[pro-player width=’530′ height=’253′ type=’video’]http://www.youtube.com/watch?v=Pev892H_dCs[/pro-player]
A quick tip for you …
… never buy new, this is more true for cars and even more true the higher the price of the car.
For example, the sticker price on my car, was $120k, but I looked around (actually, I just did a quick google search or two) and found the exact make/model/year (2007) that I wanted at a specialist dealer.
I found a car, in my own city no less, that was just 6 months old with only 1,700 miles on the clock in perfect condition for less than $90k … $30k buys a lot of enchiladas in anybody’s book!
I don’t think that I just got lucky …
I have found that the higher in price you go, the more fickle the customer … they buy cars on a whim and churn them quickly when they find out they would have rather had a boring ol’ Merc!
This works at pretty much any price range, too. If you want a more standard car, check out the leasing company sales (maybe at auction) for executive vehicles … a downturn means executive redundancies … redundancies means near-new cars available cheap!
The effect is even more pronounced when you buy imports (except for top line Italian sports cars, and certain Mercedes and BMW’s) because they depreciate by as much as 20% the minute that you drive them out of the showroom!
[Hint: next time don’t even go into the dealer’s showroom to buy that new car, just wait for the ‘other guy’ to drive their’s out, then offer him 85% of what he paid … give the poor sap your card … you just might get a call].
I once had a SAAB and every time I tried to sell it the price dropped more than I could accept: the first time I tried to sell it, I wanted $45,000 for it, but was only offered $35,000. So I waited a year …
Then when I tried to sell it for $35,000 I was only offered $25,000; the next year I got sick of waiting and just sold it for only $15,000!
I would rather have been the guy offering $15,000 than the guy selling.
Happy bargain hunting!
Its really fantastic..i must say that the post is really brilliant …
Thanks for your comment ACC … I’m blushing! Please let everybody know that we’re NOT related 🙂 AJC
POST UPDATE: check out this related entry on the FreeMoneyFinance blog ; here is the Bankrate article that the post refers to. That’s why the more expensive the car, the more likely I am to buy slightly-used …
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This is an interesting post. I know it has been over a year since you published this but I was wondering if you could comment on a few calculations I did after reading this post. My disagreement is mostly with the Finance Vs Cash option. The buying a used car part I totally get.
Let’s say I wanted to buy a car with an MSRP of 30,000. If I put 10% money down and get a loan of 27000 for 5 years at let’s say 5% APR. At the end of 5 years I will end up paying 33,571 for the car. If I had paid in cash I would have paid 30,000 for he car. The depreciation on the car would be the same in both cases. So I ended up paying 3,571 more for the car by choosing to finance it instead of paying cash.
But here’s the thing, by financing the car, I also ended up with 27,000 of cash which I can invest elsewhere. To recover the extra 3,571 that I’ll have to pay on interest for the loan, all I need to do is to put this 27,000 in an investment that can give me an APY of 2.52% only, which is not very difficult to find at all.
This suggests that buying with cash, even for a depreciating asset, does not make all that sense. Am I missing something here?
@ John – That’s true (if your assumptions are correct); see this post:
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My dad swears by this process: http://excarsalesman.typepad.com/
Other than that, I don’t think i’ll be going down that path for a long time. Sally 🙂