Depreciation question.

QFT ... I've seen it happen to Airmen and Soldiers here and at many other bases/posts stateside and overseas.

 

I see it all the time out here, but it's not military, it's oilfield workers. The guys are 18-25 making 10x what they made back in Podunk. They come out here with their big money and swinging dick and spend upwards of $60k on o big 3 Brodozer so they can drive up and down main street( all 3 miles of it) so they can impress the single girls ( all 3 of them) They get hosed on price and interest. They come into my office for insurance so I see the contracts. It's amazing what dealers do to guppies. Buyer beware.

 

Even worse is the title loan or cash advance places next to every dealer! Had one soldier take out a 4000 dollar loan with a 100% interest rate. And its a complex interest loan so he's stuck paying it for a long long time. He's actually filling for bankruptcy at the age of 20.

 

What does this mean? When you trade a vehicle in, the dealer is buying it from you. The trade-in allowance is the price they are paying for it.

 

Cash advance and payday loans often charge a $50 fee on a two-week, $250 loan. That translates to a 480 percent annual percentage rate. I know of a woman who had paid $1,200 on a $250 loan...and she still owes the money. I get the whole "buyer beware" thing but that's just stealing from a person.

 

No, it's the price they are 'allowing' you for it.

It includes what they are 'really' paying + other discounts off the price of the vehicle.

Lets say you have a $3k vehicle (wholesale or even trade in value). They can tell you they are taking $2k of MRSP when they have room to take off $4k.

So they tell you you are getting $4k for your vehicle (3 + 1) and they still have another 1 to dicker with you on final price.

But I can assure you your vehicle is booked in to them at the $3k number.

How to prove it (other than finding an honest sales manager to tell you how the game is played?)

Go to a dealer and make your best cash deal. THEN tell them you want trade a vehicle. You'll get the 'real' number then.

 

That may be true in some places but here they have to show the trade-in allowance as separate amount (with discounts, rebates, etc., listed separately) because the trade-in value comes off of the taxable selling price while rebates do not. (Discounts do.) If your go to the BMV without paperwork that breaks it all down they'll send you right back to the dealer.

But what dealers everywhere do is focus on the difference and the payment to draw attention away from the real figures.

 

Bill's somewhat correct. There is really more money in it for dealers. I worked In Clearwater for a dealership in the F&I dept after I sold my insurance agency. They make their money on new cars on the back end, ie, end of model year (MY). It's based on volume not each unit. If they sell x, they get $x contingency. If they sell xx they get $xx contigency. So invoice price is really meaningless when is pertains to what the dealer actually paid for the unit. There are so many variables in a car deal that no one really gets a great deal, only a good or bad one. It's like Vegas, the house always wins even when it appears they are losing.

 

Sure they do, there are dealer holdbacks, so the invoice that's published isn't really what they pay for the car. That's one thing I was referring to when I said in my original comment that the best way to improve your financial situation is not to trade cars because every time you do so you give a dealer thousands of dollars over and above the price of the vehicle.

But here the trade-in allowance is, in fact, the trade-in allowance. That does not make it a good deal but it's clearly spelled out as what it is.

 

I do understand what you are saying, and why you believe that is what they are paying you for your trade. But just because the paper work says that, and because the state is allowing a sales tax break doesn't make it so.

Again, prove it to yourself.

Go make your best cash deal. Negotiate hard. Come back the next day and tell them you decided you wanted to trade in after all. You've now left them no wiggle room to pump up your trade value, you'll get what they are 'really' willing to pay.

And it will be at least equal, but more likely less than, what you can sell it for yourself, including an allowance for the tax situation.

I have bought at least 4 great cars from individuals who negotiated in this manner, and were so ticked at the 'real' dealer offer they refused to trade. They would rather sell and break even with a stranger than allow the dealer to pillage them.

Same is true in the used lot market. Cars are priced, say $1.5k, over what a fair book price would be. This allows them to 'give' you another $1-1.5k for your trade, making you a happy camper.

I've owned over 50 cars (only bought 3 new), have family members with dealership sales manager time, dealer fleet sales and rental time and private used car lot sales and rental time. Personal time working with the tax collector. Personal friends with a former dealer finance guy.

I'm not trying to be argumentative. Just to put a bit of truth out there for others reading, who like the OP, have less experience in such matters. If you wish to continue to think your perception is correct, that's fine.

Last caveat. Yes, individual situations can vary from dealer to dealer and private lot to private lot. It depends on the ethics of the staff/owner and how they focus on their income, be it good sales and service that earn repeat business, or a 'bull in the china shop anything for the sale because there are so many suckers I don't need you to come back'.

The biggest strengths any buyer has are knowing what you want in advance, knowing what a fair price is in advance (not hard in an internet world), the ability to pay cash (or have your own financing already worked out) and the ability to walk away when the deal isn't coming together.

Over and out!

 

I don't want to be an ass, but it doesn't take a whole lot of research to figure out what interest means on a loan and how payments work out, etc. If you're spending 10, 20, 30K+ on a vehicle, you should REALLY know everything inside out and upside down - or you're just an idiot. A few hours of research on Google is not a big tradeoff to knowing exactly what you're walking into when you sign on that line.

Now, to the OP, the fact that they screwed you with a salvage title is low. How long has it been? I would take them to court over it. That's a straight scam. Did you ever ask if it was salvage? Did they ever say "it's a clean title"?

That said, 2% is a great interest rate but at the same time, when you pay more up front (be it a bigger payment or an extra payment every so often), it compounds and you save more in the long run. This is because in the beginning, a large portion of a payment is interest, and a small portion is principle (principle is what goes toward paying down your loan balance). As you pay, more goes towards principle and less towards interest (since as you pay, your balance is going down and thus the interest, which is a function of that your balance, becomes less and thus a smaller amount must go to interest in each payment, so more goes to principle). By your last payment, it's all principle, and no interest.

But if you pay more in one payment in the beginning, then you pay more toward principle (since your payment towards interest is always a fixed amount that's calculated off your balance), then your balance just got reduced more than it normally would, and then your next payment will have a smaller interest payment than it would have, so then that payment has more going toward principle and less toward interest, and then it keeps snowballing.

And while you save money by paying a bit extra, you'll also pay off your loan earlier. So do yourself a favor and just kick an extra $50 or $100 to your payment each month. Maybe eat at home a couple times when you normally would eat out. That will help you more than you think, and also let you get ahead faster.

 

All you're doing is arguing semantics and confusing a simple issue. The fact that a person can usually sell a vehicle for more on his or her own is common sense. The fact that dealers have to give you less than you could get yourself is also common sense. They are in business to make money. But there is no mystery as to what they are buying your car for. It's right on the sales contract in front of God and everybody. If you like the figure, you can sign on the dotted line. If not you can sell it yourself.

 

When I had my paid off tacoma i was looking at a brand new factory lifted blah blah 50 grand tacoma. They offered me 9,000 for my 03 2wd with 160k. Next week I was looking at a 10,000 dollar jeep all of a sudden they would only give me 2 grand for my truck. Ended up selling it on my own for 8500.