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ALL About Leasing and Buying

 
Old 06-30-14, 01:10 PM
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FastTags
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Default ALL About Leasing and Buying

I would like to have some input and share my experience and knowledge when it come to Leasing.

I will be updating this thread daily, as there are lots of information that I cant possibly put it all at once.

I have sold cars in the past, new and used and want to share a few tricks that may help you in the future, If I am wrong or made a mistake please let me know so I could correct it.

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So lets start with Residual Value. Residual value is dictated by the banks, it is what they call it a fair market value after XX months/years. it is a % from a MSRP, the percentage is provide by the BANK. In other words, ITS A BUY OUT AT THE END OF THE LEASE.
In theory you could negotiate the Residual Value, but not many were successful. [COLOR=&amp]Residual value will fluctuate depending on the miles you ask for, 10,000 miles, 12,000 miles and 15,000 miles[/COLOR] are the most common.

There is MSRP. Manufactures Suggested Retail Price.

[COLOR=&amp]MSRP[/COLOR] is important because the residual value % come from the MSRP.

MSRP $50,000, When Residual Value is 55%, it is equal to $27,500. This IS what you would pay if you wanted to keep the car at the end of the lease.

[COLOR=&amp]Residua[/COLOR]l value is NOT the same as the[COLOR=&amp] Balloon payment.[/COLOR] Because you can have a Residual of 55% and a balloon payment of 60%.($30,000).

[COLOR=&amp]Balloon payments[/COLOR] are usually applied to [COLOR=&amp]SMART BUY[/COLOR], where it is not the same as a Lease, because it is actually a purchase of the vehicle with your name on the title in your hand, only that you have an option to either return the vehicle or pay off the BALLOON Payment and keep it.

When you Lease the vehicle, you do not get the title in your hand, the BANK holds the Title.

[COLOR=&amp]Money Factor[/COLOR], is a daily Interest rate, similar to % APR that applies ONLY to a Lease.

So, if your MF is .001 Multiply it by 2400 and you get 2.4% APR.

MF is also provided by the bank, occasionally bank has incentives and you can catch a great deal MF like .00065 =1.56%, or better.

When you Lease a car, you do not pay the full price, you only pay Negotiated Price minus the RESIDUAL

Example of a Lease:
MSRP $50,000
Negotiated Price $48,000 [COLOR=&amp]AKA : CAPITAL COST[/COLOR]
Residual Value 55% (12k miles a year) which is equal to ($27,500) Is how much you would have to pay if you decide to keep the car after you finish the term.

MF.00065 or 1.56% (aprox $500)APR, also called RENT CHARGE for the whole term only in $, is around $500 for 36 month rent. I think they do it to confuse the buyer. On the contract you will not see the APR nor the MF, you will only see the RENT CHARGE
TAX (example) 7% From the Negotiated price, ($3,360)
Payments Aprox. $600/m x36 month x 12k.miles

In another words you are only financing( $23,860) $51,360 - 27,500 = $23,860

You have an option to select your terms, How many month and how many miles you want to Lease for. Most of the time there will be special financing available for 36, 39 or 27 month lease.
*********************************************************************
If the Residual value goes UP, your monthly payments go down. So you always want to have a higher residual to keep the payments down.

If you go from 15k miles to 10k miles, the Residual goes UP as well.

If you are planning to keep the car, It really doesn't matter if you would want to have a Higher Residual and Low payments or Higher payments and Lower Residual, it is totally up to you, at the end you pay the same.
Although I would advise to get it with a 10k miles to have a Higher residual, only because you never know what you are going to do in the future, at the end you can always buy it or sell it and not worry about the miles you have.

If you know that you are not keeping the car, you are going to Sell IT, . You are better off signing a Lease with 10k miles, so that you would pay less monthly.
If you are planning to trade it at the end, you might want to think about the Residual (Pay-Off), which will be higher if you sign a Lease with 10k miles a year.
If you are going to Return it, sign a Lease with miles that you are actually going to need. Most folks can do 15k miles a year, you residual will be lower by a few %

So you have a few things to consider.

You only have to worry about the miles, if you plan to Return the car, otherwise who cares.

[COLOR=&amp]INVOICE PRICE:[/COLOR]

Its a Price that the Dealer pay to purchase the car from Manufacturer.
Dealers also get an additional discounts (5-7%) depending on how many cars they sell a month. That is how some of us buy cars below Invoice Price.

******************************************************
******************************************************

Now that you have the basics of understanding MSRP, Residual, MF, and Down payment, lets talk about [COLOR=&amp]TAXES[/COLOR], Yes in each state they are different, in[COLOR=&amp] NY for instance you only pay TAX on the amount you finance[/COLOR], not on the Negotiated price. In Other words, Negotiated price - Residual = The Financed amount. Tax will be collected for Financed amount ONLY

[COLOR=&amp]In Texas, you pay FULL TAX on the Negotiated price[/COLOR]. Much more costly, and it can increase your payment from $35-60 easy. Now remember [COLOR=&amp]NOT all online LEASE CALCULATORS [/COLOR]calculate with the Full tax! Most of them will only calculate payments with Tax on the financed amount, there for your result may be different from the dealers by as much as $50 or more!

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[COLOR=&amp]TRADE IN - TAX BREAK[/COLOR]
Here is the link which states allow trade in tax break : [COLOR=&amp]http://www.realcartips.com/selling/0...x-credit.shtml[/COLOR]

In addition: when you trading IN your vehicle you can get a TAX break, and in some cases it could be $3,000 and UP.
Example, you bought a car for $25,000, 3 years ago. You paid 7% TAX = $1750

Today, you decided to TRADE the vehicle in, you owe say $12,000. The dealer gives you only $10,000. Since you already paid TAX on the $10,000, which is $700. The $700 will be deducted from YOUR NEW TAX that you about to pay for the NEW car.

Today you decided to buy a Lexus for $50,000, 7% TAX on the $50,000 is $3,500. You are not going to pay $3,500, you are going to pay $3,500-700= TAX ONLY $2,800.

Same thing is applied if you are [COLOR=&amp]trading the LEASED vehicle[/COLOR], do not confuse it with RETURNING the vehicle. The only thing is, NOT ALL STATES ALLOW TAX BREAK ON THE LEASED VEHICLES, Texas is one of them.

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[COLOR=&amp]Negotiating techniques:[/COLOR]

[COLOR=&amp]The common mistakes people do when negotiate:[/COLOR]
1. they trust the dealer to honor the deal without looking at the contract.
2. they negotiate the monthly payment.
3. Not patient enough. It can take 6-8 hours to get the deal done, so be patient.

What you need to understand is the the salesman is a pawn, he doesn't make the deals nor he writes the contracts. Manager does the deal, Finance manager writes the contract.

The common trick dealers use to pressure you:

1.[COLOR=&amp] How much you want to pay a month?[/COLOR]

Say for example for MSRP $50,000 the car the payments are [COLOR=&amp]actually[/COLOR] $500/m term and Down payment doesn't matter.
The manager will tell the salesman to tell you that the payments are $630/m. After going back and forward they will drop it to $530/m just to leave something if your credit is not so good, if your credit is good, they will sell it to you for about $520/m at the MSRP price and a Higher MF. [COLOR=&amp](This technique above is called packing, dealer packs payments with fees then he drops the price to get you better payment.)[/COLOR]

As SW13GS said above, the dealer will manipulate either the payment or the MF, he will raise the MF at bring it down to get you "YOUR" payment. Even if you get the price you want, you may end up paying a high MF .002 or 5-6% APR even with 780 FICO Score, while the tier 1 could get 1.5% or .0006MF.
Yes, dealers increase points on the percent to make money!! This is why it is so important to look at the Rent charge on your contract.

Another thing you need to know is that, NOT all CAR makers offer Great Residual and great Money Factor. For instance, Porsche offers MF.002, which is extremely high. It doesn't mean that it is wrong, they just do not offer good incentives like other car makers. Same thing with a residual, some cars just DON"T keep their value, there for the Residual for example: on a FORD TAURUS will be around 47% or less. not an actual values.


2. The Salesman sometimes wants to know if you are serious and [COLOR=&amp]committed to buy today[/COLOR]. If the dealer feels that you are committed, you more likely to get a good deal. The salesman will take this approach and will ask you to sign a small paper [COLOR=&amp]"i am such and such will buy the car TODAY for $400/m[/COLOR]" do not panic, the paper doesn't mean jack, in fact it can play in your benefit if you use it right.

[COLOR=&amp]when going to the dealer, you should know the following:[/COLOR]

If the dealer feels that you are not committed to buy today, he will not give you BEST PRICE because then you can simply go to a different dealership and ask them to beat the price. That is why[COLOR=&amp] you have to make them feel like you ready to buy TODAY[/COLOR], even if you are not ready at all. They cant make you do anything. You can get up and leave any time, in FACT this is a very good negotiating technique which shows customer POWER.

3. Another neat trick is [COLOR=&amp]REBATE[/COLOR]. Know your Rebate amount. Most people are not aware that REBATE can be applied after the negotiated Price, as the REBATE is usually given to the DEALER from the MANUFACTURER.
Do not mistake it for DEALER CASH, which is ONLY given to you at that specific dealership as a form of discount.

4. KBB and Edmunds.com you can find INVOICE price of almost any car with any options[COLOR=&amp]. Most cars these days you can buy at Invoice, some even below[/COLOR]. Dealer makes money regardless, don't you worry about them.

Generally a pretty good deal is, an Invoice price, or Invoice price minus the rebate.

5. Know exact options on the car you want to buy. Know exact INVOICE price with those options (Dealer will often show it to you, but it doesnt mean they will sell it to you at that price)

6.[COLOR=&amp]Know exact Money Factor for your Tier, [/COLOR]That will depend on your CREDIT. For example, Tier 1 is .0006 (720-850), Tier 2 .0012 (665-720), Tier 3 (600-665) .0035.

[COLOR=&amp]As mentioned above, UNLESS you let the dealer run your credit they will NOT know what Tier you are, so they will quote you just in case as a Tier 3 or worse[/COLOR]. So generally when you agree on the price, and you ask them to give you a run down, they will quote you with a Higher MF. Same thing amply is when you Buying a car.

7. Dont forget about calling / emailing around even if the Dealership not near by, this way you can create an illusion that you are willing to buy anywhere as long as the deal is good. The dealers will fight for your business. You tell one dealer that you got an offer for $50k and you tell the other that you got an offer for $48k and so forth.

8. If the negotiation is not going your way, GET UP and say that you are leaving, believe me you can always go back and say "YES". The more you threaten the dealer that you are going to leave the more likely you get a good deal.

Buying car is an ART. you need to understand how the system works, and be a good actor. You go to the dealership and you act, you pretend that you are READY to BUY TODAY if the price is right. Even if the Dealer does not have your car, they can do what's called a Dealers Trade. Dealers trade is when a dealer trades vehicles with another dealer, so that they can sell you the car you want.

[COLOR=&amp]You never stop pushing. Even if you got a good number on the phone, when you get there tell them that your wife said that you cannot buy unless the price is such and such, keep pushing them until you get what you want.[/COLOR]

******************************************************************

******************************************************************
[COLOR=&amp]LEASE SWAP INFORMATION:[/COLOR]

Lease swap is great, you can find a great deal, since most people already paid the Tax and put down a hefty down payment. Same thing with getting rid of the Lease, it an easy way out of your Lease.

One thing to keep in mind, when you take over the Lease, you are actually financing the rest of the amount owned, which means the BANK will run your credit and if they approve they will put your name on the Lease:[COLOR=&amp] BEWARE[/COLOR] some BANKS will NOT take the ORIGINAL (Previous) owner off the LEASE
Until the term is finished. In which case the Original owner is just as RESPONSIBLE for the payments as the New owner, and your credit can be ruined if the New buyer does REPO

****************************************

[COLOR=&amp]NATION WIDE ADVERTISED DEALS. + BAIT AND SWITCH TECHNIQUES[/COLOR]

When you see a commercial or a news paper AD:

[COLOR=&amp]Come on over, you can lease/buy a Lexus for $299/m -0 Down[/COLOR]

You really need to know all the fine print, unless you want to waste a trip to the dealer.

When you see the AD, they are not actually giving you a discount on the price, UNLESS it says Additional Dealers CASH or Dealers Discount is $$$$$$

1. Normally the advertised price is MSRP, what you do get is either a very good Residual value (which helps to keep the payment down)
2. or/and a great MF / APR % for Tier 1 CREDIT (710 and up) customers ONLY
3. they include all the rebates and discounts (Military, College, etc...) which you may or may not be qualified for.
4. they will not Include Taxes + Lic fees, which you have to pay as well, even if it says 0- DOWN

[COLOR=&amp]The Below Info is usually applies to a Local AD, not nation Wide.[/COLOR]

5. Some times the AD Only reflect 1 specific vehicle they have on the lot (In this case they will post a STOCK #), when you get there it will be either sold or they will try to switch you into another vehicle that cost more $$$ anyway.
6. The car that advertised could be ONLY 2WD, Manual transmission, and BASIC options, Brown color.

When buying/leasing a car, remember that Dealer is in the business of making money, not loosing. If you got a good value on your TARDE IN, that means you are either loosing on APR / MF, or the Price. You cant have Both. occasionally you can get lucky, most of the time you will NOT.

***************************************************************

[COLOR=&amp]AFTER THE DEAL IS MADE![/COLOR]

1. GO OVER YOUR CONTRACT. As you may find hidden fees (packing technique) there like: Disposition fees, Documents fees, Outrageous Rent Charges fees etc..

2. Sometimes the dealer will call you the next day and ask you to come back, because there was a mistake, 90% of the time it is not in your benefit. Unless they can explain to you exactly what is it they doing, and unless they are Lowering your payment by a lot, do not AGREE to come down, tell them " I am sorry, I left the country" LOL

3. the finance guy sometimes will try to SELL you additional services, I am not saying that its a bad thing to have, as some of the services can be useful depending on your situation. What you need to know is, the dealer and the sales guy is also making MONEY(commissions) on those services, there for you can negotiate on the price as well.
Obviously if you are not planning to keep the car, do not get Extended Warranty (which is never BUMPER TO BUMPER), same thing with under body coating, not need it in the Southern states.


4. When picking up the car, make sure everything works, make sure all the things like Carpets, wheel nuts, spare tire, is all there. Look for scratches, wheel rashes, even look for body work, dealers do damage their cars, and they will not let you know, so you need to look for any damage.

5. if you bought a car and the next day or even two, realized that you are not happy with it for any reasons, you have the power to RETURN it and get your old car back. It is not an easy task to do, and the dealer will tell you that it cannot be done. Its a LIE. Tell them that you know it can be done, and you will not settle UNTIL it is done, or you will be coming down every day and talking to every customer about the weather, wink wink

**********************************************************

[COLOR=&amp]OPTIONS FOR RETURNING THE LEASE.[/COLOR]

When you are getting close to the END of the Lease, you have a few options:

1. Return the vehicle to the dealer. It is the easiest choice if you are not over the mileage limit, and you are looking to get another vehicle.

2. Sell the car to an individual. You can sell Leased vehicle at any time, the Bank does not care when or who pays off the vehicle as long as it gets paid off.

A. you find a buyer
B. The buyer sends a check to the bank for the PAY OFF AMOUNT (its called 10 days pay off balance), Normally at the end of the Lease the PAY OFF balance would be equal to the Residual, but if you are selling/trading it earlier, it will be much higher.
C. Once Bank gets the check, the will mail YOU the Title + Lien Release
D. You transfer the title to the NEW owner

3. Trade in the vehicle to the dealer.

[COLOR=&amp]What you need to know about trading your lease is:[/COLOR]
A. NOT all Banks will have the same PAY OFF amount to the Dealer as it is to YOU. Meaning, if you want to Pay off or Sell the car, the Pay Off may be $22,000, if the dealer purchases the car ( trade in ) his Pay Off may be $25,000.
B. ONLY Some states allow TAX BREAK for trading in your Leased vehicle. Same thing as trading in your financed vehicle, which was explained in the TRADE IN section of this thread.
If your sate allows a TAX break for your Lease trade in, it can be very beneficial Financially to trade it in.

You don't have to worry about over mileage, scratches, you dont have to worry about finding a buyer, and if you are not up-side down you may even make some money.

Example:
You Owe for your Lease $25,000 (pay-off)
Dealers gives you $24,500 ( you are up-side down only $500)

The Tax break on the $24,500 (if sales tax is 7%) is $1,715

So you just made $1715 - $500 = $1,215

Nice, right.
If you enjoyed the read, please visit my Buying and Leasing blog https://www.byapplesauce.com/


[COLOR=&amp]Bellow you will find more Information about Buying a USED car and Diminished Value[/COLOR]

Last edited by FastTags; 08-04-18 at 07:04 PM.
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Old 06-30-14, 02:53 PM
  #2  
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Great thread and a great basic overview of leasing. If I might make a suggestion to Management, why not make this a Sticky/Announcement that can be viewed in every model subforum?

I'll reply to a few points I think are of value:

Money Factors: This is a dealer's FAVORITE way to pad profit in a deal. Through your membership here you have the benefit of seeing what others are being offered and what they are ultimately paying. A great site for residuals and money factors is www.ridewithg.com. People post what they've been given by date.

You will see dealers inflate money factors all the time. You negotiate a deal, they come back and offer you the lease terms, its very common to see what you know should be a great MF of .0006 or something, and see it be .00135 or something. This is profit straight to the dealer and they are absolutely negotiable down to the base rate.

Some dealers will refuse to show you the rate sheet from the manufacturer. The only reason they would refuse to do this is if they are not offering you the base rate. Remember the base rate includes profit for them already.

Down Payments: It is not advisable to put money down on a lease. There are several reasons for this, the most compelling being that if the vehicle is totaled early in the lease you would loose this money. With a lease the bank is the title owner, and they are the entity to which the check is cut by the insurance company if the car is declared a total loss. If you have put a large downpayment down you would then have to seek some sort of refund from the bank...good luck. The other reason is that a lease is simply a rental contract. Any money you put down simply reduces the payment by that money divided by the lease term. Essentially you are simply pre-paying rent. Keep your money in the bank and make a portion of the payments with it, that way its not at risk and you get the same benefit of having put it down.

Sales Tax: Be aware that states treat sales tax differently with a lease. Some states charge sales tax based on the whole purchase price of the vehicle, some states charge a monthly tax on each payment. Monthly taxes are cheaper, taxes upfront will have to be rolled into the lease when calculating it or paid upfront.

Aquisiiton Fees & Security Deposits: Every manufacturer has an acquisition fee. Lexus' is $700. Most manufacturer captive leasing companies no longer charge a security deposit. With Lexus and some other manufacturers you can elect to place multiple security deposits to buy down the money factor. Whether this is worthwhile depends on the numbers.

Lease end: At the end of your lease you will have 4 options:
1. Turn the car in and walk away. If you select this option, you will return the vehicle to any dealer (even if its a non-Lexus dealer where you're leasing a new car, BMW, etc they can take your turn in). The leasing company will do an evaluation of the vehicle and send you a bill for any excess wear and tear items, generally dents/scratches larger than a credit card, bald tires, ripped or torn interior trim, any glass cracks. They will also send you a bill for any excess mileage charges, typically $.20-$.25 a mile.
2. Buy the car and keep it. If you select this option they will help you facilitate financing or you can provide your own/cash. You won't have to worry about excess wear and tear or mileage.
3. Extend the lease. Most companies will extend the lease up to 6 months longer.
4. Trade the car in or sell it. You can do this at any time during the lease, the payoff is always the residual in your lease agreement plus ALL the remaining payments. So if you lease a car today, and your residual is $34,000 and your payments total $22,000...your buyout on day 1 is $56,000. Every month that goes down by the amount of your payment. Often you can do this and make a little money at the end, get out early, or avoid excess wear and tear or mileage charges. Another compelling reason to do this could be that your state gives you a sales tax credit on the new car if you trade vs turn in the car.

Great Lease Calculator: This is the lease calculator I use: https://leaseguide.com/calc/

Last edited by SW17LS; 06-30-14 at 03:10 PM.
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Old 07-02-14, 04:25 AM
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I am glad to be at service, and help. If you want additional information in regards to Lease/Buy, PM me with spec. questions, I will answer if I can.

want to keep this thread as clean as possible and dont forget to show some support and click on my blog https://www.byapplesauce.com/

PS. please do not Quote my posts, as I frequently EDIT them.

Also, please restrain from posting your deals here, this is not a " IS this a good deal" - thread. Just trying to keep it clean with only Information about Buying/ Leasing.

thank you for your feedback.

Last edited by FastTags; 08-04-18 at 07:05 PM.
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Old 07-02-14, 06:20 AM
  #4  
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Buying a USED CAR

A totally different animal from buying NEW.

When you are looking to buy a used vehicle, you are looking for that unique make and model, which may only be a few in your town, there for , there is not much room for negotiation. You find it, you check it, negotiate, and buy it. You cant wait like if you are buying a new car.

Make sure you sign up for CARFAX unlimited, check all your cars. Look for things like, where it was bought, was it sold at the auction, if so, how many times it was sold at the auction. Was there any accidents, if so, when. There should be a story and you should be able to follow it.

Also, pay attention to the exact date of the Original Purchase, the original warranty will come from that exact date.

Buying car that was driven in Northern states has it negatives:
Salt , snow--> possible rust in the future.
Drowned cars from Hurricanes and other bad weather. CarFax may not always show that the car had water damage.
Transmissions do not last as long in the North, because of the SNOW. people get stuck often and as they try to get out, they can damage the transmission.

I would not recommend a car from the NORTH.

Make sure you have the used car checked by a mechanic.

Check engine light-> means that there is something wrong, it could be a sensor, an exhaust leak or others.
When Check engine light is ON, its bad. You may not pass Inspection, You may have costly repairs, even a sensor could cost you thousands of dollars as sometimes you may need to replace more than one.

Dealers can hide the Check Engine, and the only way to see it, is with a OBD2 computer.

When the car was bought and sold at the auction over and over, there could be many reasons why. One of them because something is wrong and as soon as the dealer buys it, he is trying to sell it back.

Ask for any records that the Seller may have. Look over them, look for repairs, and consistent problems. Repairs are not a bad thing to have, unless it is the same repair over and over.

Personally, I do not recommend buying from a small dealer, I would advise buy a used car from an Individual who actually owned a car, preferably an original owner.
Some small dealers will trick you in believing that it is their car, although they most likely bought it from an individual and simply trying to re sell it. It kind of obvious when they claim that they selling it for a friend, mother or cousin, EX wife. The address on the title will not match the dealers, the name will not match, etc...

Always look at the title before buying, this way you can see multiple things:
1. Is the car paid OFF, if not there will be a BANK name as a Lien Holder
2. Is this a real title or a duplicate
3. Does the name and address matches of the person who is selling the car, if not there is a very good 80% chance it is a dealer who is flipping the car.
4. VIN matches the car VIN
5. Mileage. If they are an original owners most likely it will have minimal mileage on the title. When the car is sold, the Title changes.
6. Date on the title, will tell you when it was Registered/Titled. SO if you see that the date is a few month ago, most likely it is a dealer who registered the car, and trying to flip it, or the person bought the car, realized that something is wrong and trying to Sell it.

Last edited by FastTags; 07-03-14 at 08:41 AM.
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Old 07-02-14, 07:24 AM
  #5  
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About Carfax, I would only use it as a general reference. In my experience they are highly inaccurate.

I bought a vehicle from a dealer that was sold as CPO which was also stamped on the carfax only to find out it wasn't.
Another vehicle I purchased from a dealer had been in an accident that required body work and a bumper replacement that wasn't on the carfax.

My mother in law bought a vehicle from a dealer that had OBVIOUSLY been in a pretty major front end collision with the hood, bumper, fender and headlight being replaced. That was also not on the carfax. The dealer ended up refunding her after a short fight.

I don't trust carfax at all after seeing how information can be false or missing so often.
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Old 07-02-14, 08:15 AM
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Originally Posted by Schmexus View Post
About Carfax, I would only use it as a general reference. In my experience they are highly inaccurate.

I bought a vehicle from a dealer that was sold as CPO which was also stamped on the carfax only to find out it wasn't.
Another vehicle I purchased from a dealer had been in an accident that required body work and a bumper replacement that wasn't on the carfax.

My mother in law bought a vehicle from a dealer that had OBVIOUSLY been in a pretty major front end collision with the hood, bumper, fender and headlight being replaced. That was also not on the carfax. The dealer ended up refunding her after a short fight.

I don't trust carfax at all after seeing how information can be false or missing so often.
Thats TRUE, CARFAX only records when Insurance co. and Body Shops send that Information, occasionally they don't. Also, if there is no insurance record, because you did the work yourself or your friend, it will not show up in the CARFAX.

Carfax may not always show a rebuild title, which is not the same thing as a Salvage title.

When buying a Rebuild or Salvage title cars .

what you need to know is:
1. The car value is much lower, up to 50% Lower.
2. Not all rebuild/salvage car may necessary have frame damage and major repairs.
3. Most of the time the re builder will have Pictures before and after his work.
4. You cannot get a loan on the SALVAGE / REBUILD, bank wont give you $
5. Its not a bad thing to buy a Salvage car, if it has only body work/parts swap, no frame damage, no engine damage and you are buying to keep the car for a long time. So by the time you decide to sell it, it wont matter if it is Salvage or not.
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Old 07-03-14, 11:12 AM
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I am not going to get involved in the Insurances and Accidents, I do want to point out something called DIMINISHED VALUE and CHOOSING REPAIR SHOP, since not too long ago i had an accident and was successfully reimbursed $1800, and additional $350 for the scratch when my car was being towed, which fell under a second fleet claim.

1. Choose your shop wisely, I would avoid getting repairs at the Insurance Repair shop, as they tend to do more repairs vs. part replacement. For instance if they may repair a bumper, they will not Replace it.
2. Take pictures right away at time of your accident, as it may be hard to prove later what was damaged.
3. If you car was additionally damaged at the Repair facility or by a towing company, you can get another FLEET claim. FLEET CLAIM does not required the use of the deductible.
4. If your car is relatively new, you may be able to get whats called Diminished Value. Its a compensation for the lose of the car value. Not the same thing as a repair reimbursement. The way it works is:
after the accident your car looses its value, there for you can try to make a Diminished Value claim thru your insurance or whoever you claiming the accident with. After the repairs has made, the rep. will come out to appraise the vehicle, in a few days the Insurance
will notify you how much they are going to give you. Usually its anywhere form $300-$5,000 depending on the accident. My accident value was around $2400, so I got $1800 for the Diminished Value. After they paid for fixing my auto.
5.IMO it is better not to claim thru your Insurance if it is not your fault. UNLESS, the other guy insurance is a mom and pop shop.
NOTE:
The company that pay the most Dimished Value claims are: All STATE, and Progressive.

Not all state support Diminished Value claims, TEXAS does.


There are other things you need to know in order to collect Dimished Value, if you are Leasing the vehicle, so PM for more information.

Last edited by FastTags; 07-03-14 at 01:20 PM.
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Old 07-04-14, 10:03 AM
  #8  
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Another thing I would like to add is, Lease is not only for Rich or corporate buyers, if you calculate the payments and the expenses over 6year term of a purchase vs. lease you my find that the lease is actually cheaper.
Of course if you keep the car for 10 years it will be cheaper.

Example. Lease
Msrp $50,000
You put 0$ out of pocket
$600/mos for 36m
The lease cost you $21,600 for 3years.

Then you Leased another car just like that.
6years lease cost you $43,000

If you were to finance you would pay $50,000 for 6year term and after the 36m your warranty would be gone.
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Old 07-04-14, 10:10 AM
  #9  
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Originally Posted by FastTags View Post
Another thing I would like to add is, Lease is not only for Rich or corporate buyers, if you calculate the payments and the expenses over 6year term of a purchase vs. lease you my find that the lease is actually cheaper.
Of course if you keep the car for 10 years it will be cheaper.

Example. Lease
Msrp $50,000
You put 0$ out of pocket
$600/mos for 36m
The lease cost you $21,600 for 3years.

Then you Leased another car just like that.
6years lease cost you $43,000

If you were to finance you would pay $50,000 for 6year term and after the 36m your warranty would be gone.
You're a bit wrong, it's 4 years warranty but that's not the point, after 6 years you can still sell the car get $20k or so back. so you save much more. You'll end up paying $30k-$35k plus you save money on insurance during the 6 years.
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Old 07-04-14, 11:32 AM
  #10  
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Originally Posted by keyframe13 View Post
You're a bit wrong, it's 4 years warranty but that's not the point, after 6 years you can still sell the car get $20k or so back. so you save much more. You'll end up paying $30k-$35k plus you save money on insurance during the 6 years.
yeah, i over looked that. good point. Warranties are different from 36m and up. Also dont forget additional expenses that you may have, Tires, brakes, Tune up.

Never the less, you right, an additional $20,000 is a nice chunk of mula

Last edited by FastTags; 07-04-14 at 11:48 AM.
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Old 07-04-14, 01:29 PM
  #11  
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Like we said on the other thread, even when looking at buying and trading after 5-6 years you may still come out even with leasing when you actually do the math with real numbers.

Here are my related posts from that thread:

Originally Posted by SW13GS
This is a different scenario...but I don't want to wait for 5 years. I want a new car every 2.5-3 years...and I'm not interested in compromising on that. Its twice as long...which to me is a lot longer to wait.

Even if I could wait that long, I'm not going to be able to bring myself to wait longer than that...so its going to get traded at the end of 5 years for sure. So lets do the math there:

Using the numbers from above, it will have cost me $57,697.20 to purchase and finance the car.

Using kbb.com 2009 GS350 AWD with all the options, 82,500 miles (16,500 per year for 5 years) I get "Very Good" trade value as $19,487. So, subtract that from the $57,697.20 and the car cost me $38,210.20 to "own" for 5 years...with an outlay of nearly $1,000 a month the whole time...and the risk of loss, and it being out of warranty, the cost of brakes and tires, and so forth.

Lets again look at our lease figures, and we won't factor in being able to trade the car with any equity at the 3 year mark. Lets assume I have to pay $50 more per month to lease a new GS after 3 years. So for the first 3 years I've paid $22,139.64. Now, my new payment on my new car leased year 3 is $50 more, so $664.99...24 months of that is $15,959. So at year 5 of this scenario my cost is $38,099.40.

SO...leasing has saved me $111 over those 5 years, AND I've not had to drive a car older than 2.4-3 years old, AND I don't have to worry about tires, brakes, being out of warranty, fluctuations in resale value (hence...its WAY lower than you thought)...and thats assuming my new lease is $50 a month more. If I can lease the same car for the same payment, then leasing saves me $1310 over those 5 years. Thats also assuming I cannot trade out with equity, like I said I have never leased a car I couldn't trade out of with at least $1,000 in equity.

If I continued buying and trading every 5 years over and over again...its going to cost me the same as leasing and trading every 3 years, with more downside risk, with 35% more out of my pocket every month and a less happy me because I have to drive an old car past when I want a new one. The only way it saves you money is if you keep them for a good while with no payment...and I'm just not going to do that.

Last edited by SW17LS; 07-04-14 at 01:32 PM.
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Old 07-04-14, 06:50 PM
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This is good stuff.
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Old 07-05-14, 05:36 AM
  #13  
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Originally Posted by SW13GS View Post
Like we said on the other thread, even when looking at buying and trading after 5-6 years you may still come out even with leasing when you actually do the math with real numbers.

Here are my related posts from that thread:
You didn;t really save that $111. You calculated the KBB value with 16500 miles a year yet you didn;t calculate the extra miles on the lease. Let's hope the lease was that with 15000 miles a year( and not less) , if you drove 16500 that'll increase your lease with $400 a year or $2000 for a 5 year period. And you kinda start worry about brakes and tires as after 3 years you'll return the car with almost 50k miles, you most probably changed the tires and brakes by then.
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Old 07-05-14, 05:41 AM
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Originally Posted by keyframe13 View Post
You didn;t really save that $111. You calculated the KBB value with 16500 miles a year yet you didn;t calculate the extra miles on the lease. Let's hope the lease was that with 15000 miles a year( and not less) , if you drove 16500 that'll increase your lease with $400 a year or $2000 for a 5 year period. And you kinda start worry about brakes and tires as after 3 years you'll return the car with almost 50k miles, you most probably changed the tires and brakes by then.
I lost you here. The miles on the lease dont matter, since in his scenario he is not keeping the car he is gonna trade it or sell it. Actually he said trade it. So he does not have to worry about milage.

Last edited by FastTags; 07-05-14 at 05:45 AM.
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Old 07-05-14, 04:03 PM
  #15  
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Originally Posted by keyframe13 View Post
You didn;t really save that $111. You calculated the KBB value with 16500 miles a year yet you didn;t calculate the extra miles on the lease. Let's hope the lease was that with 15000 miles a year( and not less) , if you drove 16500 that'll increase your lease with $400 a year or $2000 for a 5 year period. And you kinda start worry about brakes and tires as after 3 years you'll return the car with almost 50k miles, you most probably changed the tires and brakes by then.
But thats exactly it. Because I traded the lease in instead of turning it in the mileage doesn't matter. I'm always over my miles...(I lease with 15k per year)...and I never pay mileage penalties because I don't turn the car back in. I've never leased a car that I haven't been able to trade out of without having to turn it in.

I usually have to buy a set of tires, but typically not brakes. Since I'm trading in though a fresh set of tires increases my trade in value...so I get that back. Also remember my numbers are based on having to pay $50 more a month for the same car in 3 years...that may or may not be the case.

But, in your scenario lets say I did have to pay mileage penalties...$.20 a mile. So every year I'm going to pay $300 in mileage penalties, or $1,500 over 5 years. So in that case its cost me $1,390 more to lease for 5 years than it has to "own" for 5 years. I haven't paid for brakes, I wouldn't HAVE to pay for tires. I've never been out of warranty. No higher up maintenance packages. No downside risk of loss. Quite frankly...$1,390 is not a lot of money to be able to drive a new car every 3 years like I want to and to mitigate that risk...that comes out to $23 a month. I loose that in change...

The point is, all these numbers are projected estimates. The point is you don't save much, if anything buy buying and trading every 5 years vs leasing every 3 years. If you want to save you need to keep the car for longer than 5 years.

Last edited by SW17LS; 07-05-14 at 04:10 PM.
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