Buying a new car today is a totally different experience than a few years ago. However, there are still things you can do to be sure you don’t pay more than you have to. In this video, Brendan shares tips about getting the most for your trade-in and coming out with a good deal on a new car.
Getting the best price for your trade-in
Getting a great deal on your new car
Improving your deal with add-ons
Hi, and welcome to another edition of coffee with Brandon. Today we're going to talk about car buying in 2022. So we just my wife and I just went through this experience, and I'm going to share with you some of the tips that I got along the way to help you level the playing field a little bit.
Because as we know, in 2022, everything is super expensive inflation is through the roof cars, houses just about everything food gas, is more expensive than it once was. And as a result, buying high ticket items like a car, a lot of people will say to you, hey, you know, you might want to pump the brakes as my pump for the day, and pump the brakes and hold off from buying a new car. But in some cases, you can't do that. And in other cases, you know, you've may in my case, you know, my, my wife drives around my kids a lot. And as a result, you know, I want some of those features like the lane deviation, like the early stopping, like the backup cameras and all that kind of stuff. And her old card did not necessarily have those features.
So with all that said, one of the key points to what I'm about to talk to you about right now is that inflation works in two different ways. If you are receiving money for something, if you're selling something you're working for someone, whatever you are in the power position, when you are negotiating on the flip side, if you're buying something you're not so much in the power position, and that the the car buying experience is what is unique in the sense that in most cases, you're trading something in so you're getting a premium in these high inflationary environments. But on the flip side, when you purchase something, you are at a disadvantage.
So let me kind of walk you through a couple pointers to help you to as I said, kind of level the playing field in these high inflationary times. Now again, I'm going to talk just about my own personal experience where we traded in a car. And on the flip side, we purchased a new car. Obviously, there's all sorts of different manifestations of this, you know, if you've purchased a used car, there's all I could do a whole other video on that. If we if you leased a car, same thing, whole other video that I could do on that this is just simply selling a car, purchasing a brand new car. And that's pretty much the experience that I just went through.
So let's start with the sale of your existing car. So one of the knee jerk responses for most people is that they will trade the car into the dealership. Now that's one lever that the dealership has to try to make a little bit of money on you. And as a result, they're always going to come out of the gates and lowball you on the value of your trade. And they'll point out things like Ooh, look at that, look at that, you know, and that's the reason why they can't give you top dollar for your trade in. One caveat to that is that if you trade in at the dealership or at the car service, and buy from that same dealership or that same car service, you do get a break on any kind of sales tax that's actually charged by the value of the actual trade. Whereas if you sell it at one place and buy it at a different place, you don't get that tax deduction. So the dealerships know this and they will use that as a bargaining chip to try to get you to sell your trade in your car.
But when I did my personal experiences I went to the dealership they in my wife had a 2016 Kia Sorento. And I went to the dealership and they pretty much offered right out of the gates 15,000 for it. I had already done my research, not surprisingly, and and found that the if we look at three different places and I ended I urge you to do this before even stepped foot in the dealership. All of these places Carmax Carvana. In room all of them allow you to put your license plate number in and your state and it will look up your car and give you an appraisal. And most of the time they will stick to that appraisal. So in the case of Carvanha car Max, which is where we ultimately sold what they required you to do is put all this information and ask a few questions and then you had to bring the car in for an appraisal and our experience is a positive one. We walked in they honored the appraisal and this was pretty much what we got it pretty much said that even with damage to the door, which is here, passenger front door needs repair, and even with at 2620 miles, they were going to give us 18,200. So, so the dealership was gonna give us 15, I actually negotiated them up to 15, five. But even with the the tax savings, and that 15 Five, it did not match this 18 Two. And so we ultimately sold the car to car max. And it was a very, very simple experience. Again, I'm not endorsing them, but in my personal experience, I had a very favorable experience with car max.
So then once we sold the car, then of course, we had to buy the new car. And that's a whole other ball of wax here because right now, the dealerships have all the power. In our case, we bought another Kia. And what this dealership told us, which I think is pretty accurate is that normally they have about 120 cars on the lot that they can offer. On the day that we were there, which was a Saturday they had 20 cars, and they had 30 people who came in to buy those cars. So this is a classic case of huge demand and very low supply. And as a result, they have all the power in this transaction so much so that most places will just simply you know say that, you know call for price, they won't actually even list the price because they're because they're they're up charging what they can actually sell for the sell sell the price.
So this is one dealership that just says you know, call and get an E price. And then another one which is so bold, this actually put their prices in the in the in the market adjustment that they're actually charging. So in this specific case, they get $6,000 market adjustment here a $10,000 market adjustment here. So long story short, yeah, they're they're charging an arm and a leg for these cars. And when you look at the entire transaction all in one, yes, we probably made three to $5,000 more on our car, selling it in these inflationary times. Because I you know, I don't know this for a fact. But my opinion is, we probably would have gotten, you know, more like 12 or $13,000 for this car.
But because the car companies are so desperate for inventory, car Max, in our case was willing to give us about $5,000 more than what I think the car was actually really worth, in my uneducated opinion. But on the flip side, you know, you are paying a premium for for the car that you're purchasing. So in our case, I think that offset itself. So I think that the $5,000 that we got on the sale was offset by the $5,000 Extra we paid on the purchase. You could dissect that. You could you could dissect that. And I'm sure even so even with the the increase on what we got for the trade, and that we still are behind in this transaction, but in this case, you know, we wanted to, we're looking at it for the safety purposes. So where can you actually, you know, have a little bit of power in this. In this transaction.
Obviously, we talked about the selling of your car and making sure that you go armed to the dealership with the different appraisals that these online companies will actually offer. That's one way to kind of level the playing field. The other place that you could potentially make up some ground is on any kind of accessories, whether it's a roof rack, whether it's the floor mats, whatever it is, you may be able to negotiate getting those accessories, those aftermarket accessories at cost, which is pretty much what the dealership offers, and you could potentially even get the labor to install it thrown in as well. So you might be able to save a couple 100 bucks there.
The other place that you could potentially get some wiggle room with them is on any kind of warranty. No I'm big, I personally am bigger on warranties. And I'm getting even more positive about warranties especially when it comes to cars. And it goes back to the whole reason why we originally wanted to get the car in the first place was all the additional safety features that these newer cars have. Which is one of the reasons why you know the the as a side note, one of the reasons why the inventory is so low because again we have this chip shortage Re and the reason why the chip shortage is impacting the car industry so much right now is that if you think about all the different systems that that are in your car and all the different little mini computers that are in your car, you know, think about it, you know, nowadays, they have the lane deviation, that the car is monitoring the sides of the road to keep you within the lines, parking sensors, you know, that's something auto, auto high beams, you know, where they'll actually shut the high beams off, if there's another car that's coming, you know, early stopping, all of these things are little mini computers and all the while you're driving down the road, they are working, and any one time, you know, one of those systems could actually malfunction. And now you have several 100, if not a couple $1,000 of cost. So yes, you know, the $2,200 that we paid for that warranty that we rolled into the the auto loan, and then pay it off, will end up paying off in several years, the way I kind of look at it is I am spreading out the cost of a future repair to one of these systems that will will function between now and 100,000 miles in that spread out that cost as opposed to you know, it might not have any costs, you know, for the first few years while the car is still new, but hit that 50,000 And something's gonna go.
And so with that said it, I like that peace of mind of having that, but the other piece of it is, you know, again, going going back to, you know, there is kind of a power mismatch when you walk into a dealership, whether it's on the on the sales side of things, but also on the service side of things, you know, you bring your car in for an oil change and you come out in the in the mechanic says that, you know, in addition to the oil change, we found this, this and this are all things that could be could be improved or could be fixed or are malfunctioning. If you have those warranties, you can say okay, fine, go for it, you know, make that make that change. And you're not second guessing whether or not they're saying that to just simply upsell you on something. So lots to cover here.
I do have a client who works in the car dealership, and if you're in a car dealership, he actually owns a car dealership. So if you do have any questions about the car buying experience, I'm happy to connect you with him so that you can ask some of these more inside. Get some insider information on the car buying experience. So that's all I got for today's video. I hope this was helpful and I look forward to our next one. Thank you
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