Quote:
Originally Posted by janaka
Pure speculation on my part. I could be WAY off....
From my view the financial situation at home is such that he most likely doesn't have a ton of extra cash laying around to pay off the $4-7k that he will owe upfront. Then he still need to go out and buy another car, either cash or start another loan. I doubt again he will have the cash upfront to buy out right a 'reasonable' DD car. This leads to going to a dealer to trade in the car which will get him the least amount for his current car versus selling private. So he takes a hit on the car and just rolls the negative equity into the new used car that he buys. Used car rates aren't great here (have no idea for where he is) so he will be paying a higher rate on the used car on top of rolling in the money lost on the trade.
For every $1000 of purchase price is usually about $20/mnth of payment (rough numbers from when i sold cars last). So lets say he's $6k upside down, that means he's paying $120/mnth on top of whatever he pays for a used car. Lets say he buys a $10,000 car which for most people is pretty reasonable, that $200/mnth +120 from the last car = $320/mnth.
In the end he's saving $150/mnth give or take. But you then have to take into consideration that an older car will need more maintenence than his new one which will offset some of the savings.
So is it worth it? Thats his decision in the end.
This is one reason why dealing in cars sucks so much because you never win with cars. Its always downhill (unless its a classic that is).
My best friend bought a 2004 Pilot last October. Paid $29k for it. Threw $5k down on it made his $550 payment for a year then sold it for $23k and had to pay out $3-4k to the dealer because he was upside down. That means it cost him $5,000 deposit + 12x $550 payments + $3-4,000 buyout to own the car for ONE YEAR!!! Thats over $15000!!! Retarded. Then he bought a 2000 Odessey for $3000 cash. Now he's saying "wow its so easy to save money without that payment now..." but he doesn't realize he's got to save for like a year of no payments to get back his deposit, then another 6months to get back what he paid out at the end of the load.... He doesn't get it, he's owned more cars in the last 4 yrs than I can count and LOST on every single one of them. Its insane how much gets thrown away.
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That is absolutely correct sir. This is why people should NEVER buy a car on their first visit. I have witnessed too many times people go into a dealership and walked out a car simply because they were overpowered with math numbers(lowly monthly payment yet 72 months!) and just eat up the buyer's remorse.
A good lesson for those out there who are impatient or isn't good with financial numbers when it comes to buying cars. They need to first find out the INVOICE price of the vehicle, email or call their local dealership for an internet pricing and negociate with them before you head in. Get the best deal and go from there. Test driving a car is one thing, but never sit down and talk with them because often, most people will be talked into getting a car they just felt in love during the test drive.
I learned my lesson back in 1998 when I leased a Honda Accord 4cyl. for $305/mo with no money down. after 36 months, $10,980 to residual (buy out) for that accord was 13,500 plus tax. Now that comes to a total of $24,480. Had I bought the car initially, it would have easily been 17,000 plus tax. Of course I ended up just not buying the car at the end of the lease and bought a used DD before the Acura. One always need to do research before they jump into getting the car.
Car has an amazing depreciation within the first 2 years, so most likely the OP will have to fork out a good 5~6000 in this case. Yet trading that car in for a cheaper vehicle... is it a good idea? To me, no. Yes the $478/mo is extremely high (and I do believe he's doing 5 yr 60 months in this case.) is still a better option than getting a lesser car ( something cheap.) and pay $330 to $350 a month. I would not be surprise if he walked out of there getting $390/month for something way less reliable than the Civic Si.
He really needs a negociator. In this HORRIBLE CAR MARKET, you can definitely get a great deal. I am in NJ, OP, if you ever need help, pm me.
I dinged the Honda dealership when I bought my 09 Si for only $20100 (before tax, title and destination charge) and it came with navigation LOL.