Colorado Springs Auto Repair

I Am A New Car Salesman's Worst Enemy

I Am A New Car Salesman's Worst Enemy

I Am A New Car Salesman's Worst Enemy by Airport Automotive in Colorado Springs

We live in a day and age of recycling everything, re-purposing old products and making them new again. For a large portion of the motoring population, the automobile is the second largest purchase they will make in their lifetime…………….. But, it doesn’t and shouldn’t have to be every 5 or six years like the new car dealers would like it.

I hear all the time from people when presented with an estimate for a repair, "ah, that car isn't worth that much." I have news for you. Neither is the new vehicle you’re going to buy. It’s going to depreciate 20% the first year, and 15% each year after that.

So I want to make a case for driving your current 10-year-old vehicle another 5 years. I will give two examples. Both examples are similar.

Bob and Mary own their home, have two vehicles and an annual household income of $100,000.

Jim and Kathy also own their own home, have two vehicles, and an annual household income of $100,000.

Bob and Mary have a 10-year-old vehicle worth $5,000, according to nada and Kelley blue book. For the record, in my opinion, those are just guides for banks, insurance agents, and used car salesman to establish some level of worth so they can finance or insure a vehicle. Its true value is what it’s worth to you as the owner. So, when I hear an owner declining repairs to a vehicle because of the perceived value published online or in a book, and says he’s going to trade it in on a new car, I wonder if they have done the math. Remember one thing as we go on here: numbers don’t lie.

So, back to Bob and Mary and their 10-year-old car. Bob and Mary don’t owe any money on their car and expect to pay $7,000 in expenses over the next 5 years for tires, maintenance, and repairs. Their annual fees for license renewal and insurance is affordable.

Jim and Kathy have a vehicle also worth $5,000 and have just been presented an estimate for repairs by their repair shop for $1,500.00. It caught them off guard, and their immediate reaction was "we don’t have that much money to fix that old car." Their service advisor offered them financing were they could have an interest free loan for up to 6 months. Get the repairs done today, and have 6 equal payments of $250.00. Not costing one additional penny if paid off in that 6-month time frame. Their response was, "we don’t like to finance car repairs." Ok, let me get this straight. You don’t have the money to fix the car, and you don’t want an interest free loan. Got it!

So Jim and Kathy drive off without making the repairs to their 10-year-old $5,000 car and head straight to the dealership where they make a deal on a brand new car. They get $5000 trade in on a $25,000 car. Wow, that’s awesome, right? Not so fast. Jim and Kathy, the ones that don’t like to finance car repairs, just financed $20,000 over the next 5 years to drive off in that new car. They financed it at 4%,  the dealer really got them there. So, the monthly payment principal and interest puts them right about $368.00 Per month, every month for the next 5 years for a total cost of $22,010.00. Not counting their $5,000 trade in. Don’t forget sales tax and dealer handling fees (in the industry its called ap, short for additional profit). Oh, and your insurance, that just went up, too. So far, it’s a pretty good deal for Jim and Kathy.

Hey, I wonder what's up with Bob and Mary? Well, they took their car into the service center as well. They were also presented with a $1,500 repair estimate. Their reaction, "that’s great, can you have it done today?" The service advisor's response was, "Mary, we’ll sure try, but if we can’t, we have a loaner vehicle for you to use at no charge while we finish the repairs on your vehicle."

Bob and Mary seem pretty happy with their now 15-year-old car. Yeah, they had to spend $7,000 in maintenance and repairs over the last 5 years, but the car served them well and gave them the opportunity to save money and prepare them for their next vehicle purchase. As for now, that old car is running well, has 250,00 miles on it, and is worth less than it was 5 years prior. They’ve decided to give it a run towards 300,000 miles, and then they will re-evaluate the situation.

So, whatever happened to Jim and Kathy? Well after 5 long years of struggling to save money, their car is finally paid off. It’s worth less than half what they paid for it. The car has 75,000 miles on it, and wouldn’t you know it needs $1500 worth of tires, brakes, and maintenance.

Bob and Mary spent $7,000 on one vehicle in 5 years.

Jim and Kathy spent $22,010 on one vehicle in 5 years.

Now, I would never tell someone never to buy a new car. But, if you have done the math, you can afford it, and you really want one, by all means, you should buy one.

But, remember. Numbers don’t lie. The average car is just a means to get from point a to point b reliably and safely. Cars are going to depreciate no matter what.

New car dealers are like casinos, the house always wins.

Take control of your life, your finances and let us help you make good educated decisions on extending the life expectancy of your vehicle.

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