Tag Archives: new cars

Bad Economy, Get A Deal On New Cars

Bad Economy, Good Deal

Bad Economy, Good Deal

A bad economy and slow sales means that it’s a buyers market in the automotive market.  Dealerships are in a hurry to push old inventory to make room for the 2010’s that will start showing up any minute.  Furthermore, the slumping economy means there are less customers even walking through the door, so they will be more willing to make a deal on the spot.

Let’s also look at the threat of dealerships being closed by the manufacturer themselves.  Already in the news there have been reports of General Motors and Chrysler closing dealerships all over the US.  Typically these are smaller volume dealers where their territory is grouped into a larger dealership organization.  When these places are closed down, usually all the receive is a letter in the mail from the manufacturer, and a lot of inventory to unload before they close their doors.

This last example is a sad state of affairs that we are currently faced with.  But it gives buyers a strong opportunity to go out and buy brand new GM and Chrysler vehicles for a fraction of what they would have cost even a few months ago.  A dealership doesn’t want to take an even lower cost from a competing dealer buying inventory, so if they can unload on customers, they will.

If you are in the market for a new car, start making some phone calls.  Also, watch the news, find out what dealerships have been notified they are closing, you might just find a deal and a reason to buy new over used.

Buy Used, Save Thousands

Right now is quite possibly the worst time in the history of car buying to buy a new vehicle. I’m not even kidding.  The car companies could fail, the banks don’t want to loan money, and to be honest with the recession economy being what it is it is hard to say whether you even have your job a year from now. So, if you’re thinking about buying a new car, don’t. It is a terrible idea.

Of course, buying a new car is almost always a terrible idea.  The only thing you get with the new car is an overpriced warranty, a sleazy salesman, and the new car smell. Oh wait, you also get saddled with thousands of dollars of extra car payments that you shouldn’t have to pay.  Compared to buying a used car, a new car is the scam of the century.

Once you drive a new car off the lot.  Its value drops by thousands of dollars.  In the first two or three years, the value can drop anywhere from 25 to 50%.  Yet, if you have a five-year loan, after two years your vehicle is likely to be worth less than what you owe. Not only that, but you are likely to be stuck with the vehicle because of it.  For that much longer. After 5 years, a used car doesn’t lose its value as fast, so you don’t get hit with the same depreciation penalty that you get with a new vehicle.

One time I actually sat down and ran the numbers, and I quickly realized that the difference between buying a new vehicle, or even a one-year-old vehicle to buying a three or four-year-old vehicle is staggering.  If you were to compare a five-year-old sedan for $7,000 and a new sedan for $15, 000, you’ll find that over the life of the vehicle, say over the five years you own it, you’re likely to pay well over $15,000 more for the newer vehicle.

Actually, if you were to hold onto the vehicles for 10 years, it gets even worse. the amount of interest you pay on a new vehicle is so much higher, that in 10 years, you could buy a used vehicle, drive it for a few years, pay off the loan and get another one, and still end up paying less than the purchase price of the new vehicle. What a deal right? That doesn’t even figure in the extra cost of interest on the new vehicle.

Don’t be a fool, by used and save yourself thousands of dollars.  Also, I’m pretty sure new car smell rots the brain anyways, so you’re not missing out.

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