70K miles.

Option 2: Pay the $4K mileage penalty and $28K for a Lexus with 30K miles.

So you are paying $17K (28+4-15) more to get a vehicle with 40K fewer miles. Is it worth it?

biancar

Yup. I agree with bobst's math there. If the car is in good condition, and you've kept up all the maintenance, no reason you can't get to 150,000 miles on that GC easily.

70,000 is just nicely broken in!

You mentioned that you were in a position where you could pay the $15,000 that is the buyout on the GC easily. Financially, that is by far your best move. No more interest costs (which bobst didn't even include in his calculations, but would mean that you would in reality be paying a lot more than the extra $17,000), the deal would be over and done with, and you could start making "car payments" to yourself in a savings account to be ready for the next purchase, maybe 2 or 3 years down the road.

sondra3

Well, with the tax, buying the Jeep would cost me over 16K, actually.

The thing is about this Jeep - I do love it - but because I suspect I'm going to have to keep doing a lot of driving over the next year or two, chances are the Jeep will start needing service 'attention'... I just think moving on to a car that has a history of being tops in reliability and longevity is worth it at least for my peace of mind. Especially a used one with a 100,000 mile warranty (the '04 Lexus RX 330).

Also, an update: in talking with a family member who's feeling a bit sorry for me, I *may* have the opportunity to buy another (used) car outright with cash. My bro may loan me the money to do so and wouldn't charge me interest.

dino001

I mentioned the Liberty as an example of a car with a large rebate to help eat the negative equity.

Cash rebates do not help against negative equity - they reduce value of the car, so the negative equity stays hidden in the new car.
Example: Xmobil $30KMSRP, $4K cash rebate. Price paid: 26+TAXES+FEES+$4K EQUITY
Value on say day 21 of ownership (lets put a few miles so it's used a car now): $26K AT BEST, more like $22-$24K (it's a used car now - one needs an incentive to buy used car vs. new). Negative equity on car: $4-8K+taxes+fees.

Buying new car being upside down w/no downpayment only increases negative equity. It's basic economics and math.

joel0622

Good analogy dino, what folks forget sometimes is if a car line has big rebates on it then the trade in value of that year model and a couple previous years is effected. If the dealer can sell a 2007 Zorch with a list of $25K for $22K less the $4000 rebate then effectively you have a car that can be bought for $18K. Now when Mr customer comes in to trade his 2005 Zorch that listed for $25K 2 years ago with no rebates and bringing list price because it was the first year and it was a hot model. This will all be taken into consideration. The dealer has to figure out how attractive of price the 2005 has to have when they know they can sell the 2007 for $18K and get new car rates on it.

Think about it if it was you. What would you give for a 2 year old car with 30K miles on it when you know a new one can be had for $18K.

Lets say you would give $14K for it. So the dealer would like to make $1500 profit at least when he sells it and knows his standard recon fee on a 30K mile vehicle that does needs tires is $1000. That means he will need to bring the 2005 model in at around $11K.

The $4K rebate today has caused your 2005 model to suffer $14K in depreciation in the first two years.

This is why you can throw KBB/NADA/Black Book out the window allot of times. Those books really mean nothing. A car is worth what the market will bare at any given time.

I hope that makes sense to every one. or if my scenario is flawed let me know.

dino001

It makes perfect sense. I would not say that the rebate "caused" entire $14K depreciation. I would probably put fibure like $6K, as rebate+dealer markup (then sold at MSRP today sold at invoice minus rebates). The remaining $8K is a "normal" depreciation on that model if there were no rebates.

Cars I could think of that fall into that category? Those short-lived stars that generate initial excitement but no depth in the market to support that due to oversupply, quality, or pricing. Many Chrysler products come in mind, from PT Cruiser to 300, to Crossfire - Caliber and Charger will likely be next.

On the other hand, if someone bought a product with huge rebate already on it, the depreciation talk is a little overblown (favorite argument from our friendly Japanese dealers), as they calculate it from the list price figure rather than actual transaction. What looks terrible against MSRP may not be as bad when compared to the actual final price.

bugchucker

Deposit? CC? Sounds funny. I have never been asked for a deposit. What does that get you? I'm waiting for an incoming vehicle now. I have never spoken to the dealer or been to his dealership. We made the deal in 4 e-mails. The dealer has said he will hold it for me and he didn't ask for any money. I wouldn't trust anyone who did.

british_rover

Many dealers won't hold a car for an anonymous person with out a deposit. Hell it is just a CC deposit if things go fishy at the dealership you can call you CC company and have them cancel it no problem.

joel0622

Theirs is nothing fishy about it. It is no different then a Relator asking for earnest money. Basically he is asking for you not to take his car out of the market if you are not serious.

The quickest way to get 4 or 5 people wanting the same car is to put a sold sign in it

jmonroe

Also, an update: in talking with a family member who's feeling a bit sorry for me, I *may* have the opportunity to buy another (used) car outright with cash. My bro may loan me the money to do so and wouldn't charge me interest.

No offence but I'm also confused. Way too many variables now, so I'm out.

Seems like every time I jump into one of these, I'd-like-to-help-you-out situations, I go away with a headache.

jmonroe

biancar

So, the Jeep would cost you something over $16,000, while a used Lexus would cost you around $32,000 - 34,000 (Cost of car at 28k plus tax plus the 4k you have to pay to the leasing company.)

Even if the Jeep will need service in the next few years, so will the Lexus. Oil changes and regular service are a given with any car.

And even if your brother makes you a no-interest loan, he still wants his money back, right?

You can pay for a whole lot of service with that nearly $18,000 differential between the two. Realistically, you won't need to spend anywhere near that. *Maybe* you'll spend a thousand or two, if that, on additional service on the Jeep. Reliable cars tend to continue to be reliable cars. If you haven't had any problems to date, you're not likely to have anything other than routine maintenance and replacement of worn parts (brakes, maybe) for at least the next couple years or so.

I can't see any scenario where buying the used Lexus makes better financial sense for you.

It sounds like you're talking yourself into additional debt. If that's what you really want, just be aware of what you're doing to any other plans you might have for that money (house, vacations, clothes, etc.).

sondra3

Sorry jmonroe. I understand...and no one's headache is worse than mine in this situation. Doesn't matter now, I don't think I'm going for the new car. It's just not as cut and dry as I'd like it to be and I'm going to fork over the cash to buy out my lease, as biancar mentioned above.

I based my decision on the fact that

a) I have the ability to buy it out in full and not re-finance and pay even more for the Jeep over the long term than the buyout amount

b) I got a referral for a competent and very fairly priced independent mechanic who I'm taking the car to for a checkup so I know where I stand; and who I can use for tune ups and such in the future at far less cost than the dealership

c) If I buy the car and change my mind I can still sell it privately (knowing of course that I'll lose some $$ doing so)

d) I really like this darn Jeep.

joel0622

d) I really love this darn Jeep.

heck, thats half the battle right there. Liking the car your driving. Nothing worse then walking outside every morning and getting in a car you can't stand that your making payments on.

biancar

Congratulations. FWIW I think you're making a very sound financial decision there. Hope you and your Jeep have many happy trails ahead! Once it's paid for I bet it will be a real load off your mind, too. Over and done and you can concentrate on other things.

(Incidentally, I had a JGC for a while too and liked it very much.)

british_rover

If you like it you should keep it. Those GJCs tend to be fairly reliable anyway so you shouldn't have any problems.

Also do you have just over or just under 70k miles?

If you are just under then take it in for any warranty repairs now. Jeeps from that MY have a 7/70k powertrain warranty.

sondra3

Thank you!
And again I really appreciate the time taken by everyone here to read and respond to my situation and all the changes of mind and ideas. I can't say enough how helpful this forum has been for me.

sondra3

Jeeps from that MY have a 7/70k powertrain warranty.

oops, I'm over 70.

Curious - does a powertrain warranty include things like brakes and/or shocks?

wlbrown9

If you like it you should keep it. Those GJCs tend to be fairly reliable anyway so you shouldn't have any problems.

Well, the Grand Cherokee's are not really that trouble free compared to a lot of the competition. We had 2 of that version, '99 & '00. Window regulators, key switch, rear gear, brakes, brakes, brakes. I decided that I would not have one without an extended warranty. Oh, yes.. waterpump as well. But that is just my opinion...your mileage may be different than mine :-). Check out the Jeep GC discussion groups.

Good luck on whatever you decide to do.

british_rover

Nope nothing really covers those. Powertrain warranty would be things like engine, trans, Transfer Case, differentials etc.

blufz1

Good economic call to keep a car you like and with which you have had no trouble. But, I would not trust my car to a shade tree mechanic. The dealer mechanics have to stay current on the cars they work on. This other guy doesn't. I think it's false economy. Just my 02. Think about it.

sondra3

But, I would not trust my car to a shade tree mechanic. The dealer mechanics have to stay current on the cars they work on. This other guy doesn't. I think it's false economy. Just my 02. Think about it.

blufz1, I think you're right, in general... fwiw, I just did a comparison of a mechanic's estimate to replace shocks with the dealer estimate... dealer charges more but not THAT much more. Just one example of course... I'll always compare just to know. I hate when dealers charge an extra hour labor when half of that hour was your car waiting in line to be serviced.

jkr2106

I have a question:

If you order a vehicle, do you have to pay MSRP or is there still some negotiating?

jipster

No... you don't have to pay MSRP if you order a vehicle. I would probably negotiate the price before ordering though. Get an out the door price in writing with delivery contingent on vehicle meeting your approval after test drive.

jkr2106

Cool...thanks

yoda05378

I am in the market for a Honda Fit, base model, manual transmission. Recently, I went to a local dealership. I test drove the vehicle, loved everything about it and went straight to negotiations. During negotiations, the initial offer by the salesperson was $17400. This shocked me and I commented that their offer was very unrealistic. I counter-offered with edmunds.com TMV invoice of $14200. It was then his turn to look shocked. He abruptly left with no explanation and came back a minute later with a piece of paper. He explained that websites such as edmunds.com have faulty data and do not take into account certain dealership fees. He showed me the piece of paper he fetched and in it showed all the fees and the dealer invoice.

I carefully examined the official-looking paper and it claimed that the dealer paid the manufacturer $16500 for the car. With the "dealer fees" added, the $17400 is justified. Then he said that since he's a noble guy and wants to help people out, he'll actually fight against his manager and try and get the price down to $17200. At this point, I got very uncomfortable and remembered an advice I read online. Before the salesperson can further confuse me, I left the dealership quickly. But I am really confused as how to haggle using invoice to get the best price. Any advice?

oldfarmer50

Well, if Edmunds info is wrong so is Kelly Blue Book. The two sources say that what people are paying is about $14,250 to $14,300.

What are the specific fees? Holdback and delivery are not negotiable if what the pros here say is correct. Other dealer fees are just extra profit though and should be flexible.

The bottom line though is that if the car is a hot new item the dealer will not come down as much.

snakeweasel

A base Fit with a manual tranny? Don't those sticker for around $14,500?

Yeah I would have walked.