Car Payments..

Live forum: http://forum.freeipodguide.com/viewtopic.php?t=68278

JKirk

16-08-2007 22:03:04

So who all make car payments here? I'm thinking of financing one but I'm not sure what's really average and I was thinking a general consensus would be interesting. If you make payments, how much is it a month? What's your interest rate, if you know. And, what do you think about it? Too much or was it a really good idea?

zr2152

16-08-2007 22:16:17

I took out a 5500 car loan from my bank in the summer of 06'

I am paying 170/month over 36 months for a total of 6120. I like it actually. I think that I got a good interest rate for someone my age actually. I pay on the 30th of every month and it is a good way to build up your credit.

guelah75

16-08-2007 22:56:24

i pay about 400 bucks a month for my car note

i think the rate was about 6.5%

it's a little high for me, but i like the comfort of my 4runner

manOFice

17-08-2007 04:25:10

I'm paying on two cars, one for 285 and one for 210 a month.

dmorris68

17-08-2007 04:59:14

$750/month. Paid off in 2.5 more payments. w00t.

Obviously it depends on how much you finance and the rate you get. Look into e-loan, I've financed a couple vehicles through them before, their rates are usually better than you can get from your dealer.

However you will often find yourself getting a better deal on a vehicle from a dealer if you use their financing, because they make money on the financing too. That's why they try to establish up front how you'll be paying, so they know how much to give on the sale price. Just one of many tactics to be aware of when car shopping.

manOFice

17-08-2007 05:03:15

yeah my new car I just got, I got a good deal financing through them.

justinfreestuff

17-08-2007 05:36:58

The average car payment in America is $378 a month over 55 months. If you invest that money instead, where would you be? Take a look at a person who works from age 25 to age 65 40 years and they invest that $378 a month into a decent growth stock mutual fund, because they drove cars they paid cash for instead. At age 65, they'll have about $4.4 million dollars.

hope you like your car.

dmorris68

17-08-2007 05:55:44

[quotef44ca15967="justinfreestuff"]The average car payment in America is $378 a month over 55 months. If you invest that money instead, where would you be? Take a look at a person who works from age 25 to age 65 40 years and they invest that $378 a month into a decent growth stock mutual fund, because they drove cars they paid cash for instead. At age 65, they'll have about $4.4 million dollars.

hope you like your car.[/quotef44ca15967]
While I don't disagree that financing is not always an optimal situation, especially when you finance more than you can truly afford, your advice comes across as a bit disingenious, or at least a bit simplistic.

First, most people need cars, and most do not have the cash lying around unless they want to drive junkers -- some don't even have the cash for junkers. Like a home, a car is real property and thus much more reasonable to finance than unsecured, revolving credit devices like credit cards.

By your argument, if I chose instead to invest my $378/mo for 40 years, sure I might be a millionaire at 65, but how will I get to work to earn the $378/mo? Everything has a price, and if I have to pay for mass transit or cab fare, then I'm offsetting that $378/mo "savings." Then there is the matter of time -- without a vehicle, it'll likely take me longer to get to and from work, and my time is quite valuable. If I scrape up the cash to buy a junker, then that also offsets the monthly $378/mo investment for awhile, not to mention the junker will likely require more expensive maintenance and upkeep.

Of course if I have the cash on hand to pay for a car up front, then that is preferable. But if you're in that situation this all a moot argument anyway, because you're probably financially solvent anyway.

Bottom line car payments are an investment too, as well as a way of life for most folks, and as long as you're not buying more car than you can afford I consider them a sound financial investment.

justinfreestuff

17-08-2007 06:18:19

lol car payment = investment?

leasing is by far the most expensive way to own a car. most leases are only available on brand new cars. brand new cars lose about 10% of their value the moment you drive them off the lot, and most lose roughly 60% of their value in the first 4 years of use. how is turning a $28,000 car into $17,000 a good investment?

if someone doesn't have the discipline to buy a $2,000 car, save up over a number of months, trade it for a $4,000, save up again, trade that for a $8,000, etc. i wouldn't expect them to understand the math anyways

loans and payments on depreciating assets is the mantra of the middle class P

http//www.edmunds.com/advice/buying/articles/47079/article.html

i didn't really want to argue, i just wanted to serve up some good suggestions. the OP asked P

JayKanish

17-08-2007 06:26:55

[quote320b942233="justinfreestuff"][b320b942233]The average car payment in America is $378 a month over 55 months.[/b320b942233] If you invest that money instead, where would you be? Take a look at a person who works from age 25 to age 65 40 years and they invest that $378 a month into a decent growth stock mutual fund, because they drove cars they paid cash for instead. At age 65, they'll have about $4.4 million dollars.

hope you like your car.[/quote320b942233]

First, most people don't finance a car for 40 years. That's longer than most mortgages. If you invested that same $378 for 60 months (closer to a car loan term) even at a highly optimistic rate of return of 7% per year you'd only amass around 27,062.

Also investing the money, while a good idea, may not be possible for a lot of people because most people don't have 17-22 grand in cash just sitting around waiting to pay for a car (payment of $378 for 55 months at an interest rate of 7% means the price of the car $17,741, give or take and that doesn't include down payment or trade.) If you do then good for you but that doesn't mean everyone does, which is why people finance. Sorry, but you're post seemed a little arrogant and it struck a nerve with me. No one asked you for financial advice. The only piece of info that was asked for is bolded.

Edit Leaving the post but dmorris beat me to the punch, thanks D.

dmorris68

17-08-2007 06:31:28

Not arguing, just discussing. A debate, maybe, but not a fight. When I referred to your "argument" I was referring to your position on the subject, not your attitude. P

I'm well aware of the textbook argument in terms of asset depreciation. I'd say I've probably been buying cars since before you were born. ;) And again, you're simplifying buying a $28K car to turn around and flip after driving it off the lot would be a horrible investment. However keeping said car for 5-6 years, using it to drive yourself to work, earn money, etc. and then trading/selling it for a recoup of 25% or more of its purchase price (if you're lucky and took care of it), would certainly be considered by many a reasonable investment.

I'm also aware of reality, which does not come from a textbook. That reality takes into account human (particularly American) impatience, and the lack of discipline of most to buy only what they can afford.

All other things being considered, there are many sound arguments to buying a NEW car as opposed to used (particularly a $2000 car) but obviously that depends on a lot of factors, including income.

I do agree that leasing is a horrible way to own a car, much the same that renting is inferior to home ownership at least from an investment perspective. However home ownership is likewise not within reach of many people, and it comes with its own pitfalls. There are many times I wish I still leased my home rather than owned it, and if I were to be single and childless again I'd probably prefer to rent.

Just trying to inject a dose of reality into the nirvana of textbook idealism. The way I see it, the most comfortable position is somewhere in between. ;)

manOFice

17-08-2007 06:31:35

[quote845e785827="justinfreestuff"]The average car payment in America is $378 a month over 55 months. If you invest that money instead, where would you be? Take a look at a person who works from age 25 to age 65 40 years and they invest that $378 a month into a decent growth stock mutual fund, because they drove cars they paid cash for instead. At age 65, they'll have about $4.4 million dollars.

hope you like your car.[/quote845e785827]

Gosh your title fits you well....

If I was to invest my car payments...what the hell would I drive to work everyday or just getting around in general?

jeagle82

17-08-2007 07:26:24

I feel a big debate coming on!

Anyways, my wife and I saved up some money each month for about 3 years, and ended up with $18,000. We bought a Honda Civic Hybrid 2005, barely used with 20,000 miles on it and I was able to also get a $2,000 nav system put into it.

No monthly payments, no interest... also, 600 miles on one tank of gas. Feels good driving that baby around.

I highly suggest everyone do as we did. Just be very militant about putting aside money into savings every month, and you will be rewarded within a couple of years. D

Big War Bird

17-08-2007 07:30:06

$280 at 0% for 72 months

Justin is right! Reminder driving a car is an act of destruction to money. Spending as little on a car as possible the smart thing to do from a person finance standpoint.

Big War Bird

17-08-2007 07:41:36

For a given car it depreciates something like 30% in its first year but uses a much small percentage of its useable life span. So buying a car just a year old results in tremendous saving over new.

skepticalcynic

17-08-2007 09:16:13

$0.00
Awesome car.
Paid cash.
Every dollar the bank loans you costs approximately $3 on average in the long run. So... do you want to pay $6,000 to $10,000 for a nice, reliable car or $60,000 for an average brand-new sedan?

ahaxton

17-08-2007 09:32:25

719/month here. Brand new BMW though.

No reason to knock people down for buying expensive cars. It's like buying any luxury product. Do I want to buy plasmas for the house or whatever.

I wanted to drive a very nice car and thats what I have done. I spend a lot of time on the road, so why not. Plus what even funnier is my auto insurance is less than what it would be on a brand new civic lol. I asked why and they said the BMW has better safety standards. I just find it so odd. I guess the bulk of insurance comes from bodily damage and bodily damage inflicted on another person and not to replace the car.

skepticalcynic

17-08-2007 09:35:33

I wasn't knocking anyone down at all. But if a person is going to make a decision involving a large sum of money and a large chunk of time, he/she would benefit from seeing the actual long-term results of both options.

theysayjump

17-08-2007 09:37:58

[quote6119290ad9="justinfreestuff"]if someone doesn't have the discipline to buy a $2,000 car, save up over a number of months, trade it for a $4,000, save up again, trade that for a $8,000, etc. i wouldn't expect them to understand the math anyways[/quote6119290ad9]

It's not necessarily about discipline.

I have a car that cost $1,250. Piece of shit, but it's done the job for the two years we've had it. Now it's falling apart and due to my circumstances I haven't had the opportunity to save up (believe it or not every penny of my paycheque was needed) until now.

I'm making more money now but I need a car and only now can I save up for one, however the car is needed now so I likely have no choice but to lease a car.

Don't be so shortsighted and assume that everyone is in the same boat as you.

manOFice

17-08-2007 09:42:37

[quote86c86a68ed="theysayjump"][quote86c86a68ed="justinfreestuff"]if someone doesn't have the discipline to buy a $2,000 car, save up over a number of months, trade it for a $4,000, save up again, trade that for a $8,000, etc. i wouldn't expect them to understand the math anyways[/quote86c86a68ed]

It's not necessarily about discipline.

I have a car that cost $1,250. Piece of shit, but it's done the job for the two years we've had it. Now it's falling apart and due to my circumstances I haven't had the opportunity to save up (believe it or not every penny of my paycheque was needed) until now.

I'm making more money now but I need a car and only now can I save up for one, however the car is needed now so I likely have no choice but to lease a car.

Don't be so shortsighted and assume that everyone is in the same boat as you.[/quote86c86a68ed]

Every penny of my paycheck goes to bills and on the side drinking.

I need a raise, lol

ahaxton

17-08-2007 09:44:58

[quote6d17ea4ee0="manOFice"][quote6d17ea4ee0="theysayjump"][quote6d17ea4ee0="justinfreestuff"]if someone doesn't have the discipline to buy a $2,000 car, save up over a number of months, trade it for a $4,000, save up again, trade that for a $8,000, etc. i wouldn't expect them to understand the math anyways[/quote6d17ea4ee0]

It's not necessarily about discipline.

I have a car that cost $1,250. Piece of shit, but it's done the job for the two years we've had it. Now it's falling apart and due to my circumstances I haven't had the opportunity to save up (believe it or not every penny of my paycheque was needed) until now.

I'm making more money now but I need a car and only now can I save up for one, however the car is needed now so I likely have no choice but to lease a car.

Don't be so shortsighted and assume that everyone is in the same boat as you.[/quote6d17ea4ee0]

Every penny of my paycheck goes to bills and on the side drinking.

I need a raise, lol[/quote6d17ea4ee0]


haha well atleast you got freebies!

We'll always have freebies (Paris)

gnznroses

17-08-2007 11:03:44

mine is $200/month on about $6800 (i had a hefty down payment). my interest rate is high, like 22% or something. best thing to do is to pay at least 50% more than what you owe each month. my intention was just to pay it all off within about 6 months but until i get some more cashflow i won't be doing that.
by comparison my insurance is $375/month (

FreeOffersNow

17-08-2007 11:06:09

Have had 3 cars and no car payment...yet. Thinking about trading in or selling my LS for the 2008 Infiniti G37 when it comes out...all depends on the test drive.

ahaxton

17-08-2007 11:43:37

[quote4614d8b4a4="gnznroses"]mine is $200/month on about $6800 (i had a hefty down payment). my interest rate is high, like 22% or something. best thing to do is to pay at least 50% more than what you owe each month. my intention was just to pay it all off within about 6 months but until i get some more cashflow i won't be doing that.
by comparison my insurance is $375/month ([/quote4614d8b4a4]


OUCH! 22%! 375/mo insurance!
That'd make me cry.

gnznroses

17-08-2007 12:18:03

i think my last bill was $192, i paid $200, and the amount went down $50 or so. all the rest was interest i guess (
i'm definitely gonna pay more on it whenever i can. interest is a money pit.

manOFice

17-08-2007 12:19:52

After I got my second car my stupid insurance increased by more than double (

Big War Bird

17-08-2007 13:03:30

[quote00c9c90177="gnznroses"]i think my last bill was $192, i paid $200, and the amount went down $50 or so. all the rest was interest i guess (
i'm definitely gonna pay more on it whenever i can. interest is a money pit.[/quote00c9c90177]

Be careful, the amount you are paying over the monthly statement may just be prepaying for the next month and is being not applied to the principle.

You should write two checks, one for the monthly balance due and one for principle only. On the second check write "apply to principle only."

JKirk

17-08-2007 13:17:00

Nice, little debate we got going here, fellas. 8) Anyhow, I was considering buying a new car and with $15,000 down payment including a decent trade in value I should be paying around $200-$300 a month but could be more depending on what the interest and stuff would be. Doesn't sound too bad to me but I won't actually be in the buyer's market for another 6 months or so I'd say so things could change.

Ahaxton, you are paying 719 a month? What model did you get, SUV? You must have done a small down payment or you must have a big price tag. P I respect that fact you went with BMW though, not criticizing at all, just curious.

gnznroses

17-08-2007 13:56:14

be prepared when you go to a delership to spend a lot of time there... i was there 3 days straight for hours per day and this is after i chose the car i wanted... it was hours just getting them down to a reasonable price. i had two quotes, one from edmunds.com and one from blue book (whatever the website is). they were about $500 apart but still fairly close. the salesmen tried for hours to give me bullshit prices several thousand over the actual value of the car. i wasn't having none of it but that didn't keep em from going through it all. i ended up agreeing to $500 over the highest of the two quotes, which ain't real bad but i could've done better. i was just tired of dealing with em and i didn't want to go to another dealership to try and find a car and start the process over, which then might end up causing me to lose that one i wanted. the day before i had lost out on an awesome deal on a mustang. someone bought it out from under me and they said he never drove it or anything and that he was in and out within 15 minutes. in the end i'm kinda glad i didn't get the 'stang, but it was a great price.

after settling on a price it was still another 3 days or so of filling out paperwork, waiting for them to find someone to approve the loan on the remaining balance, etc.

manOFice

17-08-2007 14:01:08

Yeah when I just bought my recent car, I was there ALL DAY because they kept throwing BS numbers and saying they can't go lower...then when you threaten to leave they just kept lowering it =P

gnznroses

17-08-2007 14:13:02

also what was funny was the "big sale" they were having and the $2000 coupon i got in the mail. i waited til i got a final price to show it to em - tho i knew itr was bs from the start - and they say "oh, no, we already took that off, see here" showing me their paper with the numbers on it. it showed the starting number at $21,995 or somethign retarded, with $19,995 being the first number he threw at me. i bought it for $15,995, and the reported value was $15,000 to $15,500.
of course after you add $840 in taxes, and a $50 paperwork fee, it was nearly $17,000.

JayKanish

17-08-2007 14:19:41

[quote8fd3c7c8fc="Big War Bird"][quote8fd3c7c8fc="gnznroses"]i think my last bill was $192, i paid $200, and the amount went down $50 or so. all the rest was interest i guess (
i'm definitely gonna pay more on it whenever i can. interest is a money pit.[/quote8fd3c7c8fc]

Be careful, the amount you are paying over the monthly statement may just be prepaying for the next month and is being not applied to the principle.

You should write two checks, one for the monthly balance due and one for principle only. On the second check write "apply to principle only."[/quote8fd3c7c8fc]

Some banks won't allow that. It all depends on how they calculate interest. If it's simple they can pay down on principal and the monthly payment will be reduced accordingly.

In some cases, it will apply towards the next payment. However, if it is applied towards the next payment it may still be reducing the principal without paying on interest (ie. monthly payment is 300, you pay 600, 450 goes to principal, 150 goes to interest but next month your payment is not due). Some banks will do this so that they hold the loan as long as possible (the term says 60 months so that's what it is amortized for and it will not re-amortize). In the end though, what this means is that this amount you pay down on more you will shorten the life of the loan by that much.

Others establish the interest ahead of time and each payment you make goes towards the further payment principal AND interest, causing you a headache because it does nothing but pay an extra payment.

This is set forth in the note and should be reviewed. Be especially sure that there is NO prepayment penalty. Some banks will apply a penalty if your loan is paid off before a certain date so they can recoup the loss of the interest they would make on you. Make sure to carefully review you contract because most people don't and they can sneak shit in on you there.

ahaxton

17-08-2007 14:43:44

[quote5d77ebd61e="JKirk"]Nice, little debate we got going here, fellas. 8) Anyhow, I was considering buying a new car and with $15,000 down payment including a decent trade in value I should be paying around $200-$300 a month but could be more depending on what the interest and stuff would be. Doesn't sound too bad to me but I won't actually be in the buyer's market for another 6 months or so I'd say so things could change.

Ahaxton, you are paying 719 a month? What model did you get, SUV? You must have done a small down payment or you must have a big price tag. P I respect that fact you went with BMW though, not criticizing at all, just curious.[/quote5d77ebd61e]

I got a sedan. I'm not a SUV fan unless its something like a Range Rover.

I just usually go for the down payment that covers taxes and then some.

I'm not forced really for any down payment since I qualify for the lowest interest rates.

manOFice

17-08-2007 14:44:56

I think my interest rates are like 6.5%

gnznroses

17-08-2007 14:45:04

i've never seen a credit card or any other type of financing that works like that. my contract tho says there's no penalties for paying it off early (apparently some do) and never says anything about payments simply carrying over. but my new bill is also $190 or something so it didn't just reduce what i owe this time.
we had a sears bill once that when you pay more than what's due, it would reduce what the minimum payment is next time, but it still reduced the amount you owe as well.

ahaxton

17-08-2007 21:01:13

[quote0a14049ff3="manOFice"]I think my interest rates are like 6.5%[/quote0a14049ff3]

Thats a pretty good average. All depends on the car. Can easily get lower with a new domestic car, sounds about right for a Japanese new vehicle though.

Kidd

17-08-2007 23:51:55

ahaxton

dont knock on honda's safety no car of theirs including the acura line is under 4. most are rated 5 stars.

some of bmw's cars have horrible ratings in the past they have improved a bit.

honda is leading with safety technology.

dont knock honda they give you the most bang for the buck and it shows.

and yes im a new civic owner and i love its low insurance rates.

FreeOffersNow

18-08-2007 06:15:06

[quote79ddd10b6a="gnznroses"]also what was funny was the "big sale" they were having and the $2000 coupon i got in the mail. i waited til i got a final price to show it to em - tho i knew itr was bs from the start - and they say "oh, no, we already took that off, see here" showing me their paper with the numbers on it. it showed the starting number at $21,995 or somethign retarded, with $19,995 being the first number he threw at me. i bought it for $15,995, and the reported value was $15,000 to $15,500.
of course after you add $840 in taxes, and a $50 paperwork fee, it was nearly $17,000.[/quote79ddd10b6a]

edmunds and kbb are both high...and both state that their values should be the START of negotiation. you've been robbed.

ahaxton

18-08-2007 09:11:11

[quote2cc9a8d125="Kidd"]ahaxton

dont knock on honda's safety no car of theirs including the acura line is under 4. most are rated 5 stars.

some of bmw's cars have horrible ratings in the past they have improved a bit.

honda is leading with safety technology.

dont knock honda they give you the most bang for the buck and it shows.

and yes im a new civic owner and i love its low insurance rates.[/quote2cc9a8d125]


I'm not knocking on Honda.
I'm just telling you the truth. Between a 2007 honda civic and my 07 bimmer my insurance rate is cheaper than what Allstate would have given me with the civic. I don't see where you see me knocking honda. Of course it doesn't really matter considering the payment is a whole lot more with the bimmer, but thats what I was offered as an allstate customer. $23 lower with the bimmer than if I had a civic. I went with bimmer after a multitude of reasons, but the kicker was when my INSURANCE COMPANY actually preferred insuring the BMW. Can't go wrong with that.

Sure its safe for what it is, you can't ask for everything in such a small vehicle.

JKirk

18-08-2007 10:55:09

No car flame wars, they are almost as bad as game system wars.

samz465

18-08-2007 11:03:28

[quote813de8ea43="JKirk"]No car flame wars, they are almost as bad as game system wars.[/quote813de8ea43]
Btw...what kinda car is this thread for??

JKirk

18-08-2007 11:11:33

[quote042d1424fd="samz465"][quote042d1424fd="JKirk"]No car flame wars, they are almost as bad as game system wars.[/quote042d1424fd]
Btw...what kinda car is this thread for??[/quote042d1424fd]

http//www.prestigiousautogroup.com/images/Picture%201223.png[" alt=""/img042d1424fd]

gnznroses

18-08-2007 12:54:34

[quote9b840b5881="FreeOffersNow"][quote9b840b5881="gnznroses"]also what was funny was the "big sale" they were having and the $2000 coupon i got in the mail. i waited til i got a final price to show it to em - tho i knew itr was bs from the start - and they say "oh, no, we already took that off, see here" showing me their paper with the numbers on it. it showed the starting number at $21,995 or somethign retarded, with $19,995 being the first number he threw at me. i bought it for $15,995, and the reported value was $15,000 to $15,500.
of course after you add $840 in taxes, and a $50 paperwork fee, it was nearly $17,000.[/quote9b840b5881]

edmunds and kbb are both high...and both state that their values should be the START of negotiation. you've been robbed.[/quote9b840b5881]

edmunds doesn't say that. it says "The TMV price is our estimate of the current average selling price for this vehicle, and is what you need to know to negotiate a fair price."
one or the other also said it's what you should be paying, including a dealer's average profit margin. right now edmunds is saying dealer retail price should be $14,861. when i priced it before i accidentally included a moonroof option because i had looked at two tiburons and one of em had it so i was thinking both did. bluebook i think was the one that was listing $15,500. i ended up paying $15,995 like i said, so a bit over what it's worth but i don't feel "robbed". i knew it was a few hundred more than i might've gotten if i had looked elsewhere or had two dealerships trying to compete with the same car, but after looking for days and then spending forever debating with the dealership about the price, i just wanted to be done with it.

Admin

18-08-2007 12:57:36

not to be a jerk[=http//forum.freeipodguide.com/viewtopic.php?p=707165#707165]not to be a jerk, but if it took you "forever" to get "down" to $500 over edumunds, you might need to work on your technique

gnznroses

18-08-2007 13:25:02

i dunno how else i could've handled it. they'd throw a number at me, i'd say there's no way, they'd try to give a BS reason, i'd say nope, they'd pretend to go ask for permission, leaving me there for 20 minutes, then they'd come back with a slightly lower price, i'd laugh at em, then we'd repeat it. yeah i could've left and wait for em to call me with a decent price, but then some jackass could come and buy the car i wanted. i was content with dragging it out a while, and when it got to the price i finally got, i decided that was low enough to take it and be done. i also felt that the price was reasonable, not withstanding what edmunds or bluebook said.

samz465

18-08-2007 14:42:51

[quote048d96185d="JKirk"][quote048d96185d="samz465"][quote048d96185d="JKirk"]No car flame wars, they are almost as bad as game system wars.[/quote048d96185d]
Btw...what kinda car is this thread for??[/quote048d96185d]

http//www.prestigiousautogroup.com/images/Picture%201223.png[" alt=""/img048d96185d][/quote048d96185d]
You fucking pimp.

dmorris68

18-08-2007 14:50:10

[quoteb2dfbd6822="gnznroses"]i dunno how else i could've handled it. they'd throw a number at me, i'd say there's no way, they'd try to give a BS reason, i'd say nope, they'd pretend to go ask for permission, leaving me there for 20 minutes, then they'd come back with a slightly lower price, i'd laugh at em, then we'd repeat it. yeah i could've left and wait for em to call me with a decent price, but then some jackass could come and buy the car i wanted. i was content with dragging it out a while, and when it got to the price i finally got, i decided that was low enough to take it and be done. i also felt that the price was reasonable, not withstanding what edmunds or bluebook said.[/quoteb2dfbd6822]

Ahh grasshopper, you have much to learn about car dealer negotiations. lol It's a science really.

I'll tell you what I do, and it works well. First, let me just say that the amount you settle for depends on a lot of factors, some outside your control. Such as the type of car you're after, the demand in your area, the timing of the sale, etc. But this will get you pretty close to the best deal in most cases.

First, educate yourself on the lingo of the business so that the dealer knows you aren't some sucker off the street. Learn what the following terms mean

li Holdback
li Factory-to-dealer incentives
li Dealer invoice price

Among others. All of that and more is publicly available if you search for it. Then go to Edmunds, KBB, or wherever (numbers should be the same) and generate a spec for the exact vehicle you want, with all options. You will get a pricing guide or list with MSRP and Dealer Invoice. Note that many dealers will install PIO's (Port installed options, in the case of imports) and DIO's (Dealer installed options) that won't show up on the Edmunds report. This is usually stuff like undercoating, floor mats, upgraded tires, etc. Which is fine as long as you can figure out the reasonable value of such items.

I always walk into a dealership looking to pay invoice. In most cases, you can pay dealer invoice and the dealership will still make a profit, due to the aforementioned holdback and dealer incentives. In fact it's possible to buy for UNDER invoice and they still make money. I bought a brand new 1996 Eddie Bauer 4x4 Explorer in late 1995 and paid $600 [ib2dfbd6822]under[/ib2dfbd6822] invoice with very little bargaining. In 1998 I bought an Eddie Bauer 4x4 Expedition and paid $200 over invoice.

Obviously the dealer is in business to make a profit -- it would be unreasonable to expect otherwise. So once you know the dealer's numbers to a degree of certainty, aim for giving them anywhere from $400-$1000 profit, depending on the cost of the vehicle, demand, etc. In-demand vehicles give you much less room, since they will let a sale go if people are commonly walking in and paying MSRP or close to it. And you'd be surprised how many folks do -- some new vehicles are presold at HIGHER than MSRP, and folks still line up on waiting lists to pay it.

Another factor that impacts how close to invoice you can get is the brand. Domestics like Fords and GMs are much easier to deal for invoice and even less. In-demand imports like Toyota, Honda, and the import luxury brands are much harder, but you can still get pretty close. On my 2001 Toyota Sequoia Limited 4x4, I paid around $1000 over invoice but that was still about $2000-$2500 under MSRP. That one took a whole day of haggling and going to competing dealers in the area, because it was the first year Sequoia's were out and they were in high demand.

The key is to appear knowledgeable and confident, and to possess good speaking and negotiating skills. Car sales folks, like other sales people, are professional negotiators and will roll over you if you aren't prepared. Also, if you can find a dealership that pays their sales staff a fixed salary with a sales quota rather than commission, you will have much greater success in bargaining. In those cases their ultimate goal is to sell a unit of inventory, and not a dollar figure.

Also, I mentioned this before, but if you intend to finance through the dealership, that's another area of profit for them. Use that to your advantage, and threaten to finance through your bank or elsewhere unless they knock some more off.

FreeOffersNow

18-08-2007 15:37:50

thanks dmorris...I really didn't want to be the one stuck writing that story ;)

I paid $16,750 for my 2003 Lincoln LS which had a KBB of $26K+ ($47K~ original dealer invoice) w/ several options not reflected (extended park assist, HID headlights, etc. etc.) After making a modest calculation adding 40% of the original cost of each option which wasn't noted, the car had a KBB value of $28K.

The car was on the lot for $22K~, and on eBay for $24K~ reserve. $200 non-negotiable doc fee, and some other $150 non-negotiable. Took almost 3 days of negotiation (all over the phone) to get the price I did. As dmorris said, you just have to sound/be knowledgable, and let them know you know what their profit is going to be.

There are other tricks about demand that many people aren't aware of

liright around the 25th of the month the dealerships are looking at their inventory and determining how many cars need to be sold by the end of the month. If the dealership has had a slow month they may have a really large inventory to sell. That means a better savings for the buyer.

liweekday mornings in september are generally regarded by "the experts" to be the best time to buy a new (and sometimes used) car. Why? Foot-traffic is low, and "by September, all the next year's models have arrived at the lot, and dealers are desperate to get rid of the current year's leftovers, says Phil Reed, consumer advice editor for Edmunds.com. It's the prime time of year for incentives and sales, not to mention bargaining. 'Any car that's been on the lot for a long time loses its value in the eyes of the car salesman,' he says."

http//www.smartmoney.com/dealoftheday/index.cfm?story=20060905&pgnum=1

gnznroses

18-08-2007 15:57:29

if i had it to do it over again i think it'd be quicker and still get me a lower price. this was my first car buy, aside from one i bought from my cousin and never got around to getting fixed. of course i'd heard about the haggling but i'd never experienced it. i'm really glad i had printed the estimates, because i would have been willing to spend a bit more than i did even. they had two models and when i looked at them at the lot, i thought the one i ended up getitng was out of my price range, because i didn't know how big of a difference there was in what you can end up paying and what they tell you the price is on the lot. the had told me $19,000 or something like that. i knew that was way overpriced, since anew one was only $20,000 - $21,000 but i didn't know so much of it relied on negotiating. i mean if i was selling a car i wouldn't even put a ridiculously inflated price cause it'd drive people awa. it almost did me. so i printed those estimates and took them up there and told em that's the price i wanted. i paid a little bit more than that, but i was overall happy with it.

if i had it to do again i'd take it in there and demand that price, tell em not to bother with a bunch of BS, because when it comes down to it, they're gonna sell it at that price in order to sell it. sure they could wait for someone else who may pay $500 more (like me) or maybe someone will pay $1000+ more, but the person you are talking to would get the comission for selling that car right then, and can't guarantee the next person who looks at it is gonna come to them - the sale might go to someone else.

i definitely won't go through a long shpill like that again, cause now that i do have my own car i can shop around more and not have to worry about someone else driving me.

ahaxton

18-08-2007 20:13:47

[quote97d37b4def="JKirk"]No car flame wars, they are almost as bad as game system wars.[/quote97d37b4def]

Again there is no car war going on here. Just facts, my auto insurance on my 07 bimmer costs less than it would on a 07 civic. I received quotes, double checked, and they went through with me how it was calculated.