NO MARKET FOR USED CARS

Vanity | 10 January 2003

[MeneMeneTekelUpharsin]

I've noticed that a lot of used vehicles are for sale everywhere. A LOT of nicer later-model vehicles are for sale and they're not moving very fast. SUVs sitting there week after week are NOT selling. Cars are NOT selling. One used car lot near here put out some used Mercedes Benz cars for around $4000 apiece and then moved them off of the lot and now has put them back on the lot (hoping someone would think they sold, I guess). What's the situation elsewhere?

[Mad Dawgg]

"If a vehicle is used for business purposes, it can be 'written off' regardless of whether it is paid in cash, a loan, or leased. You need not be incorporated.

Yes but if memory serves a corporation or SP business can buy using pretax dollars where as an individual can't.

[Wright is right!]

"Note: all the debt is kept on the 2nd mortgage so I can deduct it."

Absolutely. We have ZERO debt except for the motorhome (house is paid for, no credit-card debt). The motorhome qualifies as a SECOND home and the interest is tax-deductible as long as we use it at least 2 weeks a year. For a couple of years after paying off the house, we were in the Standard Deduction realm, but the motorhome has given us that deduction again, which will allow us to deduct OTHER stuff that didn't add up by itself.

And, being the owner of my own Net-based business, I can go on the road with it and take biz with me. I'll be on the beach in FL for 10 days starting next Thursday in it, and it will be business as usual.

Michael

[Mad Dawgg]

"Sounds like you made a nice move."

Yes, rental properties can bea PITA but it sure is nice to have residual cash flow every month!

[AppyPappy]

Yes but if you are going to have debt, it is better to deduct it.

[Mad Dawgg]

Do I read right that you are in Self Storage Units? (from your Tagline.)

What is your take on them? We are looking at them as another form of cash flow but am clueless on the ins and outs of the business.

[cactusSharp]

wanna bet ? send me freeper mail...I'll locate a handful of em

[TroutStalker]

You got lucky.

Actually, it was what Edmunds.com priced the vehicle at for style, year, condition, features, location, etc. I had a window sticker that I printed out from their website, detailing the info. The buyer, a professional driver, was looking specifically at that model and one other, and after looking at what else was out there jumped right on it.

In other words, I got lucky. LOL.

[woodyinscc]

Yeah! In the F&I 1 point over buy rate on the average contract is 1400 to 1500$ and on a five yr contract no equity in the auto until about 40 mos.

[winodog]

Bump for after the weekend.
My father was shopping for a deal on a "new used" 3/4 ton diesel truck.
He wound up buying a brand new one and got a fantastic deal. He said he shopped for months and could not find anything at a decent price but they made a great offer on the brand new truck.

[Rosencrantz]

From a FReeper who was "lucky" enough to get some hands-on experience in the Automotive Sales World, let me say this:

SHOP ONLINE FOR CARS - **EXCLUSIVELY**

It is THE way to get the BEST DEAL around.

Be sure to do a few things:

• Contact at least 5 dealerships, asking each for a Best Price Quote for the model that you're looking at. Once you've gotten quotes, call the 2nd or 3rd lowest, and bargain from there.
• Do NOT give out any credit info until you've found your deal and are ready to buy. Better yet, get preapproved for a loan and go to the dealership knowing exactly what you can/want to spend.
• Ask for dealer invoice amounts (they're available from edmunds.com). Depending on demand, 2-5% above dealer invoice is standard for US cars. Don't forget, invoice is NOT their cost. It's what they paid for the vehicle, but does not include the dealer buy-back, usually $400-$700 cashback from the manufacturer paid bi-annually to the dealer.
• Dont' be afraid to call a dealership and work directly with the General Manager. If anything, he will pass you off, but he'll pass you off to his best salesman, and that guy will probably throw you a deal, because if you walk, the GM asks where the hell you went and he ends up looking bad.

Some useful sites:

• http://www.edmunds.com
• http://www.invoicedealers.com
• http://www.autobytel.com
• http://www.autoweb.com

Finally, shop at the end of the month. Sales is sales is sales and a salesman is a salesman is a salesman. Every sale boosts the numbers, numbers make the GM happy. You will get better deals at the end of the month than you will at the beginning. Good luck.

- R

[cactusSharp]

and to anyone who buys a used car KNOW THIS...........
there is a vehicle id number called the VIN on the dash on the left side of the windshield........write that number EXACTLY and call that cars dealership ( another words if you are looking at a Mustang,call a Ford delaer with that VIN number......ask TWO questions
1. any maintance records and look close at the miles repairs intervals and
2. check the warranty, many to most near new used have warranty FOR FREE still applicable.............

[Dianna]

I'm surprised how easily people are taken these days, especially at the big-box screamer-ad dealers..

My husband and I got taken on the very first car we purchased. 19% interest. We did the initial financing, then were called back a week later and were told they had to lower the price of the car to get it financed.

What really teed me off was that I was hoping that after 6 months of good payment history we could refinance, but our bank turned us down. They said we couldn't afford it.

[Dasaji]

There is just so much to say on this subject of the used car market having been very soft since October of 2001. I think used car dealers could write books on this subject, as we all have weathered the most turbulent of storms in this industry.

If you run the numbers with financing, much of the time financing a used vehicle for an appropriate fair market price is still a better financial move. You will pay less in finance charges over the course of three years than if you financed a new vehicle at 0.0% and "pay for it" in a seriously significant depreciation cost. The used car has already taken its big depreciation hit and will now go down just a little each year. (In a perfect world :)

I can't tell you how many people have called our dealership asking how much we will give them for a new car they bought within the year at 0.0% (it was a good deal, before they got laid off, right?) and have heart failure when we quote them the fair market wholesale value of their car. I try to explain that it *wasn't* such a good deal, now, was it? (Nicely, of course...their heart is still palpitating from the figure I just quoted.)

The reason the used cars are priced so high on the New car lots is because Joe Salesman gave Mr. & Mrs. Smith too high of a trade-in figure just to make the deal on the new Mini Van. Then, you can't sell it at the auction for what you have in it (cause you "whored" the deal to get Mr. & Mrs. Smith burning gas in the Mini-van and now the Used Car Manager is looking like a schmuck in front of his GM cause he's losing money on the used cars) so you let it sit on your lot for however long it takes until you can break out of it with a retail sale.

If you are buying a used car, please do your homework. Use Edmunds.com or NADA.com to check fair "realistic" retail prices. The same goes for what you are going to get for your trade-in. Kelley Blue Book is fantasy fiction. So is eBay.

And not all used car dealers are Rudy Russo-type operations (Remember the movie Used Cars?). Most are willing to work on price and trade in value in a realistic sense as long as the customer is also realistic :)

[roadcat]

"While I agree that you should "go cash" whenever you can, the huge majority out there couldn't scrape together $10,000 in cash if their lives depended upon it. While personal discipline has something to do with it, often "life's little disasters" can do you in as well."

Sorry to hear about the setbacks you've encountered. That's true, sometimes the setbacks keep you from getting out of hock. In my sister's case, her debt was from buying stuff she absolutely shouldn't be buying. She has mounds of high-interest credit card bills, and she's buying $150 toys for her kids, buying expensive sports equipment and clothes etc. The Buick she bought with the expensive $12,000 interest payments became junk in 4 years because she couldn't afford to maintain it.

Yes, I've been fortunate enough to pay cash for my cars but I baby them, do all my own maintenance, and keep them for many years (average 15 years and 200K miles). Best advice I got in high school autoshop was to learn how to change out all the lubricants and do it religiously on your cars. People are lazy nowadays; and I know for a fact that most dealors skip lube jobs even though you pay them for it. I have caught them time and again on my relatives cars by pre-marking stuff on the cars before servicing. The service managers are adamant about how they do all service they check off the checklist until I point out all the missed stuff and they then apologize profusely.

[Badray]

" Yes but if memory serves a corporation or SP business can buy using pretax dollars where as an individual can't."

It's been a long time (but not long enough) since I looked at the tax code, but I seem to recall that the expense was deducted from the gross income in arriving at your taxable income.

[ewm138]

"If you want a car that will last forever and a day, buy a Volvo.
Do not buy a Volvo unless you want a car that is with you forever, they never die."

I agree with both of you 100%. I am a former Volvo mechanic and have been driving them since I was 17. We almost never did engine work in our shop, I think I saw one thrown rod and one blown head gasket in over three years at one shop. 90% of our work was scheduled services, clutches, brakes, tune-ups, and occasional fuel system problems (Bosch stuff). My mom has owned only two cars since '76, both Volvos, and she drives extensively for her business (antique dealer). The head gasket just blew at 230k on her '89. I finally blew up her hand-me-down '76 in about '93.

[Semaphore Heathcliffe]

outstanding book. I can't imagine reading it and coming away unchanged.

[Badray]

"Yeah! In the F&I 1 point over buy rate on the average contract is 1400 to 1500$. . . "

What the $%#& kind of car are you buying and how much are you financing?

Financing $20,000 at 8% for 60 months = $405.52 or $4331.20 in finance charges. If the dealer buy rate is 7%, the difference is only $9.50 a month or $570.00.

The other thing to remember is that the dealer buy rate is usually a wholesale rate that the average customer cannot obtain directly from the bank. So while the dealer is making money, the customer is not (always) getting ripped. The bank is paying the dealership both for the customer referral and for saving all of the costs of writing the loan for the bank.

If furniture and jewelry stores can have markups of 200 or 300 percent - or more - (where the 50% 'discount' means that the customer is still paying TWICE the dealer cost and giving the dealer more profit than a car dealer ever dreams of making on the deal, why does everyone get their panties in a twist if the dealer makes $500 or even a $1000 on a $20,000 or $25,000 car?

What's wrong with the dealer making a profit?

[AppyPappy]

The greatest scam is roll the upside-down 2 year-old Escort GT into the new Excursion. Turn a $42,000 vehicle into a $48,000 vehicle just to lose the old impulse vehicle. I guess saying "No" is no longer an option.

What's my payment?

[AppyPappy]

The best deal is made face to face. Set your price and go in and get it. Shopping for a "deal" will get you screwed every time.