Comments on: 3 RULES TO GETTING THE BEST DEAL WHEN CAR SHOPPING http://sageprofit.com/getting-the-best-deal-when-car-shopping Fri, 30 Jul 2010 03:20:06 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: dustin http://sageprofit.com/getting-the-best-deal-when-car-shopping/comment-page-1#comment-30 dustin Sat, 25 Jul 2009 16:24:51 +0000 http://sageprofit.com/?p=21#comment-30 There are some nice benefits to new cars, I'll give you that. If you've got the cash and want something factory-fresh and don't mind making that dealer a little richer, then by all means! But I'm assuming most people are not going to be able to write a check for their next new car, which leaves them in a position of having to finance a rapidly depreciating asset. A few suggestions for avoiding those used car pitfalls: 1) test drive that ride over to your trusted mechanic and pay him to inspect it for you (I'm a big believer in this) 2) get the CarFax (which won't tell you if they smoked but should tell you if was wrecked), or 3) pay cash for a certified used car at a dealership. You'll pay that guy's markup, but should be able to get something close to new that's been spiffed up with that spray-on new car smell! There are some nice benefits to new cars, I’ll give you that. If you’ve got the cash and want something factory-fresh and don’t mind making that dealer a little richer, then by all means! But I’m assuming most people are not going to be able to write a check for their next new car, which leaves them in a position of having to finance a rapidly depreciating asset.

A few suggestions for avoiding those used car pitfalls:
1) test drive that ride over to your trusted mechanic and pay him to inspect it for you (I’m a big believer in this)
2) get the CarFax (which won’t tell you if they smoked but should tell you if was wrecked), or
3) pay cash for a certified used car at a dealership. You’ll pay that guy’s markup, but should be able to get something close to new that’s been spiffed up with that spray-on new car smell!

]]> By: bmcbride http://sageprofit.com/getting-the-best-deal-when-car-shopping/comment-page-1#comment-27 bmcbride Thu, 23 Jul 2009 02:15:25 +0000 http://sageprofit.com/?p=21#comment-27 C'mon man, the new car smells better! I agree with you 100% on cash vs finance. But sometimes, the new car has other things going for it besides the nice smell and shiny paint (if you got the cash). The new car doesn't have the chance that someone: 1. Never changed the oil, drove it like a maniac, and wrecked it. 2. Often took their 4 dogs to the park in the backseat 3. Smoked in the car OK, those last two do have something do to with the smell! Also, the new car may benefit from more saftey equipment. You just have to be willing to pay the depreciation, property taxes, and opportunity costs...Man, that is one nice smell! C’mon man, the new car smells better!

I agree with you 100% on cash vs finance. But sometimes, the new car has other things going for it besides the nice smell and shiny paint (if you got the cash).

The new car doesn’t have the chance that someone:
1. Never changed the oil, drove it like a maniac, and wrecked it.
2. Often took their 4 dogs to the park in the backseat
3. Smoked in the car

OK, those last two do have something do to with the smell!

Also, the new car may benefit from more saftey equipment.

You just have to be willing to pay the depreciation, property taxes, and opportunity costs…Man, that is one nice smell!

]]> By: dustin http://sageprofit.com/getting-the-best-deal-when-car-shopping/comment-page-1#comment-21 dustin Fri, 01 May 2009 17:58:22 +0000 http://sageprofit.com/?p=21#comment-21 Joe, thanks for the comments. 1. I understand your thoughts here. I am an advocate for buying cars and keeping them for their entire usable lifetime. But of course if you compare a used car kept for 3 years vs. a new car kept for 10 years you can make the new car seem like a better deal. One might suggest a $5,000 car kept for only six months has a $10,000 annual cost of ownership, but that would be ridiculous. Cars depreciate 15-20% each year with their greatest rate of loss of value occurring during their first year. Buying a used car that has already depreciated buffers you from that loss. Here's a great article on depreciation: http://www.bankrate.com/brm/news/auto/20011226a.asp. Letting someone else absorb that loss makes better financial sense. 2. Again, I can see where you are coming from with this suggestion, but it still doesn't work for me. Are you really suggesting that financing a new car will save you more money than paying cash? Let’s test it. Imagine that you and I visit a dealer together. You go for a new ‘09 (Honda, of course) and finance $20,000 at 7.5% interest. I opt for the same car, but a used ’08. It’s a program car with 10,000 miles and I pay $18,000 cash for it. Your loan is for three years. We both keep our cars for three years. The average amount of depreciation for your new car the first year is $4,600 according to online depreciation calculators. That’s because new cars lose on average 15-20% of their value the first year. During the three years, your ’09 Honda will lose $8,873.50. Mine’s already a year old when I buy it, so my first year of ownership it will depreciate only $2,700. I lose a total of $6,945.75 for the three years I own it. Stay with me. At the end of the three year period, we both decide to sell. After three years, your ’09 is worth $11,126.5 to you. At 7.5% interest on the loan, you’ve paid a total of $22,396.32. I’ve still only paid $18,000. Am I any better off? After three years of depreciation, my ’08 with 10,000 more miles is worth $11,054.25 to me, according to an online depreciation calculator. You paid an extra $4,396.32 for your new car, but at the end of the same three years, yours is only worth $72.25 more than mine! Paying cash for used cars is simply the better way to go, financially. I realize that not everyone can afford to pay $18,000 cash for a used car. So here’s my solution; save more and buy only what you can afford. If you’ve only got $500, that’ll get you something. I’ve paid that much for a car and I’ve also sold cars for that before. $5,000 will get you a decent amount of car is you shop wisely. 3. Finally, I don't expect everyone to agree with my last point. But I strongly suggest making quality and reliability the main considerations in choosing a car. And don't let the car salesman or TV ads be your source of information on what's a quality product. A little bit of research will save lots of money and headaches down the road. Joe, thanks for the comments.

1. I understand your thoughts here. I am an advocate for buying cars and keeping them for their entire usable lifetime. But of course if you compare a used car kept for 3 years vs. a new car kept for 10 years you can make the new car seem like a better deal. One might suggest a $5,000 car kept for only six months has a $10,000 annual cost of ownership, but that would be ridiculous.

Cars depreciate 15-20% each year with their greatest rate of loss of value occurring during their first year. Buying a used car that has already depreciated buffers you from that loss. Here’s a great article on depreciation: http://www.bankrate.com/brm/news/auto/20011226a.asp. Letting someone else absorb that loss makes better financial sense.

2. Again, I can see where you are coming from with this suggestion, but it still doesn’t work for me. Are you really suggesting that financing a new car will save you more money than paying cash? Let’s test it.

Imagine that you and I visit a dealer together. You go for a new ‘09 (Honda, of course) and finance $20,000 at 7.5% interest. I opt for the same car, but a used ’08. It’s a program car with 10,000 miles and I pay $18,000 cash for it.

Your loan is for three years. We both keep our cars for three years. The average amount of depreciation for your new car the first year is $4,600 according to online depreciation calculators. That’s because new cars lose on average 15-20% of their value the first year. During the three years, your ’09 Honda will lose $8,873.50. Mine’s already a year old when I buy it, so my first year of ownership it will depreciate only $2,700. I lose a total of $6,945.75 for the three years I own it.

Stay with me.

At the end of the three year period, we both decide to sell. After three years, your ’09 is worth $11,126.5 to you. At 7.5% interest on the loan, you’ve paid a total of $22,396.32.

I’ve still only paid $18,000. Am I any better off?

After three years of depreciation, my ’08 with 10,000 more miles is worth $11,054.25 to me, according to an online depreciation calculator. You paid an extra $4,396.32 for your new car, but at the end of the same three years, yours is only worth $72.25 more than mine! Paying cash for used cars is simply the better way to go, financially.

I realize that not everyone can afford to pay $18,000 cash for a used car. So here’s my solution; save more and buy only what you can afford. If you’ve only got $500, that’ll get you something. I’ve paid that much for a car and I’ve also sold cars for that before. $5,000 will get you a decent amount of car is you shop wisely.

3. Finally, I don’t expect everyone to agree with my last point. But I strongly suggest making quality and reliability the main considerations in choosing a car. And don’t let the car salesman or TV ads be your source of information on what’s a quality product. A little bit of research will save lots of money and headaches down the road.

]]> By: joe http://sageprofit.com/getting-the-best-deal-when-car-shopping/comment-page-1#comment-18 joe Tue, 28 Apr 2009 23:52:51 +0000 http://sageprofit.com/?p=21#comment-18 1. Buy used... this isn't the best way to look at it. If I buy a 09 Honda for 20K and keep in ten years. My cost is 2K per year. If I instead by a 05 Honda and pay 15k and keep it 6 years, my cost is 2500 per year. Who is the sucker now? Its more a problem of people flipping to a new car every three years or so, then keeping it for a longer time. For example 5 cars, in how many years?, do the math on cost of ownership. Probably could have bought a new car and kept it for 250K miles, for less then the 5. 2. Pay cash... sure you save the interest rate cost, and you are forced to see the true cost of a car. BUT, to think you are ahead after you pay cash is stupid. A car depreciates, you will lose money every time, paying cash doesn't help here. However spreading out the cost of a car, makes a lot of sense since they have a useful life over the same period. 3.buy Japanese... it's an opinion I don't agree with, but none the less no comment. 1. Buy used… this isn’t the best way to look at it. If I buy a 09 Honda for 20K and keep in ten years. My cost is 2K per year.
If I instead by a 05 Honda and pay 15k and keep it 6 years, my cost is 2500 per year. Who is the sucker now?
Its more a problem of people flipping to a new car every three years or so, then keeping it for a longer time. For example 5 cars, in how many years?, do the math on cost of ownership. Probably could have bought a new car and kept it for 250K miles, for less then the 5.

2. Pay cash… sure you save the interest rate cost, and you are forced to see the true cost of a car. BUT, to think you are ahead after you pay cash is stupid. A car depreciates, you will lose money every time, paying cash doesn’t help here. However spreading out the cost of a car, makes a lot of sense since they have a useful life over the same period.

3.buy Japanese… it’s an opinion I don’t agree with, but none the less no comment.

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