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Buying a car in todays economy

 
 
Reply Mon 20 Oct, 2008 10:18 am
I've been toying with the idea of buying a new car for some time. I'm not a big car guy, but I do enjoy keeping up somewhat with the new models, features, etc. I've been driving me base model '99 Cavalier for 6 or 7 years now, and damnit I want a cool car!

I'm curious what peoples' thoughts are about buying a car now (and by now, I mean in the next 6 months). I've heard things like it will be very difficult to get a loan for a car, and that it's not a good time to buy. On the flip side, I've heard that because nobody is buying, dealers are desperate, so you can haggle a great price because they really need the sale. I've even read that some place are still doing the whole "0% financing for 18months" type of incentives.

So assuming I can afford a new(er) car, is now a good time to buy? If it matters, I would most likely be buying a used car, or a new car, but last years model. I see no sense in buying brand spanking new. I would most likely go through a dealership, though. I hear they can usually get you better financing terms, because the finance company is tied to the car manufacture, so they have a vested interest in you using them for a loan as opposed to a bank.

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Type: Discussion • Score: 9 • Views: 5,128 • Replies: 43
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gungasnake
 
  1  
Reply Mon 20 Oct, 2008 10:23 am
@Nick Ashley,
Anything you buy right now could be outmoded altogether in four years. Particularly with the prices they're asking for new cars, I'd not consider it.

Used Japanese cars... particularly the Honda Accords often get sold after about 120,000 miles simply because owners have not absorbed the information that they can live for 300,000 or more. But you want them at least eight or ten years old. The prices of recent used ones are held up artificially to such an extent that you'd be better off buying new ones.
DrewDad
 
  1  
Reply Mon 20 Oct, 2008 10:32 am
Check with your bank/credit union prior to going shopping.

My credit union offers car loans at low rates; they can show that taking the cash back incentive and then financing at the credit union is a better deal than 0% financing.
0 Replies
 
parados
 
  1  
Reply Mon 20 Oct, 2008 10:34 am
@Nick Ashley,
Check the dealer incentives. Many of them are $2000 or more. At the moment you will find you pay about the same or only a $1000 more for new car vs a year old car with 15,000 miles on it.

0% interest is often done by rescinding the cash incentive. Some car manufacturers are offering it. Compare the total cost with the incentive and a higher rate vs no incentive and the 0%. You could end up paying more with 0% interest than the cash incentive and 6% on the loan.

Now is the time to pick up new 2008 vehicles at a reduced prices because the 2009's are out. In a couple of months or less all those 2008's will be gone.


Never pay MSRP. Do your research. Offer dealer invoice less any incentives out there.
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 10:38 am
@gungasnake,
gungasnake wrote:
Anything you buy right now could be outmoded altogether in four years.

Well, that's always the case. But considering I didn't like the look of my car when I got it, and yet still kept it for 7 years, makes me believe if I get a car that I love now, I can hang onto it for awhile.

Quote:
Particularly with the prices they're asking for new cars, I'd not consider it.

Would you not consider it due to the current economy, or would you simply never advise against buying a car made within the last 10 years? I'm really just wondering if waiting say 2 years would be beneficial.

Quote:
Used Japanese cars... particularly the Honda Accords often get sold after about 120,000 miles simply because owners have not absorbed the information that they can live for 300,000 or more. But you want them at least eight or ten years old.

no, you want them 8 or 10 years old Smile

I know that it is usually cheaper to repair an old car then buy a new one. But repairing a car adds stress and hassle to ones life. Especially when you break down in the middle of nowhere. This hasn't yet happened in my cavalier, but repairs do seem to be coming more often then they used to.

You also have to factor in how much enjoyment you get out of the car. This differs greatly from person to person, but is what makes it worth buying a "cool" car for me.
0 Replies
 
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 10:44 am
Thanks for the tip everyone. I'm surprised I'm getting recommended to buy new. I haven't done nearly enough research yet, but I've always thought the general rule of thumb is that buying new was for suckers, and even buying a used car with 3000 miles was significantly cheaper.

I'll have to get serious about what model I want, then really start researching. Investing the cash incentive makes sense to me. I'll also have to figure out what to do with my current car. I am guessing that selling it privately will net me more money then trading it in. We'll see though.

My brother is a car salesman for Dodge. While I know I don't want to buy a Dodge vehicle, he will probably be able to guide me through the process, so I know what to expect. Maybe I can bring him along to haggle for me, too. I've never been good at that.
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 10:49 am
@Nick Ashley,
Make sure you have credit lined up before you visit any car dealer. The low interest rates offered by car dealers means they have to make up the loss by charging you more for the car.

Go to car dealerships outside of main metro areas where the rent and cost of living is much lower; you'll get a much better deal.

As you probably already know, the sticker price doesn't mean much, because of the markups embedded in that price. The other is that dealers gets factory discounts that do not appear even on their "invoice."

Depending on the make and model, try for the biggest discount you think you can get away with - like 25% off the sticker price. Tell them you'll pay cash.

If they let you walk out of the salesroom, you know that's too low. Play that game with several dealers on the same car; that'll give you a feel for what the bottom price is. Negotiate tough; they want to sell, you have other dealers for competition.

Most car salesmen will say they need to get the approval of their manager; a tactic that doesn't mean anything - just a delay tactic. You will go back and forth with the price, because they want to make it look like they're negotiating in good faith, but they are not. They already know what the lowest price is for that make and model.

Ask them; what's your best price. Tell them you'll go see another dealer if they won't offer you their best price. Then offer them several hundred less.

BTW, there are magazines that lists factory price and retail price by make and model. That might be a good place to start.

Good luck.
0 Replies
 
DrewDad
 
  1  
Reply Mon 20 Oct, 2008 11:00 am
@Nick Ashley,
Nick Ashley wrote:
I've always thought the general rule of thumb is that buying new was for suckers, and even buying a used car with 3000 miles was significantly cheaper.

It depends on what is important to you.

All but one of my cars have been used. I hated buying cars several years old, because it seemed like there was always something wrong with them.

Our current two cars, one we bought new and one we bought one year old. Both have been great.

I'm in favor of buying new, provided you know what you're doing and can get an honest price. The car we bought new, we went Internet shopping. We determined exactly what features we wanted, then E-mailed the dealerships within about 200 miles asking for the best price they could give.
DrewDad
 
  1  
Reply Mon 20 Oct, 2008 11:01 am
@DrewDad,
Also, beware the trade-in.

One option is to buy your car and then sell your old car as a private individual.

If you want to go trade-in, then negotiate the new car price, then negotiate the trade-in as a separate deal.
0 Replies
 
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 11:22 am
I really appreciate all the help in how to go about buying the car. Since the advice I am getting is related to getting the best deal, can I assume that the current economy really doesn't make a difference, and I should go ahead and research/buy now as opposed to waiting a couple years?
chai2
 
  1  
Reply Mon 20 Oct, 2008 11:25 am
@Nick Ashley,
Huh, I always thought the opposite...buying used was for suckers.

I don't care how much the seller/dealer works on the car before putting it out there to sell. You'll never know what kind of driver the prior owner was, how well the car was maintained, or if the car was just a lemon all along.

I like to buy new, and take good care of my vehicle and keep it a long time.
0 Replies
 
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 11:27 am
@Nick Ashley,
If you see a model you like, by all means. Cars age, so waiting doesn't make sense. New cars may have a little design difference and probably more bells and whistles, but waiting only delays it, because new cars will always have more. If you plan to keep your car for the long term, I say "go for it." I traded in my 9 year old Lexus for an Acura TL, and love it.
0 Replies
 
roger
 
  1  
Reply Mon 20 Oct, 2008 11:39 am
@Nick Ashley,
I'm agreeing with parados, right down the line. For what it's worth, Toyota says they have plenty of money for financing. Check Kelly Blue book if you go for an end of model year. They used to list all the special offers available, so you can be sure you're getting what you are entitled. I did this with my current car 5 years ago. I'm happy with it, and I know exactly what has been done in the way of preventitive maintenance. I had the option of zero % financing, but magically, at least one of the incenives would have disappeared if I had gone that route.

If you go used, Experian used to list accidents and other vital statistics - for a fee. I think the fee was reasonable for what they were selling, though there's no guarantee every accident was reported.




0 Replies
 
DrewDad
 
  1  
Reply Mon 20 Oct, 2008 02:06 pm
@Nick Ashley,
IMO the overall economy only affects you in a couple of ways.

1) Job security. Don't buy a car if you're likely to get laid off.
2) Car prices. The current credit crunch means that there are fewer eligible buyers, which brings the price down.

So, it's a good time to buy, in my opinion.
TTH
 
  1  
Reply Mon 20 Oct, 2008 04:31 pm
I always buy new and research first. I don't ask the dealer what their best price is, I tell them what I am willing to pay for the car. If they won't sell it at my price, I go somewhere else and have always found a dealership that will take my offer.
0 Replies
 
hawkeye10
 
  1  
Reply Mon 20 Oct, 2008 05:32 pm
@DrewDad,
"So, it's a good time to buy, in my opinion."
Bullshit. All of the American car makers have cut their lending in a major way, and rates are much higher than customers are used to. The following documents the situation at GMAC, but it is widely reported that Chrysler and Ford are in the same boat.
Quote:
Oct. 14 (Bloomberg) -- GMAC LLC, the lender once owned by General Motors Corp., may deepen the automaker's 18 percent U.S. sales slide this year by limiting car and truck loans to people with the best credit scores.

GMAC said yesterday it's granting financing only to buyers with scores of at least 700, who represent about 58 percent of U.S. consumers. The Detroit-based company, now controlled by Cerberus Capital Management LP, provided 43 percent of GM's second-quarter auto loans.

The move added to the global credit squeeze that threatens to choke economic growth as companies and consumers find it harder and costlier to borrow. Banks restricted lending to auto dealers in New York, New Jersey and Alabama last week, citing unstable debt markets and shifts in strategy.

``Everybody is concerned about risk, because risk has to be controlled, risk has to be conserved,'' said Michael Robinet, an analyst with CSM Worldwide Inc. based in Northville, Michigan. ``This is a way they can have good risk.''


http://www.bloomberg.com/apps/news?pid=20601213&sid=am.hB81anEHU&refer=home
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 05:50 pm
@hawkeye10,
As a matter of fact, all those auto companies now having huge losses and cash problems are probably good to stay away from. The simple reason is that parts for their cars may be hard to come by if they close their plants and go belly up.
hawkeye10
 
  1  
Reply Mon 20 Oct, 2008 05:56 pm
@cicerone imposter,
As fewer people buy new it is even more important for the parts industry to support the after market consumers, getting parts should become easier and cheaper. There will be many more suppliers going out of business than we have seen till now, but those who want to stick around will compete to sell parts for older cars. Also, I would love to be in the junkyard business right now.
0 Replies
 
CalamityJane
 
  1  
Reply Mon 20 Oct, 2008 06:07 pm
@Nick Ashley,
I only lease my cars, but still need to negotiate good terms and I usually do.
First, do your homework and narrow it down to the choice you want. Then
start researching prices - edmunds.com has good comparables and will let you add/remove certain features to price the car exactly to your specifications. You also can use edmunds.com for your old car to sell.

Once your ready to buy, go for it! If you're buying from a private party, have
the car checked by a professional - but I guess you know that. If you're buying from a dealership, go there at the end of the month when they're more likely to give you a better deal in order to get the sales figures up for the entire month thus increasing their commission.

Other than that - the cheapest car might not be so cheap when it comes
to parts and maintenance, and I think this is especially true for many
Japanese manufacturers. So keep this in mind when selecting a Porsche Wink
hawkeye10
 
  1  
Reply Mon 20 Oct, 2008 06:21 pm
@CalamityJane,
have fun trying to lease the next one
Quote:
But Chrysler Credit recently said it was getting out of the auto leasing business altogether. That doesn't mean you won't be able to lease a Chrysler 300 or Jeep Grand Cherokee, but you'll be doing it through some other financing company. Ford's (F, Fortune 500) credit arm and GMAC, which has a relationship with General Motors (GM, Fortune 500), have said they were tightening rules for leases.

Some independent financing companies say they're getting out of the leasing business. On Wednesday, Wells Fargo (WFC, Fortune 500) said it wouldn't finance auto leases after this month, and Chase Auto Finance said it wouldn't write leases on Chrysler Corp. products.

http://money.cnn.com/2008/07/29/autos/new_leasing_rules/index.htm

Leasing companies took a bath this year, as residual values tended to be far below what was written into the lease. as with so many other financial things, leasing included more risk than the parties believed was the case.
 

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