First and Most Important…What can I afford? Since a car is usually the second largest people make in their lives (after a home) it’s important not to let your emotions lead the way. Do your research ahead of time and know, before taking a test drive, how much you can afford for your particular situation. Pushy salesmen out for a big commission will gladly help you fall in love with something too expensive because it’s good for them. Make sure you know that you don’t work for the salesman; THEY WORK FOR YOU! When your gut tells you something is wrong you’re right. And usually it’s only going to cost you money. Again, don’t take our word for it. Talk show host and financial guru Dave Ramsey makes a lot of good suggestions on cars and a whole lot more at DaveRamsey.com.
What is the wholesale cost of the car you plan to buy? A great ballpark number can be found by pricing your trade at
Now that I know the approximate dealer cost of the car, how can I figure out a fair price? According to the largest retailer of cars in the US their first quarter of 2007 average gross profit (price of car minus cost of car) was $1934. According to Capegemini, the National Automobile Dealers Association found that “larger dealer groups have succeeded in achieving higher profits than traditional one-off dealers (2.5% of revenue, pre-tax, vs. 1.6% for all dealers…)” The average gross profit industry wide is about $1600 and knowing how many other costs like advertising, interest, taxes, insurance, salaries, rent, etc. need to be paid we believe this is a fair number. If you are paying less than $1600 over cost consider it a good deal. Less than $1000 consider it an outstanding deal that you shouldn’t pass up, assuming you are getting what it looks like you’re getting. (see below for approximate values of various features etc. that can affect the actual price of the car)
Approximate value increase/decrease for various car features: These are numbers that are only general approximations and that even vary from dealer to dealer. These numbers apply mainly to low mileage, late model vehicles (approx. 45k and under).
- Sunroof add $300-500
- Alloy Wheels add $300-500
- 10,000 miles add/subtract $750-1000
- Silver or Black add $300-500 (Depends on the vehicle. The sportier the higer the premium)
The single most expensive part of owning a car is its loss in value over time (depreciation). According to USA Today® and Kelley Blue Book® new cars can lose as much as 73% in just three years. At best a three year old vehicle may retain just over 60% of it’s value. This is another way that a used car from Alliance Car Sales can save you so much money.
Financial expert and radio talk show host Dave Ramsey says the only people who can afford to buy brand new are people with a net worth of over one million dollars.
Although we consider these valuations to be a useful tool they cannot account for all variations in vehicle conditions, features, etc. and should therefore be used only as a guide. Alliance Car Sales cannot guarantee the accuracy of these estimates.
Whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things.
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