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Great Opportunities On Pre-Owned Vehicles? Ben's Tips On Great Opportunities On Pre-Owned Vehicles? Ben's Tips On How To Protect Yourself & Where To Find The Best Deals Around! Zero Percent Financing + Huge Car Sales Increases = Great Deals, But Some Potential Financial Landmines!
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Every year, Thanksgiving falls on the fourth Thursday of November. And every year, Texas car dealers are able to be open for business on Sunday because of this hole in the calendar. Especially this year, Texas car dealers will be welcoming consumers to their facilities to make 'em the deal of the decade on a new or pre-owned vehicle...but buyers need to beware. I predicted this weeks ago, and it's always nice to be proven right by my peers. In the 11/10/01 edition of The Dallas Morning News, Terry Box wrote exactly what I said would happen after the zero percent financing deals began sweeping through the auto industry in October '01: "Zero-percent financing propelled new car and truck sales last month to their highest level ever and boosted area sales so much that many dealers anticipate a record year.
But the unprecedented incentives could have less-generous effects in the weeks ahead, industry officials say. Some models are in short supply, and consumers may find that their current cars aren't worth as much because the flood of trade-ins is depressing used-car values.
"This tremendous glut of used cars may make people's trade-ins worth so little that they can't afford to get out of them," noted Dr. George Hoffer, an economist at Virginia Commonwealth University who follows the auto industry. "It could become serious enough that the industry will need to address the problem sometime after Christmas."
Two-thirds of new-vehicle sales typically involve a trade-in, industry officials say. In an average fall month, that would amount to about 900,000 used vehicles.
With the record 1.73 million new-vehicle sales in October, though, dealers likely took in 1,142,000 vehicles in trades, officials estimate, a 27 percent surge in the average number of trade-ins. The resulting oversupply is accelerating the depreciation of used cars, making them worth less as trade-ins.
Paul Taylor, chief economist at the National Automobile Dealers Association, found in a recent survey of sales over the last 10 months that the value of 15 popular vehicles is dropping at a rate of 15.5 percent a year. "It will be closer to 20 percent nine months from now," Mr. Taylor predicted. "A year ago, the annual rate [of depreciation] for these vehicles was around 10 percent."
What Consumers Need To Be Wary Of
Several things will make jumping in to these low [or no] interest deals more difficult than originally thought by most consumers:
- The flood of trade-ins will depress the value of your current vehicle you wish to trade out of
- The flood of used vehicles will make "great deals" common-place...creating a potential false-sense of security for buyers
- The flood of trade-ins makes doing your homework on the history of the car even more important than ever before
What Wannabe Pre-Owned Car Buyers Can Do To Protect Themselves
I'm not trying to scare you out of buying a pre-owned vehicle. Quite the contrary: Now's a great time to take advantage of some terrific deals, on both the cars themselves and the financing available to acquire them. Here's some tips worth following...
- If you're wanting to acquire a new vehicle at zero/low percent financing, SELL YOUR CURRENT VEHICLE YOURSELF. The dealers will beat you down 20 ways to Sunday on the value of your trade-in, so don't give them the chance. Sell it on your own and add about $1,500 to the new cash you'll end up receiving. Autotrader's a great resource, both the traditional printed version available at 7-Eleven and other stores with decent magazine/newspaper racks, or try their on-line version.
- Figure out first if it's even worth pursuing: Do you even know how much you owe on your current vehicle? It doesn't matter if you've leased it or are buying it outright...the balance owed is still the bottom line. Contact the company that services your loan/lease program and ask them for the payoff as of today. Then an easy on-line resource to check out what the market's giving up on used vehicles in your zip code area is Kelly Blue Book's website.
- Shop around for the best deal on pre-owned vehicle financing: Don't forget the fact that whomever's selling you a vehicle plans on making money by financing your acquisition, too! And I don't begrudge anyone making a profit...all I want to do is make you aware of this fact. It makes sense to go to your bank or credit union and get approved for a used car loan before you go shopping, plus it'll make the salesman take you even more seriously when you're out kicking tires. And don't forget: There are some great deals on leasing pre-owned vehicles that will drop your monthly payment even lower.
- Check out the history of the vehicle BEFORE you buy! Remember, there were tens of thousands of vehicles that were totaled by insurance companies as a result of the flooding in Houston last summer. Many of these cars are creeping back into the pool of used vehicles, so check 'em out before you buy. Carfax.com is a good cheap resource. You might also want to consider Experian's auto history background service, or get a mechanic to check it out even more thoroughly...plan on spending up to $100 on having a qualified mechanic scrutinize your final choice. Spend the dough: Don't be penny-wise and dollar-foolish and skimp on this. Saving a few bucks on the front-end could cost you thousands in the long run.
- Want to get an incredible deal on a higher-end, lease-returned vehicle? Mercedes, Lexus, BMW, Infiniti, Cadillac, Expeditions, 4-Runners, Ranger Rovers...you name it. If it's on the road, why not let someone else take the hit on depreciation allowing you to cash in on a fantastic deal? Get a copy of Ben's Car Tips and learn how to shop and secure the best deals on lease-return vehicles: E-mail Ben with your city/state of residence and he'll get the information into your hands within 24 hours or less.
- Can't afford a big ticket vehicle? It's okay...not everyone needs a high-end set of wheels and not everyone can get financing due to stuff like job loss, lousycredit from medical bills, flaky ex-spouses or just general flakiness, period. Unfortunately, this offer is only good for North Texas residents at this time: If you need a good, cheap set of wheels as well as someone to finance 'em, e-mail Ben with your city/town of residence in North Texas and he'll direct you to his source for second chances in the used car world [that won't beat you down any further!].
- Over-miles on your current vehicle lease? Relax...Ben's already covered your escape strategy in several columns and sections on the website. Click here for a listing and get smart, not scared!
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