Reason #1 in the 10 Reasons You aren’t Rich article was “you care what your car looks like”.
This is very true. Cars are usually one of the biggest problems on a persons budget. You go “upside down” in your loan quickly with a car – and it stays that way for a few years. That means if you try to resell your car you may owe more than you can get. You get stuck.
One of the best ways to avoid this is to get a used car. It will have depreciated in value already so you shouldn’t go upside down. However it isn’t the greatest option for those of us who can’t keep an older car going. You do have to trust that the person before you treated the car right (oil changes, regular maintenence, etc). If they didn’t then the car could need some work done earlier than you expected.
So, new or used? That is the question. I always bought used until my last car. My dad is amazing at fixing cars – but now I live 7 hours away from him. When my $500 Mystique finally pooped out on me I was left trying to decide what to do about a car.
I stumbled on to the buying technique by accident and now I hope I can help some of you who are stuck buying a new car.
Here are the steps to getting your car cheap:
1) Go to Edmunds.com and price the vehicle you want
This site will tell you what the invoice price is so that you can see what the dealership is paying. It will also show any incentives that are available – know those because the salesmen will not always tell you. The vehicle I wanted had a sticker price of $16,900 and it said that my wiggle room was $500. I qualified in $1500 in rebates/incentives.
2) Email the dealerships from Edmunds
This was what surprised me. I emailed 5 different dealerships and told them I was planning on buying a car next week and I would go with whoever gave me the best deal. I told them the car I wanted, the incentives I qualified for, and gave them a date I was planning on purchasing the car. Emailing them from edmunds showed them that I knew what I was looking for and exactly how much I could get.
3) Wait for your deals
I was hoping for $14,700 but I was pleasantly surprised. The lowest bid was for $12,700!!! That was $2000 less than what I was willing to pay. It was also lower than the used cars on the lots (as old as three years). My highest bid was for $15,100 (still $1800 less than sticker price)
4) Write down the deals in a notebook and go to the dealership
This part was important – I didn’t realize how that would unnerve them and make me feel more empowered. I opened up my notebook and said I emailed you and you gave me this price can you honor it? On the page was his quote along with the names, quotes, and addresses for the other four people. He asked a few questions – if I wanted to upgrade anything, if I had a trade… I said no – I just needed the car. He said alright and brought it to the lot. During negotiations he said “you can put that notebook away – we can help you here” THREE times! It was obvious that seeing that I had other options made him work harder for the sale – and not in a sneaky way.
5) Buy your car
It turned out to be an okay deal for me and the salesman. I’m sure he figured the lowest amount he could give me and still make a profit. He did not have to work to get the sale – I came in and bought the car. I ended up with a car for far less than I thought I would have to pay.
According to Edmunds my car is now worth $9400 (private party value). I have had the car for 2 1/2 years. That means my car has depreciated $110 a month so far. If I would have paid sticker price for it than it would have depreciated by $250 a month. That is a savings of $140 a month over the past two and a half years! I plan on driving this car until it poops out and hopefully that will be 10+ years.
On to Reason #2: Do You Feel Entitlement?