Inflated Car Prices and Financing Rage

Yeah don't feel bad, cash for clunkers really flushed out the used car market for a lot of people.

I've ALWAYS bought gently used for the price break but with the way used cars are financed it really doesn't make a lot of sense unless you get a killer deal.

There are few things I dread in life that having to buy a car. I've been driving a car I hate for the last 4 years, simply because I don't want to deal with dealerships, finance people, or negotiations. I negotiate every day at work. I hate doing it in my personal life.

*more than having to buy a car.

looked at cars in December. Was quoted an interest rate of 4% on a purchase of a 2012. The difference in rates based on the model year of the vehicle has always been confusing

http://www.youtube.com/watch?v=i-1sqSrb4lw&feature=related

Sorry for your annoying experience. If it's any consolation, I believe the new CarMax coming to W. Central Ave. has a no-haggle pricing policy as part of their business model. They don't want customers drifting away, thinking they can negotiate a better deal on the same merchandise somewhere else. What they charge is what they charge.

I recently purchased a gently used car of the 2007 vintage. I received a quote from my credit union of 3.29% interest which I snapped up. Used car prices are up because there is a shortage of them due to various reasons. However nothing stops you from getting a good price on the car, not what the dealer wants.

My daughter swears by CarMax. Will be interesting to see their impact on the community.

Yes used car prices have been at historic high levels for a few years. Most attribute it to Cash-For-Clunkers.

The prices that are being asked in Auto Trader and the Blade are incredible.

My personal experience in buying cars is that you can get a "loaded" used car but if buying new they usually have less on them. I can live without that new car smell for $10,000-$15,000 difference.

Another option would be to see if you can find someone that can go to auto dealer auctions. My grandpa's brother just got us a 2010 Dodge grand caravan loaded for a little over 8,000. I've seen them on used lots for almost 16,000.

agree with dbw, that pathetic "cash for clunkers" really threw the car market off.
When you remove a huge segment of "lower" priced cars, the remaining market can raise prices against the demand.

The surge of new car sales is great for the salesfolks, but puts the buyer in a bad place as they don't have to "deal" as much or at all. I am in the position of wanting to buy a '11 or '12 car and have the cash to pay for it. I have found that even with the money up front the salespersons are not in a dealing mood, and expect you to pay the asking price with no questions asked.

I sold cars for 5 years and then worked in finance for another 3. I find it funny that people get so worked up buying a product where the industry posts the actual cost to the dealer online. Last I checked, the Appliance Center doesn't post the invoice price of a washer on the internet, but it seems no one feels threatened buying a washer. Go to edmunds.com, look up the invoice price of the car you want, write down a fair price and go buy your car. It's that easy.

Now, as far as used cars go, prepared to be raped. LOL!!

I've been without a car for almost 4 months and have been using that time to research and watch the market. Here is what I've found from Toledo as far as Southfield, MI

• under 7-10k car: 80-175k + mileage 1999-2006
• 11-13k average: 2008-2010 50-75k
• 11-13k rare: is the sweet spot if you can find it at the right time and place. Found a 2010 Chevy Cobale for 11.2k with only 23k miles, even a Chevy Aveo for $9k with 17k miles
• 14-16k: this seems to be the price if you want something within 2-3 years and under 30k miles. Basically a new car with 1-2 owner and lost it's depreciation value.
• 15k+ new car: well new :)

The rub is if you want something with less than 50k or in my case prefer under 30k (I need something with a warranty that will last till the car is paid off. My last two cars died within 1-2 years on a 5 year loan).

Another issue is with used cars even if you find one around 15k that's near new the interest rate can be as high as 24%.
While a new car can be bought around 14-15k and interest rate from 4-11%
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While I never expected to buy a new car it's actually cheaper for me to get one, as the interest rate is half what I was quoted for the slightly more expensive used car.

Now I'm trying to shave the price down further by figuring out which exact model and color is needed to reach that. Looks like the cheapest I can get it is a 2012 Chevy Sonic silver LS model for $14.9 and 1/2 interest rate compared to the used 2009 Impala.

Thanks for all the replies!

Another issue is with used cars even if you find one around 15k that's near new the interest rate can be as high as 24%.

Who is charging 24%? That seems like a rate you would get if you had either (a) a credit score average of 350, or (b) were buying from a tiny used car lot with a bad reputation.

Not saying you are inflating or lying INC, but that's a penalty credit card interest rate for being habitually late on payments. But since the banking industry has gone nuts, I guess anything is possible / likely.

Right now, I've got a '99 Ford Taurus that gets crappy gas mileage in town (but great on the highway) and 108,000 miles on it. It's gotta last me another couple years, I think.

24% is for someone fresh out of bankruptcy trying to get a used car. Agree thought it was very high. Was expecting the highest to be around 12-14% and hoping for under 10.

INC, if you don't mind my asking, where are you finding places that will finance someone fresh out of bankruptcy?

I know someone who has very bruised (OK, battered) credit that is in desperate need of a vehicle to get back and forth to work. They have good, stable income now, but haven't even explored the possibility of financing a car because they assumed they wouldn't qualify.

I think they have resigned themselves to finding an el cheapo clunker or finding one of those shady dealers who doesn't care about credit. Neither of which is a likely way to get into a reliable vehicle, of course.

(Don't think they care about what type of car they get, as long as it is a reliable way to get to/from work.)

It would be nice to be able to pass along a feasible suggestion to them.

INC, i feel your pain, because of that outrageous interest rate, i am so upside down on my car that i can't even trade it in unless i can come up with the difference in blue book and trade in value, so by the time its pad off, it probably will be in the junk yard.

Every year I think about buying a new car, but my 2000 Camry is holding up pretty well. With 130,000 miles and around $500 in maintenance costs per year, I think I am going to drive it until the wheels fall off. Plus, it has a tape deck. Can't get that in a new car!

Plus, it has a tape deck. Can't get that in a new car!

Mine too!

Party on Wayne...Party on Garth!

For your situation INC, I would recommend an "opportunity buy" when you run across one. Sooner or later a friend or family member will be upgrading or getting rid of their vehicle, and you could offer to buy it from them for the trade in value or hope to get the family/friend discount (partial barter, maybe?). Yeah, you don't get to pick what you want, but you almost always end up with a great deal and you know the history of the car.

I bought my last two cars this way. One was paid for cash and the other was partially financed through a credit union (on a great promotional rate, I might add).

Unintended consequences - cash for clunkers. The stupid program ended up being a huge tax on the poor and the working classes. People the gov't says it always wants to help, now are paying higher prices for used cars.

mom2: Dunn Chevy in Oregon. Every step of the process was relatively smooth. Even when I was giving them 101 questions trying to get it as cheap but most value as possible they never hesitated to help out. The 2009 Impala was 24% interest, my 2012 Sonic is 11% interest. Still high in a way, but coming straight out of bankruptcy (discharge Jan 3rd) I am grateful. No pushing or overbearing salesman. Oh the actual financing company is GM Finance.

brainswell: that was an option. I had been planning to buy my girlfriends car as she is getting a new one this spring.
Unfortunately my deal at work is ending (they're reopening my place I'm now living) so I have to move next month. Had to have a car asap so I could start moving and couldn't wait till spring.

mom2: not sure of their budget, but Dunn they just had a sell last weekend and some are left. Still a nice little Aveo for $9k with low miles. Had thought about it, but I'm 6'4" and couldn't fit in the little thing :)

Yark Chevy also qualified me for a car (not sure of actual financier) and that was 24% and wanted $500 /month for a used car.

Earlier on I checked into Nationwide on Woodville Road and another "$50 a week" kinda place. Neither left me with a good feeling. Over charging for cars that were pretty much on their last leg, visibly beat up. You can get a feeling for a place by looking at their used car offerings.

Do some searches, if the majority of the cars have over 120-150k miles for 7-11k it seems kinda fishy

Dave white used lot in Sylvania also has programs like that, that's where i got my mine, and i only needed $300 down. (of course the interest rate was out of this world but i was in desperate need so i took the deal.)

May not be the right place to ask-we are back in the market & drive Honda & Toyota-Our Camry getting a little long in the tooth. Interested in a sub compact SUV like Suburu Forester-any feedback?

If anyone is curious, I did end up with a new car 2012 Chevy Sonic. Payments are less than I was expecting and my interest is over 1/2 what I was quoted elsewhere. My insurance also dropped about $30 /month :) From Dunn Chevy in Oregon.

Feel like that pig in the commercial driving around. Weeeeeeeee weeeeee freedom.

Private: I bought a Honda Accord at Brown Honda on Central before. They were reasonable, helpful, and when I went in for maintenance was treated like a king. They left a good mark, but sadly they were out of my budget this time around.

Note to self---Never file bankruptcy, the interest rates that follow should be illegal

I purchase the cars in our household and I hate the process. But I do my homework and know what is a reasonable and fair price for what I am getting. People go in and purchase a car without even questioning the price. I question everything.

This process take time - the longest 3 weeks and I have always felt it was fair in the end. Never tell a car dealer how you are going to pay. Never say what payment you are comfortable with. Negotiate first and get a firm price. Then look into financing or pay cash.

My 2007 sweet little car is loaded with things I do not know how to use and has 22,100 miles. I will last my lifetime I am sure.

Thanks, Coffee. I drive an Accord, we will be retiring a'99 Camry. I was wondering if anyone had comments on Suburu in general or the Forester in particular. Want a good snow car. We will be looking at all compact SUV's before taking the leap.

Private: most of my family are in WV and several have Subaru's. Those little suckers are tanks and are great in the snow and hills. The forester looks very nice with a modest price tag for an SUV. Don't have any word of mouth for their SUV's though only cars.

Best of luck to you.

My daughter and her boyfriend are starting out in life....needed a car. They bought a car from (without naming names) a "$50 a week place".

When I saw the POS they bought and did the math in financing it was appalling. A "major mechanical part" went out 3 weeks later, car became a driveway cinderblock and was repo'd. The kids are technically adults and signed a contract....and were completely taken advantage of. Called it a "life lesson".

I purchase the cars in our household and I hate the process.

Buy a car online sometime. That's how I bought my last car and it was the smoothest auto sale I ever saw. I loved it - no hassle, no car sharks to fend off... and, given the price guides and reviews these days, my purchase price was $200 over invoice and I saw the proof.