Comments (0)

By admin, September 24, 2010 5:36 am

Save Thousands of Dollars at Trade-in Time by Considering The Trade-in Value When Buying a New Car

For identical monthly finance payments, some cars will depreciate less than others and at trade-in time save thousands of dollars for the far-sighted owner

Getting residual values
This will take a little homework and shoe leather.
1.Identify several cars having similar features that can be leased for similar monthly payments.
2.Note and write down the residual value of the cars.
3.If youre not married to a brand name (most cars today have similar high quality) then if features are similar, go with the car having the highest residual value

The Internet may not be the best place to try to get this information. Surveys show that 60% of people looking to buy or lease a car do some searching on the Internet. This has made the manufacturers less willing to disclose residual values. In fact, some of the Big Three (GM, Ford, Chrysler) will not print them in a quotation from the dealer.

Residual values risks

• These values are at best educated guesses
  Residual value amounts are made by companies (or the car’s manufacturer) as to what the car will be worth after a certain number of years. It is not a value you can take to the bank. The manufacturer might even inflate the value in order to increase the sale of leased cars, where by increasing the residual value the monthly lease payment is decreased a little bit and may be more completive vis–vis another make of car.
• Check popular publications
  If you sense from popular publications (newspapers, car magazines, etc) that the car is not selling very well and that there is a big push to get rid of inventory, then assume that the residual value might in fact be as much as 10% less than the actual value ought to be.
• Other risks in residual value accuracy
  This risk is present matter what two cars you select for comparison. Between now and, for example, three years from now, a competitive model might pop up that makes your current prospect a real dog by comparison, thereby decreasing its residual value. But that is true about any current model. So don’t worry about that, as you are only trying to compare two residual values knowing that both are in danger of being similarly different in the next three (or 4, or 5 or 6) years.
• Residual values from the Internet
  Although the Internet is jammed with card sites offering residual values, they are mostly approximations. The largest automotive database I know of ($50,000 annual license fee to use) offers residual values for each of four different geographical areas of the United States. In the Northeast U.S. it offers one set of values for the western half of a State and a different set for the eastern half.

Therefore the only reliable value is the one you get from a local dealer. All the rest are really an average. Manufacturers are uniform in not giving out residual values to third parties, so one has to wonder where the Internet sources get them.

Decide on term of ownership
Before asking for the residual value of the lease, decide on how long you plan on owning the car. Leases are offered for up to five years, or 60 months. Just be sure to get a residual value for the number of years you plan on owning the car.

By Federal law all pertinent financial data must be provided before signing a contract.
Ask any salesperson for a lease offer, and insist on the residual value. He may give it to you only verbally, since every effort is being made to hide this from you. Insist on it, and they will deliver the value. Say Thank You and move on

If you get a hard time from the dealer or his salesperson, here is the law you can quote

Note: For the sake of brevity, much of the material has been omitted as not relevant to residual values, but may be seen in whole om the Internet searching for Regulation M, then look for sub paragraphs as follows:

Regulation M Consumer Leasing Sec. 213.4 Content of disclosures
For any consumer lease subject to this part, the lessor shall disclose the following information, as applicable:
4) Residual value. The residual value, with a description such as the value of the vehicle at the end of the lease used in calculating your base [periodic] payment
This means you have legal right to the residual value, under Federal Regulation M

Financial gain
For any two vehicles, whether a Sedan, Van, SUV, or light truck, costing about $25,000, it is not unusual for the trade-in value after three years to differ by up to $3,000. This is money that stays in your pocket. So the effort to do this fact finding before buying the car is handsomely rewarded.

Financing terms
The interest rate that determines the monthly payment is immaterial. All that is to be compared are two cars for which the monthly payment is essentially identical, and then develop an estimate of what each might be worth in x number of years.

It’s essentially money-in vs. money-out. If you pay the same monthly payment for car A as for car B, will car A cost $3,000 more to trade it in for the new model A than if you had bought car B?

Copyright 2006 by Beacon Data LLC All rights reserved

Comments (0)

By admin, August 6, 2010 5:36 am

New car research is much easier today then in the past. The use of the Internet has changed the way people buy cars. Not only with researching the cars, but in finding the availability of dealers vehicles and taking virtual tours of the vehicles. There are few items to keep in mind when getting ready to purchase a new car. These items will help your research go smoother.

Pick up a copy of consumer reports the car edition

Consumer reports rates cars every month, but that is going to take too long to read about three or four at a time. You need the addition that covers all the vehicles in one edition. This way you can have everything in one issue to get started. Start by looking through cars that you are interested in. Make sure you read through consumer reports ranking methods. One of the most important factors of their ranking system is their reliability report. If the car is a new model there will be no reliability information. Consider the source here and make a few assumptions. For example, if its a Honda or Volvo then you can assume that the reliability will be good. These vehicles always score high in this category. If its a dodge or Chrysler, then make a note. Those vehicles tend to report lower Reliabilities

Look at some details with a grain of salt

Here is what I mean by that. Gas mileage and performance are loosely based. If you live in florid and have the air conditioning on all the time, then your mileage is going to be less than what is advertised. A good practice is to at least subtract a mile per gallon from the reported statistic. This gives you a better idea of a realistic economy rating. If you drive mostly in the city this is very helpful since city mileage is always less than highway mileage.

Mark down prices and details

Compare the vehicles you are interested in and keep each on a separate piece of paper. By having them on a separate piece of paper you can make notes as you go along. Next go to the manufactures page and look up the model directly. Most sites now are highly interactive. You can take tours and see the car from every angle. This is good to do and will help you save some time from going to the dealer and doing this yourself. Keep in mind that the prices that you see on these sites should never be the price you are going to pay. If you were ignorant and walked into the dealer, this is where they would start. You need to know what the dealer pays (dealers invoice) then you can know where to start to negotiate. On each piece of paper right all this information down so you have it organized. Look at the prices of the options you are interested in and write those down as well. You should have a good idea what options cost . The reason is that you will go to the dealer and see a lot of cars in the lot. It can be overwhelming if you are not prepared. By knowing the model and options, you can work faster and accomplish your goal at the same time.

Now go to the dealer

After you have all your information, the real reason is to go and drive the vehicles. You need to make sure you like the way the car or truck rides and if it feels like a good fit for you. The process of decision is behind you at this point and you were able to make all your decisions at home where there is no pressure to buy anything. Ask the dealer what incentives are available from the manufacture. Make sure that you understand that the manufacturer gives you incentives but they also give the dealers incentives. That is their secret, they are going to get some sort of incentive to sell the cars and that you should keep in your back pocket. Some savy salesman may try to make you think he is not going to make anything on a deal if you low ball them. Carry your research paperwork with you and dont be shy about having it. They will know that you did your homework and it helps at the bartering table.

At last take your paperwork and start to talk money. Be firm yet respectful and do not be afraid to walk away. For some reason there is a lot of back and forth in the negotiation process. Salesman have to steal away to ask their managers if they can sell for a certain price. When they come back and say that this is there last price, dont be afraid to say its unacceptable. The business is highly competitive, they will try to sell you a car. If not, go to another dealer and start over. If you do your homework you will be much better off.