Being convinced is not the same as being totally aware of what happens in the back room of car dealerships. No question that what you did makes perfect sense. So everything that follows is not criticism in any way. These are things I think about: 1) What financial organization makes money with 0% loans? I don't know of any. In reality, they lost some money on the "loan component". 2) Did the dealer make money on the deal. I'm pretty sure of that. The total bottom line matters and not what the "components" of the deal contributed individually. 3) Do auto dealers often bundle a whole lot of different things (auto sale, loans, delayed payments, extended warranties, etc.) to make the deal look "great". This type of marketing has to be an art form. To me, that is what is in play here. 4) Was there a better deal lurking in the shadows with better negotiations. No way to really know without checking out the competition. 5) The only way to figure out the best deal is to seek out as many offers from as many dealers as possible. The supply and demand of the marketplace is the only real advantage the buyer can use (or not use).
I'll give you my opinion and it is just that, my opinion. When you trade cars you are going to get screwed one way or another. I always get screwed every time I trade and I expect nothing else. The last time I traded I did not think I got it too bad but I probably did.
In NJ an encumbered title costs a bit more. If the price of the car does not increase with the 0% interest than it could be a good deal. In the few offers I've heard about the price of the car with 0% is higher. As said above, somebody has to pay for the loan. Opportunity coat can't be ignored. How much does the money for the purchase earn every year? $25000 invested in a number of stocks can generate $1000 per year or more in dividends.
One more thing... Most here will agree the closeouts of the east coast 2012 Prius Plug Ins (late 2012, early 2013) were a good deal. By the time I caught wind of the deals people here were getting, the inventory was low. I did my research and found several in northern Virginia and southern Maryland. Koons Toyota has multiple dealers in those areas. The Koons dealer in Tyson Corner, Va had four advance models available. I called the next morning and they had three blue and one gray. I was given the discounted price over the phone and I had to place a $1000 credit card deposit to hold one until the next morning. I drove up early the next morning ready to purchase. When I arrived, they had only one Advance model left. Not the ideal situation to purchase under. But, based on my internet research and information here, great pricing on a new Plug In Advance. I was prepared to purchase outright, but the 60 month, zero %, interest was too good to pass on. Good deal? Everything considered, I feel it was. Trading a vehicle only complicates things. I've only traded a vehicle in once in thirty years. The dealers always have the upper hand, but a savvy, knowledgable purchaser can work a deal. Timing on my Prius purchase was good. Some on the west coast were buying east coast plug ins and shipping them because of the pricing. Toyota is making money on all those residual 0% interest payments. I'm happy, they're happy.
This was where I started, and yes, it seems that your approach works. The one thing that made me change my mind was the rebate offer, and I'm not sure if a rebate was part of your purchase. If I chose the 0% interest my rebate was $500. If I didn't choose the 0% interest the rebate was $1500, and extra grand. For me, I'd rather take that discount upfront. As I mentioned in my earlier post there are several ways that one can approach this deal. It all depends on what feels best for each individual car buyer. Over the course of five years the savings, or loss, will be minimal in my opinion. And in the end, we all know the ultimate winner is the dealership.
That's a pretty biased negative view of a whole segment of retail business that probably isn't (totally) justified. Do you feel that way about going to Walgreens or Wal-Mart or any other retail business ?? If not, why not ? They all have to make a profit to stay in business. NOW.......I'm not defending everything that car dealers do; far from it. My opinion is that there IS a fair price obtainable for a new car but you have to be alert and do a little work to get it. You could avoid that by buying used from a private seller. But then there is a whole 'nuther set of potential problems to deal with.
That is my opinion of car dealers. You have your opinion and I have mine. You certainly are not going to change my opinion, don't even try. So maybe I have a biased view, so what? Comparing a car dealer to Walgreens or Walmart is just plain nuts.
Not meaning to hijack this thread from the original intent, but I'd like to respond to this with my current experience. I'm in the process of buying a new Prius and am offering my car as a trade-in. A 2006 Pontiac Vibe in VG condition with 90,000. Blue Book, Edmunds, et al. had a dealer trade in of roughly between $4000 and $5700. The dealer offered me $3500. I said no way, and told them I wanted $4500. The salesman grimaced and said there is no way they could do that, and that I'm getting their best bottom price. I then get the ol' pressure line of "If we give you $4500 will you buy right now?" I said no. Of course he gets up and gets his boss who gives me even more sales pressure with a variety of lines e.g. "Our salesforce don't work on commission" "We're giving you better than our invoice price", and a final, "If you buy it right now..." I held firm and told him I'll just go to another dealer. There are about a half dozen within an 80 mile radius and figured one would give me the trade-in amount I wanted. The boss again tried to sway me by saying that another dealership may give me more for my trade-in, but charge me more for the car. I told him I don't care how the final figure is arrived at as long as it's a fair price I'm willing to pay. In the end he relented and I got the extra grand. I've learned that dealers generally offer 70% of the market trade-in value of a car. I know my Vibe was worth at least $5000, so the offer of $3500 is in line. Easy rider makes good points. In the end you do have to work for a good price. You can't allow yourself to be driven by impulse (I really want that new car!), be intimidated, or merely blow-off all dealerships as rip-offs. This is the name of the game when buying a car. The basics haven't changed since Henry Ford started to mass produce them. If you're fortunate to live in an area with a number of dealerships it really does pay to shop around. Yeah, it can be a hassle and time consuming, but it could save you a few grand in the end.
You are absolutely right, it does pay to shop around. I live in a Chicago suburb and I shopped at 3 Toyota dealers for a 2014 Avalon Hybrid XLE Touring. The dealer that I bought it from was much different from the other 2. I got a better deal and was very easy all around to do business with plus they have a great service department.
I'm glad to see that you were able to get a good deal. I'm sorry, however, that you probably still feel you got screwed by the dealership.
What I meant to say is that I think I got a decent deal but I probably still paid too much. I have no idea what the profit margins are on new cars or what the true trade in value of my car is. It takes a car expert to know that and I am certainly not that but I am very satisfied with the deal I got. I bought 4 new Toyotas from a Toyota dealer near to me. I had the oil changed on my last car, a Prius there. A couple 0f months later I looked under the car and the splash pan that covers the oil pan area was missing. That part costs $262.00. I took the car back to them and they would not acknowledge my car was equipped with that part and they refused to do anything about it. I wrote Toyota Headquarters. I got a call from a person there. I was told to take my car to a dealer of my choice, pay for the replacement, send them a receipt and they would send me a check which they did. A fantastic response. So if I am biased against car dealers it is because of instances like this. When you trade cars and they give you a price you either take it or leave it. I certainly understand that. Concerning other aspects of doing business with a car dealer, I would be surprised if I am the only person who has had a bad experience with a car dealer.
The "allowance" they give you for a trade is negotiable just like anything else. They do have a target margin for every deal though; the total deal. Some make it look like they are giving you a GREAT deal on the new car; others give you top dollar on the trade. Almost NEVER will you get both. And nobody is saying that your bad experience is unique. It probably is pretty common. But that is no reason to condemn EVERY car dealer EVERYWHERE. Some are actually pretty fair and up front........those are just pretty hard to find.
Wow! Can I invest in the same things you invest in? When I invest $1000 for 5 years at 10% I only make about $100 the first year, $110 the second year, etc. At the end of 5 years, yielding ~$1600. Mike
Well, first off let me know where I can get a guaranteed APR return of 10% for five years on 25 G's... and I'm in!!! And while it's true, you can let your money earn money, remember, you're reducing that $25,000 each month by $416.66, or $5,000 per year. You'll have to deduct that each year which means you won't always have the 25 G's earning interest. You're account will always be depreciating. After all, you will have to pay for that car at some point.
There are many techniques to buying a car that a properly trained buyer can use to ensure they get the best local deal around. Unfortunately it takes homework, discipline, and patience...a combination lacking in many car buyers. The ability to pleasantly and cordially walk out of multiple dealerships as many times as needed is a key essential. Way too many buyers (especially young or new ones) don't realize all the options available to them.
