Comments on: Vehicle Buyback Programs

By: Marci

Marci — Mon, 03 Nov 2008 15:58:20 +0000

Well, I must be one of “those” people, as my car is paid off and my truck I paid cash for. I did have payments of $312/mo stretched to 5.5 yrs – BUT I paid it off in under 2 yrs as I hate making payments. It’s 8 yrs old and has 114,000 miles on it and I plan for it to last to 200,000 at least, so it’ll be awhile

And yes, I paid myself after it was paid off, and plan on paying cash if/when I buy another one – I hate car payments

Another trick the dealers pull….Every time I took the car in for maintenance while still in warranty, they would give me a ‘loaner’…it was always a newer model and an upgrade from what I had… They were sure nice to drive and always the dealer would tell me how easy it was to get into the newer one The most blatant was on the major maintenance at 90,000 – when I had a loaner for two days… for my basic Forester, the loaner was a fully loaded sporty new Tribecka…wow! What fun to drive! And I have to admit it was tempting! But I managed to say NO! LOL!

By: Funny about Money

Funny about Money — Mon, 03 Nov 2008 13:24:25 +0000

Don’t you think, though, that most people regard car payments as akin to death & taxes: something you can’t avoid? How many folks do you know who are driving a paid-off car? The cost of even a late-model used car is so high most people have to finance it, and five years is a long time for a vehicle to survive on the roads.

In that scenario — i.e., that folks think of a car payment as a nonoptional part of life — it makes perfect sense that consumers would fall for a “buy-back” offer.

I was lucky enough, after I bought my first car on time, to have a second income stream that allowed me to pay off the principle in about 18 months. After that, I just kept on making the $300/month “car payment” to myself…actually, to a Vanguard short-term corporate bond fund, which makes 3% to 6% and even in bad times loses little or nothing. If you plan to drive a car for 10 years, even if it takes you five years to pay off the original loan, by the end of the car’s lifetime you have more than enough to buy a new vehicle in cash.

But…umh…whether you’re making the payment to yourself or to a lender, you’re still making a car payment. Personally, I prefer myself, as creditors go, but the fact is you still have to find a way to get that payment out of your cash flow.

By: Weekend Linkage - November 2, 2008

Weekend Linkage - November 2, 2008 — Sun, 02 Nov 2008 14:58:29 +0000

[...] Vehicle Buyback Programs Help Used Car Dealers, Not Consumers “Dealers are trying all they can to move new car inventory.” [...]

By: Weekly Roundup: A Halloween Visitor Edition at Clever Dude Personal Finance & Money

Fri, 31 Oct 2008 15:02:49 +0000

[...] Dad warns us about dealership “vehicle buyback” programs. You need to investigate the math on these [...]

By: Sam Li

Sam Li — Thu, 30 Oct 2008 14:23:19 +0000

I’m working for a long time in auto industry and I know many tricks that dealers are using to get money out of your pocket. Don’t blame dealers and don’t get scared of them they just doing whatever they can to survive in these troubling times. I would make a couple of suggestions to “Writer’s Coin” – unfortunately buying a car it’s always about to lose a money, it’s depreciative asset and there is no way car will hold the value unless we are talking about collectible cars, which is not the case, I guess ?. Basically you have 2 scenarios if you have a cash at your hand and when you are not hence need a financing. So if you need a financing the most efficient way to buy is NOT LEASING! It actual car loan, after you paid off your car, drive it to the ground. That the scenario when you lose the least money. Let me know if you are interested in more details I can elaborate on my blog.

By: Marci

Marci — Thu, 30 Oct 2008 05:18:43 +0000

The dealers (and banks for that matter) just hate to waste the time to ‘let you’ read the fine print. I just firmly told them that I was not signing anything until I had read all/everything/each page in the packet. They could wait it out and answer my questions, or I could walk out the door. They waited.
That was 8 years ago, and 114,000 miles, and I don’t intend to ever buy a new car again, but as it was exactly what I wanted, and as the used cars of the same type were selling for less than $1000 less, I felt the new one, with the new car warranty was the better way to go, in this particular case.

By: Chiko

Chiko — Wed, 29 Oct 2008 14:27:11 +0000

This is so true. The delaership that I worked for during the summer (as a college student)two years ago did this type of move all the time. I was so suprise on how many people who thought it was a good idea.

By: Marc and Angel Hack Life

Marc and Angel Hack Life — Wed, 29 Oct 2008 14:24:36 +0000

Solid advice. Don’t sell a car back to a dealer. Sell it yourself!

By: DavidK

DavidK — Wed, 29 Oct 2008 14:03:10 +0000

Dear Lord no! You actually READ the FINE PRINT FrugalDad??! Who in the world does that? I thought people are supposed to be SCAMMED by GREEDY corporations and the like as if they were unattended babies playing with scissors. This is why the fine print is there because LEGALLY the eeeevil corporations do have to tell you what they are actually offering you in the “deal”. They cannot hide it and lie. Too bad many people can’t take the minute or two to read it and make sure to blame the government for not informing us sooner and making sure we understand in simple kid terms. It didn’t take long for someone to chime in about those greedy scamming companies and I’m sure it won’t be the last. Strange how people seem to think any business that would like to make a profit is inherently bad, bad, evil, doubleplus ungood.

@Writer’s Coin, the internet is a wonderful place and you can find all sorts of sites that have information on what to look for when talking with dealers and how they work their sales techniques. There was a great article by a journalist that actually got a job as a car salesman for about a month and he wrote all about how it works and what they know to do in certain situations.

@Rebecca and others, did you folks make sure to thank all those “stupid”, “greedy” people (quoting from people here, as I don’t agree) who bought the cars new so that you are able to drive inexpensive used cars? Someone out there had to buy that car new and take the depreciation hit so that you could benefit. As blindly idealistic as people would like to be, in order to live frugally we depend on others who are either not frugal or so well off that they don’t have to be frugal. Just as doctors make a living from pain and suffering (which sounds unfortunate but is true), the frugal-minded people make bargains from those who have or want more.

By: Frugal Dad

Frugal Dad — Wed, 29 Oct 2008 13:25:35 +0000

@the weakonomist: Glad I could help….LOL! On a serious note, I actually enjoy telling about my screw-ups here because I hope it will keep people from repeating by mistakes. I certainly haven’t made all the right moves, but I can share quite a few wrong ones. The point is we learned from the experience, worked off our mistakes, and have moved forward, never to repeat them again.