Yes, it is better to buy a used car than a new one. You save on depreciation, taxes and insurance. Most people don’t realize that while a vehicle is necessary, it is also the worst possible investment, depreciating 20 to 30 percent in value the moment a new car is taken out of the box. dealers lot. Take advantage of someone else by buying a lightly used car (1 to 3 years with 10,000 to 30,000 miles). Let someone else pay for that ridiculous depreciation. In addition to all the recent improvements to cars of all makes and models, it is not uncommon for a car to run 200,000 miles.
It used to be that in the 80’s an import ran 100,000 to 150,000 miles and a domestic like Ford or GM was good up to 80,000 to 100,000 miles and then it was time to scrap it. With recent improvements, it is not uncommon for a car to reach more than 150,000 miles of any make. When you equip this with the fact that most states have a fairly high sales tax, property tax, or a combination thereof that is directly related to the value of the car, a used car with a value lower becomes a more attractive option. Even the insurance is lower for used cars. So with all the savings on buying used versus new cars, should you pay the retail price at your local used car dealer?
Absolutely not. Having experience as one of the best car salesmen in the entire country, I can definitely explain how a used car dealer makes money and exactly how much they will benefit from a sale. The basic rule of thumb is that for every $ 10,000 in price there is at least $ 2,000 in margin or profit. So at $ 20,000 because the sale price includes about $ 4,000 in markup (profit) from the dealer. On top of that, there is a dealer processing fee that almost all dealerships charge (an average of $ 300 to $ 600 per car). The so-called dealer processing fee is simply a gravy or profit for the dealer. The processing fee emerged as a way to generate non-commissionable profits (profits of which the merchant did not pay a percentage to the seller). Basically the reseller processing fee has nothing to do with any processing and is a scam (don’t pay for it and if they refuse to remove it, go elsewhere. If enough people do this they will remove the fake fee).
Now, there may be costs that the dealer has on details, maintenance, etc. of the car. These are usually minimal and always ask for documentation for everything they say. For example, if the dealer says we put a completely new brake system on that car and it costs more than $ 2,000. That may be true, but it probably isn’t. Actual service records will probably show $ 300 or so. If they don’t show you the actual service records, go out and find another dealer. This means that they are hiding something.
So now you know how they brand their cars, but first you need to understand that there are some very honest and reputable dealers, but there are 10 times as many who are extremely dishonest. Here are some definite rules that you must follow.
1) Drive the vehicle. Don’t take their word for it. Handle it. Take it for the day and drive on highway, winding roads, and stop-and-go traffic. Use it as you normally would. This will reveal issues or items that need to be examined or fixed.
2) Always, after you’ve decided on a car that meets your needs, take it to an independent mechanic. This is not as important on 1-3 year old low mileage cars, but it is vital on older cars with higher mileage. The independent mechanic or shop will offer you a full breakdown for around $ 60 that will reveal everything about the car and whether it is a good deal or a nightmare waiting to happen.
3) Run a Carfax report. This can reveal previous accidents or flood damage, but is not beyond the independent mechanic. Sometimes a mechanic will find things that Carfax did not report, such as a flood or a car accident. Not all flood accidents and damage are reported correctly.
4) Always negotiate the purchase price. Never allow yourself to be changed to payments until you have agreed on a price. I’m amazed at how many people easily switch to payments where they have no idea what the purchase price, profit, or markup is. Most don’t even know the term or rate before committing. They just want you to commit and then the finance manager befriends you and takes even more money out of your pocket. At most dealerships, the initial profit averages around $ 1,500 on a used car and the finance office or back-end profit averages around $ 1,700. This money comes from one source, the consumer.
5) Negotiate. Do your homework. Be prepared to walk around and look elsewhere if the dealer is unreasonable. Look for separate financing. What most people don’t realize is that a home equity loan could save you a lot on fees and interest. A car dealership, as a general rule of thumb, adds 2-3% to the actual rate of profit and they call it their convenience to provide a service (as I saw on a CarMax sign and I don’t think Carmax will save you money with their price of I don’t haggle. A simple comparison will prove it.) In California they have created laws and legislation to stop or limit this practice. Always ask your finance manager for the pass rate and proof. Each of the banks will fax an approval. If the speed is too high, walk.
6) An even better alternative is to buy your car online. I recently bought a GMC consignment through eBay and got a better price than I could get at an exclusive dealer auction. I paid about $ 3,500 less than the actual dealer cost would be on this vehicle. I also did not pay any false processing fees. When I stopped by some local dealerships and showed them the car and told them what I paid for, they said it was impossible until I showed them the bill of sale, title and documentation. Now several of these dealers are buying their own cars online and through Ebay. It is important to note that you need to research online and dig into the car, seller feedback and transaction history, email any questions you have, and analyze the pricing and listing histories for the make, year and the model of the car or truck. You are interested in. Be careful with the processing fees and such (they are all clearly listed). The great thing about buying online is that you control the price, there is no profit for the dealer and you save a lot.
How much can you save online? I saved over $ 9,000 than local dealers were asking for the same shipment and mine had even more options. The best deal on a used car is to bypass the dealer entirely and buy it online. You can find your own financing regardless of whether you have good or bad credit and save a ton. If you must go to a dealership, never fall in love with any car. The dealer will use this to his advantage. Follow the steps above and give them a fair offer. You want to end up at $ 500 above your cost and that’s reasonable. I have seen gains of over $ 13,500 or more on a $ 30,000 value vehicle. That is disgusting. Average dealer profit is $ 2,500-3,000 per used car. Don’t get carried away by a used car dealer. Do your homework and shop around. Not only will you save on just buying a used car, but you will also save for years on things like term, rate, interest, taxes, etc. The average American works too hard to fork out a month or two to make a profit from the dealer.
