There are four common scenarios people opt for:
Option 1: Buy new and finance.
Option 2: Lease new.
Option 3: Buy certified pre-owned.
Option 4: Buy pre-owned.
My 2008 Honda CRV has 215k miles, and now that I will be commuting again a few days a week I’m looking to make an upgrade. My options will be an AWD SUV such as a Honda CRV, Toyota RAV4, Mazda CX5 & Nissan Rogue. Among other options.
I’m leaning certified pre-owned - hoping to find something no older than a 2019 with under 35k miles. The argument against new is always the depreciation when the car comes off the lot, I struggle justifying that myself. I do want good warranty options which tend to require certified-pre owned.
I’m curious how other people here handle car purchases.
I am in the business and unless you need a car you are better off waiting until inventory constraints ease.
We also have a lease car. I initially got for tax purposes when I owned my own business. To us, this car is a rental, we really only think about what we want to drive and how much we want the the monthly payment. Dealers takes care of service, etc. We get a new one every two to three years. The Mrs. deals with the dealer, she’s a much better negotiator than I am.
So, two different cars with two different philos.
Except telling the wife you just paid $80,000 for a car.
If you’re keeping the car 10+ years, not that much. But if you’re moving into a new car every few years it costs you a lot. A typical car loses 25% of its value that first year and nearly half overall after 3 years.
Otherwise,
I usually short term lease 2 years and do 10k miles per.
If I love the car after 2 years I buy it and in most cases have equity if I want to flip it in a year or 2.
Buying new allows me to get it pretty much exactly the way I want it within the boundaries of what is available. If I can't get what I want, I won't buy it. And I am a very picky bastard, which is why Ford has lost my business twice and Toyota has never been able to win my business for either their their main brand or Lexus.
Buying a late model used with relatively low mileage (definitely under 50K) gets more vehicle for the money but you are buying somebody else's problems. I've had both big wins and bad results doing this, but I can definitely say that about new cars too, which is the main reason I won't touch GM vehicles any more, and also the reason I am becoming more critical of Ford products.
And for perspective, I was in as auto services business and did a lot of my own work when I was a lot younger.
My last car I bought (2016 Honda Pilot) offered 0% financing - so I took it. I will always take 0% financing if it's offered.
otherwise I probably pay for the car outright.
I just factory ordered a 2021 Ford F-150 and will pay for it.
PJ...here is something that worked for me the last two times I bought a car. It was my wife's car and also my truck. I planned to buy cash for both IF there was no 0% or 1% financing. Unfortunately, they did not have such a deal at that time.
So, do not tell the salesman what your plan is when it comes to how you are going to pay. Negotiate the lowest possible price for the vehicle with him.
Then, you will be sent into the finance department. They make thousands if you finance the vehicle. Tell the finance guy that you planned to buy cash. However, you would be willing to finance the car if...
1. He reduced the price of the vehicle
2. there was no prepayment penalty.
In both instances, I was able to have the finance guy reduce the cost of the vehicle by at least $2k.
For my wife's car he knew I was planning to pay it in full when I drove off the lot. However, he asked to wait 30 days so the lender would not claw back his commission.
He also credited me for the first month's interest. I waited until the first payment was due and just sent a check for the entire balance.
We both won.
As offers come in, I shift the goal posts, beat down the monthly and start making outrageous demands. Cash incentives, unearned fleet/loyalty credits, pickup/dropoff with loaner for all service, extended warranties, free Sirius xm, free “OnStar,” tire repair insurance, upgraded components, tinted windows, floor mats, LoJack, roadside assistance and towing, free car washes, expedited inspections. I’m a real pleasure. This drops a majority of the dealers, but there are several who will still be game.
At this stage you squeeze the last drops of blood from the stone, pick your preffered dealership, and done. I’ve negotiated every car deal for those closest to me for the last 20 years in this manner, never have had stress or a bad deal from my end, and still have good relationships with many of the dealerships because I am open with them that they are in a bidding war, I maintain excellent communication throughout, and I am decisive when given what I ask for. Sometimes one deal doesn’t work, but the next one does.
Have them deliver to the office or house snd pick it back up in 36mos. Never set foot in a dealership. Never have your cash tied up in the worst asset ever. I’m ok with a slight premium vs having to deal with selling a car down the road and if I just have to keep the thing, the buyout generally gets you near to what the cost to buy up front would be if the residual and mf were good.
finance every penny with cheap money deals (1-3% apr)
long warranties are a must on these cars.
look for refundable or pro-rate refundable,
so upon a sale down the road, you can get back a check.
last year was lots of low mile off lease deals due to wfh.
grabbed a 2yr old cpo bmw 17k miles, 1/3 off msrp.
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if I finance or not.
My last car I bought (2016 Honda Pilot) offered 0% financing - so I took it. I will always take 0% financing if it's offered.
otherwise I probably pay for the car outright.
I just factory ordered a 2021 Ford F-150 and will pay for it.
PJ...here is something that worked for me the last two times I bought a car. It was my wife's car and also my truck. I planned to buy cash for both IF there was no 0% or 1% financing. Unfortunately, they did not have such a deal at that time.
So, do not tell the salesman what your plan is when it comes to how you are going to pay. Negotiate the lowest possible price for the vehicle with him.
Then, you will be sent into the finance department. They make thousands if you finance the vehicle. Tell the finance guy that you planned to buy cash. However, you would be willing to finance the car if...
1. He reduced the price of the vehicle
2. there was no prepayment penalty.
In both instances, I was able to have the finance guy reduce the cost of the vehicle by at least $2k.
For my wife's car he knew I was planning to pay it in full when I drove off the lot. However, he asked to wait 30 days so the lender would not claw back his commission.
He also credited me for the first month's interest. I waited until the first payment was due and just sent a check for the entire balance.
We both won.
Good tip and I will do that since on my pre-order all I did was pay a deposit.
And I'm the opposite of Glowrider.
I have owned two cars the past 20 years.
A 2002 Acura TL (which I got in fall of 2001) and a 2012 Acura MDX with I got in March or so of 2012.
I bought both cars - the TL I bought through BJ's car buying program - pre-negotiated price for the most part and the MDX I did a bunch of research.
No idea why someone would want to go back to car shopping every 2 - 3 years unless you're someone who has to some latest feature.
My 2012 Acura MDX seems like it's still a modern car. If I trade it in I'll get around 10k for it (per Carvana estimate).
I can't see how leasing is better financially or the hassle of car shopping is enjoyable to anyone.
but to each his own.
Cars change so much, and the technology today is significantly better than anything in the last three years, let alone the last two decades, and the cars three years from today will be significantly better than the ones we have today, for what we can expect will be similar in price.
if you don't consider it a hassle then even better.
you could probably open a small business doing this on behalf of people as kind of a side job if you wanted to.
My wife just bought her first new car, but it's electric so there were thousands in rebates that reconciled it. We ended up paying about 38k for a fully decked out 2019 Leaf SL-whatever with the extended battery in the fall of 2019.
if you don't consider it a hassle then even better.
you could probably open a small business doing this on behalf of people as kind of a side job if you wanted to.
I’m an attorney, but this could be a great new practice area!
if you don't consider it a hassle then even better.
you could probably open a small business doing this on behalf of people as kind of a side job if you wanted to.
Not that this would make you change your philosophy but there are terrific car lease brokers around. You dont have to do anything. Many dont charge me a fee. Name a car, model and price. They try to get that for you or as close as possible. Mine delivers the car as well. Zero headache.
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you, I hate car shopping.
if you don't consider it a hassle then even better.
you could probably open a small business doing this on behalf of people as kind of a side job if you wanted to.
Not that this would make you change your philosophy but there are terrific car lease brokers around. You dont have to do anything. Many dont charge me a fee. Name a car, model and price. They try to get that for you or as close as possible. Mine delivers the car as well. Zero headache.
If they don’t charge you a fee, how do they make money?
If they don’t charge you a fee, how do they make money?
They charge the dealer a fee.
So in the end, they charge you a fee.
If you drive a lot finance for sure. Whether that’s new or preowned. You don’t want to be mileage broke two years into a three year lease.
I do think car companies are really starting to gear their efforts more and more toward leasing for a variety of reasons. Many want the latest tech as noted above, people want lower payments, and the cost to replace a lot of these safety features and infotainment options is astronomical. I think a lot of people financing cars in today’s day and age are going to be in for a big shock when pixels start burning out on the dash or center screens. Car companies are also using technology in repair shops that your local repair store can’t afford. Forcing you into high cost dealer based servicing. You don’t have to worry about huge service costs when leasing as you typically have the car for two or three years.
To give you an example, someone clipped the mirror of my 2020 Mercedes-Benz GLC. The mirror housing was slightly cracked underneath and the blind spot assist wasn’t working. That mirror cost $1,300 to replace.
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If they don’t charge you a fee, how do they make money?
They charge the dealer a fee.
So in the end, they charge you a fee.
This, don’t worry, you’re paying for the service lol.
100% agree with this but for a different reason. And that is whether you buy hew or used, the second you drive off the lot you’re out a Couple grand. What would happen if you brought in that two year old low mileage car back to the dealership a month after you bought it? Do you think they’d offer you close to what you paid for it a month earlier? Think you’re getting your taxes, fees etc back? New or used, you are out a coup,e of grand the second you drive off the lot
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if I finance or not.
My last car I bought (2016 Honda Pilot) offered 0% financing - so I took it. I will always take 0% financing if it's offered.
otherwise I probably pay for the car outright.
I just factory ordered a 2021 Ford F-150 and will pay for it.
PJ...here is something that worked for me the last two times I bought a car. It was my wife's car and also my truck. I planned to buy cash for both IF there was no 0% or 1% financing. Unfortunately, they did not have such a deal at that time.
So, do not tell the salesman what your plan is when it comes to how you are going to pay. Negotiate the lowest possible price for the vehicle with him.
Then, you will be sent into the finance department. They make thousands if you finance the vehicle. Tell the finance guy that you planned to buy cash. However, you would be willing to finance the car if...
1. He reduced the price of the vehicle
2. there was no prepayment penalty.
In both instances, I was able to have the finance guy reduce the cost of the vehicle by at least $2k.
For my wife's car he knew I was planning to pay it in full when I drove off the lot. However, he asked to wait 30 days so the lender would not claw back his commission.
He also credited me for the first month's interest. I waited until the first payment was due and just sent a check for the entire balance.
We both won.
Classic. I do something similar on trying to get a better deal once things are turned over to Finance Dept. Usually getting a few extras or better warranty or lower price, but haven’t mastered it like you with the collusion...that’s great!
Classic. I do something similar on trying to get a better deal once things are turned over to Finance Dept. Usually getting a few extras or better warranty or lower price, but haven’t mastered it like you with the collusion...that’s great!
I just come right out and ask people how I can help them to personally make more money. I ask for specifics. When they tell me, I try to figure out a way to make it work for both of us. It is so much easier playing poker when both people show their hand and both can win at the same time.
I don’t want to own a vehicle that leaves me or my family on the side of the road. Car breaks down in the morning it’s gone in the afternoon. My brother always jokes with me about how good it is that cars aren’t wives.
Cars are my passion and I can afford them so I buy them. It’s worked well for me.
You should buy a lottery ticket if you've had good luck with them in the past. People beat the shit out of those cars. At least you know they were well mantained.
I paid cash because we are both retired and am hoping this is my last car.
I try to keep it at least 2 years old and under 25,000 miles ...
Then I look to negotiate a price.
What is it they say about the depreciation of a car once you drive it off the lot? How much does it go down?
I don’t know why anyone would choose paying cash over 0% financing, that’s about as bad a business decision as you can make.
But for electric cars and maybe all cars, because you are basically buying a computer these days, you might consider leasing. This is especially true of hybrids and electric cars. I have a hybrid and am wondering about the trade value since it has an expensive battery and a computer that the dealer told us was 10k right there.
Cars and TVs have so much tech in them, they are becoming junkers more quickly.
I picked up a German suv last year and that thing has saved my ass from a major accident with its collision avoidance braking system (traveling in the left lane north of the city and a woman came out of one of the center island gas stations which merge into the left lane. She thought she could make it.
The car concluded in its calculations she couldn’t, so it immediately sounds a warning alarm, shuts the windows and roof, turns off the music, and applies the brakes immediately before the driver can react. Accident avoided. If I had been driving an older suv, maybe there would’ve been a different outcome.
I’m less concerned with the tech in the car as long as Apple play is available (next car has to have wireless CarPlay), and more concerned with the safety features present in the drivers assistance packages, like the front and rear collision avoidance, or parallel self parking in the city gets me into spots I couldn’t dream of parking in myself. While semi-emasculating, that feature has paid for itself and saves me an awful lot of money avoiding garages.
If I had an ev, I’d be consistently looking for upgrades in battery and technology. There’s always something techie in new cars these days, and with OTA firmware updates that add features and debug cars, that’s the sort of thing you don’t want to be late on.
I don’t know why anyone would choose paying cash over 0% financing, that’s about as bad a business decision as you can make.
Agreed, even if you dump your cash into a basic savings account you are getting 1-2% back.
I tend to agree with this also. If you plan on keeping the car throughout the loan term (if any), what does initial depreciation matter. My thing is how do I know what's been done with the vehicle and how hard was it driven previously. Sure the CPO inspection will look over everything they physically can see, but the dealer inspection isn't going to be see if someone beat the shit out of their lease and induce premature wear on internal parts for the first 2-3 years of operation.
My philosophy going into a dealer is to negotiate the actual price of the vehicle and trade-in (if any). Don't fall for smoke and mirrors where the sales person will talk about how much the payment will be, blah blah blah. If they leave me sitting for more than 30 minutes to do a "credit check" I'm walking out.
All new vehicle prices can be discounted 10-20% without much hassle via rebates and one's haggle skills.
Don't get emotionally attached to the vehicle, brand or dealer, if they aren't willing to work with you, just go to another dealer or brand, or start lobbying via internet to get a feel for the deals and discounts. Play dealers with internet quotes against each other and look for advertisements in local papers, junk mail, etc...to use as leverage for historical sales.
Good Luck and Happy Shopping!
In my situation when I was younger and started to make some good money a friend gave me some excellent advice. I was planning on financing to own at the time.
"Buy something you really like, even if you stretch the budget, because by the time you make the 3rd payment the excitement of a new car will start to wear off and you'll have 33 more payments to make".
He knew me well and for me personally it was good advice and 40 years later even though I no longer finance cars I still go by it.
I was in the used car market recently and I see a lot of 2020 and 2021 cars on Carvana (and elsewhere) with 500 miles or 1000 miles - generally under 2500 miles that for whatever reason are being re-sold and they're pretty close to sticker. And they are selling at those prices.
maybe it's a supply and demand thing and as noted in many threads lately used car prices are skyrocketing, but like many things our fathers used to say (like don't ever pay asking price for a house or never buy the warranty), some "rules of thumb" change over time - and this may be one of them.
I was in the used car market recently and I see a lot of 2020 and 2021 cars on Carvana (and elsewhere) with 500 miles or 1000 miles - generally under 2500 miles that for whatever reason are being re-sold and they're pretty close to sticker. And they are selling at those prices.
maybe it's a supply and demand thing and as noted in many threads lately used car prices are skyrocketing, but like many things our fathers used to say (like don't ever pay asking price for a house or never buy the warranty), some "rules of thumb" change over time - and this may be one of them.
I don’t think you can draw any conclusions from the current car market. Insane stuff going on with dealers adding thousands to the sticker price for a “market adjustment”.
Honda has done all my maintenance. I am thinking about replacing it while the value is high. Another CRV, Forester or Mazda are on my list. The RAV4 was on my list, until I rode in my son's. It has the most awkward entrance/exit, that I would be at the chiropractor's after a week of driving it.
I always buy new and finance through the dealer. I might consider cash this time, if I get a decent trade-in.
How is it stupid if you are the buyer and the dealership is trying to sell it to you at close to near new prices and the bluebook says it is about $8,000.00 cheaper?
I think I know what you are saying but, - if you are buying it could be a handy negotiating tool.
Owned old BMW for me.
Both have been very reliable cars.
I always do all negotiations via email.
I go to showrooms to test drive and pick up new car only.
I look at local dealer stock and pick a car I like and then send email to several local dealers (within ~50 miles) and describe the car I'm looking for and include all the features in the one I selected and ask for non-negotiable offer. Since dealers can swap stock, they all reply with offer for the exact car I picked, and I always get at least 1 super high and 1 super low offer. If I like the lowest price, I make the deal. Usually they bring it to my door and I never step inside the dealership. May not squeeze out every last dime but I've always gotten great deals without any pain.
I also negotiated the bmw vial email only as well.
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the old axiom "as soon you as drive this car off the lot it depreciates 25%" (or whatever the percent is) is legitimate anymore in 2021.
I was in the used car market recently and I see a lot of 2020 and 2021 cars on Carvana (and elsewhere) with 500 miles or 1000 miles - generally under 2500 miles that for whatever reason are being re-sold and they're pretty close to sticker. And they are selling at those prices.
maybe it's a supply and demand thing and as noted in many threads lately used car prices are skyrocketing, but like many things our fathers used to say (like don't ever pay asking price for a house or never buy the warranty), some "rules of thumb" change over time - and this may be one of them.
I don’t think you can draw any conclusions from the current car market. Insane stuff going on with dealers adding thousands to the sticker price for a “market adjustment”.
The good news is, they're also adding money to trade in values. Or they did for me, anyway.
I had a 2018 Jeep Grand Cherokee High Altitude with a lease reaching its end, and had already leased a new 2021 4Runner to replace it. Mrs. Dunk's new Volvo XC60 hasn't come in yet so we were trying to stretch the Jeep out as long as we could, and took it right down to the wire and a little bit beyond.
When I took it to the closest DCJ store to return it, they told me that they couldn't take it back because they couldn't assume the payoff since I was beyond whatever window allowed for that. I figured I was going to have to drive it down to Hazlet to return it to Buhler, where I originally leased it.
A few minutes later, they came out and asked if I wouldn't mind calling Chrysler Capital with them on the line and get the final payoff number, which they then offered to pay on my behalf, and they covered my lease-end fee, and they gave me $500 on the spot as a convenience payment to me.
I don't know if they would have done all that if it wasn't a higher end GC, with under 30k miles, but they made it obvious that they need inventory to feed the demand that is causing the used car market to spike right now.
Ultimately, I realized that I probably should have just assumed the payoff myself and sold the car privately, but that was a headache I didn't need, especially when I was getting relieved of a $460 lease-end payment and getting $500 on top of that.
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If they don’t charge you a fee, how do they make money?
They charge the dealer a fee.
So in the end, they charge you a fee.
Yes this is 100% true, but if they hit the numbers I wanted, who cares?
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In comment 15285346 superspynyg said:
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If they don’t charge you a fee, how do they make money?
They charge the dealer a fee.
So in the end, they charge you a fee.
Yes this is 100% true, but if they hit the numbers I wanted, who cares?
Not I. I was just answering the question. A quality broker who gets you a good price can be well worth the fee, whichever side pays it.
We used to love slightly used, but had issues with used cars. Knowing your vehicles entire history is very valuable.
Honda has done all my maintenance. I am thinking about replacing it while the value is high. Another CRV, Forester or Mazda are on my list. The RAV4 was on my list, until I rode in my son's. It has the most awkward entrance/exit, that I would be at the chiropractor's after a week of driving it.
I always buy new and finance through the dealer. I might consider cash this time, if I get a decent trade-in.
Replying to my own post. Had a service appt. on Wednesday and my wife tagged along as we only have one car. While we were waiting we wandered into the sales dept and asked look at the new CRV.
Next thing we know, we're buying a new 21 CRV EX. Comped us for the service, gave us what I consider to be a very good trade-in price for a 6 year old car. 0.9 % / 4 yrs. Could have paid cash, but decided to put down an additional $5K and finance at that rate.
The CRV feels familiar and yet is much improved. Turbo is really smooth and zippy. Seats are more comfortable and ride is quieter. Dual climate controls are a marriage saver. Safety features mind boggling. It may be weeks before I understand applelink, Sirius, navigation, etc.