| Yes, it is better to buy a used car than a new car. | | | | accident and or flood damage, but it does not over rule |
| You save on depreciation, taxes and insurance. Most | | | | the independent mechanic. Sometimes a mechanic will |
| people do not realize that, although a vehicle is | | | | find things a Carfax did not report like a flood or car |
| necessary, it is also the worst investment possible as it | | | | accident. Not all accidents and flood damage are |
| depreciates 20 to 30 percent in value the moment a | | | | correctly reported. |
| new car is driven off the dealers lot. Take advantage | | | | 4) Always negotiate the purchase price. Never let |
| of someone else by buying a slightly used car (1-3 | | | | them switch you to payments until you have agreed to |
| years old with 10,000 to 30,000 miles). Let someone | | | | a price. It amazes me how many people are easily |
| else pay that ridiculous depreciation. Besides with all the | | | | switched to payments where they have no idea what |
| recent improvements in cars of all makes and models | | | | the purchase price and profit or markup are. Most do |
| it is not uncommon for a car to run to 200,000 miles. | | | | not even know the term or rate before they commit. |
| It used to be that back in the 80s a import would run | | | | They just want you to commit and then the finance |
| 100,000 to 150,000 miles and a domestic like Ford or | | | | manager befriends you and takes even more money |
| GM was good until 80,000 to 100,000 miles and then it | | | | out of your pocket. At most dealerships the front end |
| was time to junk it. With recent improvements it is not | | | | profit averages around $1500 on a used car and the |
| uncommon for a car to reach 150,000 miles plus of | | | | back end or finance office profit averages around |
| any make. When you equip this with the fact that | | | | $1700. This money comes from one source the |
| most states have a rather high sales tax, property tax | | | | consumer. |
| or combination thereof that is directly related to the | | | | 5) Negotiate. Do your homework. Be ready to walk |
| value of the car, a used car with a lower value | | | | and look elsewhere if the dealer will not be reasonable. |
| becomes a more attractive option. Even insurance is | | | | Look into separate financing. What most people do not |
| lower on used cars. So with all the savings in buying | | | | realize is that a home equity loan could save you huge |
| used versus new, should you pay the asking price at | | | | on rate and interest. A car dealer as a rule adds 2 to |
| your local used car dealer? | | | | 3% to the actual rate for profit and they call it their |
| Absolutely not. Having experience as one of the top | | | | convenience for providing a service (as I saw on a |
| car salesman in the entire country, I can definitely | | | | CarMax sign and do not think Carmax will save you |
| explain how a used car dealership makes money and | | | | money with their no haggle price. A simple comparison |
| exactly how much they will profit off of a sale. The | | | | will prove this). In California they have created laws |
| basic rule of thumb is that for every $10,000 in price | | | | and legislation to curb this practice or limit it. Always |
| there is at least $2,000 in markup or profit. So, in a | | | | ask the finance manager for the approval rate and |
| $20,000 car the asking price includes around $4,000 in | | | | proof. The banks will each fax over an approval. If the |
| dealer markup (profit). On top of that there is a dealer | | | | rate is too high then walk. |
| processing fee that almost every dealer charges | | | | 6) An even better alternative is to buy your car online. I |
| (average of $300 to $600 per car). The so called | | | | recently bought a GMC envoy through Ebay and got a |
| dealer processing fee is just pure gravy or profit to the | | | | better price than I could have at a dealer only auction. I |
| dealer. The processing fee came about as a way to | | | | paid about $3500 less than what the dealers actual |
| generate non commissionable profit (profit that the | | | | cost would be on this vehicle. I also did not pay any |
| dealer did not pay a percentage of to the salesman). | | | | bogus processing fee. When I drove by some local |
| Basically, the dealer processing fee has nothing to do | | | | dealers and showed them the car and told them what |
| with any processing and is a scam (do not pay it and if | | | | I paid they said it was impossible until I showed them |
| they refuse to remove it go elsewhere. If enough | | | | the bill of sale, title and paperwork. Now several of |
| people do this they will remove the bogus fee). | | | | these dealers are buying their own cars online and |
| Now, there can be costs that the dealer has in | | | | through Ebay. It is important to note that you must do |
| detailing, servicing, etc to the car. These are usually | | | | your research online and delve deeply into the car, the |
| minimal and always ask for documentation for anything | | | | sellers feedback and transaction history, email |
| they say. For instance, if the dealer says we had a | | | | questions that you have, and look into price and listing |
| whole new brake system put into that car and it cost | | | | histories for the make, year and model of car or truck |
| over $2,000. That may be true, but it probably is not. | | | | you are interested in. Watch out for processing fees |
| The actual service records will probably show $300 or | | | | and such (they are all listed clearly). The best thing |
| so. If they will not show you the actual service records | | | | about buying online is you control the price, no back |
| leave and look for another dealer. This means they | | | | end profit for the dealer, and you save big! |
| are hiding something. | | | | How big can you save online? I saved over $9,000 off |
| So, now you know how they markup their cars, but | | | | of what local dealers were asking for the same envoy |
| first you must understand that there are some very | | | | and mine had even more options. The best deal on a |
| honest and reputable dealers, but there are 10 times | | | | used car is to avoid the dealer completely and buy it |
| that many that are extremely dishonest. Here are | | | | online. You can find your own financing regardless if |
| some definite rules that you must follow. | | | | you have good or bad credit and save a ton. If you |
| 1) Drive the vehicle. Do not take their word for | | | | must go to a dealer, never fall in love with any car. |
| anything. Drive it. Take it for the day and drive it on the | | | | The dealer will use this to their advantage. Use the |
| highway, curvy roads and in stop and go traffic. Use it | | | | steps above and give them a fair offer. You want to |
| like you normally would. This will reveal problems or | | | | end up at $500 over their cost and that is reasonable. I |
| items that need to be looked into or fixed. | | | | have seen profits of upwards of $13,500 or more on |
| 2) Always, after you have settled on a car that meets | | | | one vehicle worth $30,000. That is sickening. The |
| your needs, take it to an independent mechanic. This is | | | | average dealer profit is $2,500 to 3,000 per used car. |
| not as important on low mileage 1-3 year old cars, but | | | | Do not get taken by a used car dealer. Do your |
| vitally important on older cars with higher mileage. The | | | | homework and compare. Not only will you save just |
| independent mechanic or shop will give you a | | | | from buying a used car, but you will save for years on |
| complete run down for about $60 that will reveal | | | | things like term, rate, interest, taxes, etc. The average |
| everything about the car and whether or not it is a | | | | American works too hard to fork over one or two |
| good deal or a nightmare waiting to happen. | | | | months earning to the dealer for profit. |
| 3) Run a Carfax report. This can reveal previous | | | | |