Monday, October 27, 2014

10 EARLY NEW YEAR’S RESOLUTIONS FOR FLORIDA CAR DEALERS

With just two months left in 2014, I’m suggesting these New Year’s resolutions for Florida's car dealers; I want them to have enough time to get their acts together ;)

1. Stop charging your dealer fee (a. k. a. delivery fee and doc fee). This fee is really profit for the dealer disguised as an official fee charged by the state or federal government. When you quote a customer a price, it should include all charges except for sales tax and license fees. State law in Florida does not prohibit this or even put a cap on this fee as many other states now do, but it’s just the wrong thing to do.

2. When you advertise a car at a price, clearly disclose to the reader how many cars are available at that price. Dealers get around the law by listing a stock number next to the car, as if this is will explain to the reader of the ad that there is only one available at this price.

3. Don’t advertise a large discount on a car unless the discount is from MSRP. Dealers advertise huge discounts from prices that are artificially inflated. What good is a $15,000 discount if the dealer has a $15,000 markup above MSRP on that car?

4. Don’t pander to folks with bad credit and give them false hope. Tell those with bad credit that if their credit is too bad, you cannot obtain financing for them. When you advertise…”No credit or Bad Credit is No Problem” you aren’t telling the truth. When you advertise that “no credit application is refused”, you are misleading the customers to think that no loan is refused because of bad credit. You are not telling them the truth.

5. Don’t advertise that you can sell used cars as low as $99. There is no such thing as used car that can be profitably sold for $99. The scrap metal or the parts on a car that cannot run or is totaled in an accident is worth $150 or more.

6. Have a heart! I received a call this morning from the son of an 81 year old man who had been diagnosed with bipolar disorder and committed to a mental health institution under the Baker Act. The day before he was committed, his father bought a brand new car for $32,000+ from a well-known South Florida dealer. The son read my column instructing those with a problem with a car dealer to call the owner or the general manager before taking legal action or notifying the press. When he tried this, he was stonewalled by both the general manager and the president of the dealership. His father had bought the car the day before he was committed to an institution under the Baker Act. This is not only heartless but just plain stupid. What do you think this will do for that dealer’s reputation when their customer’s son contacts the local TV stations and newspaper?

7.  Be accessible to your customers. You might think that you own and operate a pristine business that never offends or takes advantage of anyone, but you can’t be sure about that if you insulate yourself from your customers. You might be amazed at what you find out when you speak directly to your customers and even to those who wanted to be your customer but changed their mind for some reason.

8. Don’t surprise your service customers with a “miscellaneous supplies fee”. Sometimes this is called an “environmental fee”. The price you quote your service customers should be the price they pay…not that price plus 10% which is pure profit to the dealer.

9. Don’t mark up your “hot models” over MSRP. The manufacturer’s suggest retail price affords the dealer very generous profit margin. Don’t exploit the temporary situation where demand for that hot model exceeds supply. This is no different than some gas station operators do during fuel shortages before and after hurricanes. 

10. Do away with the fine print. If there is something important that is worth reading in your ad, print it in a font size that can be read without a magnifying glass. If it’ not important, don’t put it in the ad. The only reason for fine print in a car ad is to hide something that you don’t want the reader to find.

Monday, October 20, 2014

Why Your Car Dealership Won’t Tell You the Price

I’m sure that you noticed that the last time you went car shopping you were unable to get a firm price on the car, unless you were willing to sign on the dotted line and put down a deposit. It’s impossible to get a firm price on a car over the telephone, and very difficult to get one via email. If on the off chance you’ve never bought a car, or haven’t bought one in a long time, try this. Call any car dealership and ask for a price on a specific year, make, and model. I can almost guarantee that you won’t be able to get a firm price.

Have you ever wondered why you can get a firm price on just about any other product except an automobile? You can call a jewelry store and get a price on a diamond ring that costs as much or more than a car. You can go on Amazon.com, get a firm price, and buy virtually anything. Walk in or call any department store and they give you a firm, out-the-door price.

Car dealers don’t want to give you a firm price because they want to deprive you of your rights in our American free-market economy. One of our important American freedoms is to be able to shop and compare prices so that you can choose the best one. There are some countries where the prices are dictated by the government or giant cartels. We have anti-trust laws in America that prohibit price fixing, monopolies, or collusion between companies which keep prices artificially high.

In fact, there’s even a federal law that says auto manufacturers must put a sticker on all vehicles that discloses the Manufacturer’s Suggested Retail Price, MSRP. This law was written by Senator Mike Monroney back in 1958. Senator Monroney felt there was a need for this law because, before then, car dealers could ask any price they wanted for car. They could put their own price sticker on their cars and mark their cost up any amount they chose. A car-buyer, pre 1958, had absolutely no basis for comparing prices between competing car dealers. The MSRP gave every car shopper a common basis for comparing discounts from MSRP. All dealers pay their manufacturers the same price for a car and all MSRP’s for a specific year-make-model have the same percentage markup. The Monroney label was a great idea and it worked fairly well for a while, but it wasn’t too long before the car dealers figured out ways around this “handicap” to their profit margins.

The easiest way around an MSRP is simply to refuse to give the customer a firm discount unless they agree to buy the car, and this is why you can’t get a price from a car dealer until then. Another way is to give you a firm discount but add hidden charges like dealer fees, doc fees, electronic filing fees, or dealer installed accessories after you agree on the discount from MSRP. “Bait and switch” is a popular tactic which simply brings you in to buy a specific car only to find out that its “just been sold”…but here’s another one almost like it. Another popular tactic is to advertise discounts from “list price”, “dealer list price”, or “sticker price”. Dealers even have counterfeit Monroney labels printed that they display alongside of the real Monroney label. These counterfeit price stickers I’ve named “Phony Monroney’s”. I’ve seen advertisements from Napleton Chrysle-Jeep-Dodge in North Palm Beach last Saturday, advertising “$10,500 Discounts on Every Vehicle in Stock”. The discounts aren’t from the MSRP but from “dealer list” which is clearly thousands of dollars above MSRP.

The best defense against all of this is to insist on an out-the-door price. Explain the following to the sales manager at the car dealership. “If you give me an honest out-the-door price, I will compare it with the two prices I already have from two other car dealerships. I will buy from the dealer with the lowest price. If you agree to give me your best price, you have a 33% chance of selling me a car. If you refuse to give me a price right now, you have 0% chance of selling me a car, because I will walk out that front door and you will never see me or hear from me again.” You can accomplish the same thing over the telephone or via email.

I also recommend that you try www.TrueCar.com in addition to the tactic I just described. By way of full disclosure, I’m a TrueCar dealer, I own stock in TrueCar, and I’m a member of the TrueCar national dealer council. If you give TrueCar a try, be sure to navigate to the page on their website that gives you the final price certificate. Do not rely on the estimated TrueCar prices on the previous page. To get the TrueCar certificate you must enter a name, email address, and phone number. If you would rather not be contacted by a car salesman, enter a different phone number and name. You can even get a different free email address from Yahoo, Microsoft, or Google. The TrueCar dealers are required to give you an out-the-door price on their price certificate (plus only government fees like license, sales tax, and registration). This means they should disclose all dealer fees and dealer-installed options. If they do not do this, you can call TrueCar on a toll free number:

"Total Transparency Pledge: As a TrueCar Certified Dealer, this car dealer is committed to total price transparency. This means that this car dealer discloses its dealer fees and commonly installed dealer accessories in its pricing estimates. Call 1-888-TRUECAR if you have questions or concerns.”







Monday, October 13, 2014

Leasing a Car Can be Hazardous to your (Financial) Health

I recently received an email from a very smart man and a reader of this column who was recently victimized by a car dealer when he leased a Mazda. The dealer had added a second dealer fee, calling it an “electronic filing fee” into the capitalized cost of the lease. He found this particular dealer through TrueCar, a vehicle purchasing referral service that I’ve recommended in this column. In full disclosure, I’m a member of TrueCar’s national dealer council and a stockholder.

This man’s experience reminded me of the fact that leasing is far more complicated than buying a car. It also reminded me of the old saying, “If you sit down at a high stakes poker game, look around the table and can’t find the ‘sucker’, then you’re it.” When you walk into a car dealership (high stakes poker game) you can be sure that the salesman, sales manager, and F&I manager all know far more about leasing than you do. I’m not suggesting that you shouldn’t lease a car because sometimes leasing can be better than buying; but buying is easier to understand and therefore you’re less likely to be taken advantage of.

I’m going to assume that you understand how to buy a car. I recommend that you determine the exact year-make-model vehicle you want and determine the exact MSRP, manufacturer’s recommended retail price. Once you’ve done this, get at least 3 bid from three dealers. This is best and most easily accomplished using the Internet. I also recommend that you use www.TrueCar.com. Unfortunately, TrueCar currently gives only an estimated lease payment but will shortly be making available a firm one. When using TrueCar for a purchase price, be sure that you go beyond the TrueCar lowest price estimate page and view the True Car Buying Certificate. The estimate page does not disclose additional dealer fees, dealer installed accessories, or anything else the dealer will be adding to his “TrueCar price”. You can see these extras when you go on to the page that shows you the TrueCar buying Certificate. But even then, you must be careful when you visit the dealer who appears to have the lowest price or payment. This is how the “very smart man” that I mentioned in the first paragraph was tricked. He did get the final price including dealer fees, but the dealer lied to him and added another fee disguised as an official fee. The dealer called this an “electronic filing fee”, yet it was just another dealer fee in disguise.

It’s important to mention here that I fear that some buyers hesitate to navigate to the TrueCar page with the price certificate because doing so requires revealing one’s identity and contact information to the dealer. However, if you want to maintain your anonymity, you can always use an alias, make up a phone number, and create a different email address.

Now, back to leasing. When you have received your bids from three dealers, make sure you have information about the three most important variables in leasing for you to compare. The first is “capitalized cost”. This is the selling price of the car. Next you have to compare the “money factor” which is similar to the annual percentage rate on a purchase contract. The final factor in determining the lowest lease payment is the residual value of the car you’re leasing. The residual value is what the lender forecasts the vehicle to be worth at the end of the lease. While the capitalized cost and money factor should be low, the residual value should be high. You want to lease from the dealer that offers you the lowest capitalized cost, money factor, but the highest residual. This sounds like a lot of time and work and it is. A quicker way would be to competitively shop the lease payment with at least 3 dealers just like you did the price. If you do this, just be sure you are using the same length of lease e.g. 24 months, 36 months, or whatever. Also be very sure you are getting the lease payment quote on the exact same car (same MSRP and identical options) from each dealer.

It’s probably obvious by now why you can so easily be taken advantage of when leasing. Dealers and manufacturers will strongly encourage you to lease rather than buy. Lease advertising far outweighs purchase advertising. There are two important reasons for this. First, car dealers can make a lot more profit on a least than a purchase. Secondly, when you lease a car you must return the car to the dealer after the lease period is over. This gives the dealer and the leasing company total control (you don’t own the car; the leasing company does) and a better chance of leasing or selling you another car. Even when prospective customers come into a dealership to buy, they will be “strongly encouraged” to lease. I’m called by customers of other dealerships who thought they’d bought a car only to find out they’d signed a lease contract instead!

Nevertheless, a lease when negotiated skillfully can be just as good a deal as a purchase and sometimes better. A lease special by the manufacturer is almost always a very good deal if you do your homework on the capitalized cost. The rate and the residual are set by the manufacturer, but the dealer can inflate the capitalized cost. Please remember to be sure the low price you negotiated is the same as the capitalized cost on the lease contract.

Finally, if you are not treated honestly by a TrueCar dealer, call their toll free number. My experience with TrueCar assures me that they will “make right” any failure on the part of a dealer not being honest with you, including refunding unwarranted charges. Please just refer to the TrueCar Total Transparency Pledge:

"Total Transparency Pledge: As a TrueCar Certified Dealer, “Dealer’s Name” is committed to total price transparency. This means “Dealer’s Name” discloses its dealer fees and commonly installed dealer accessories in its pricing estimates. Call 1-888-TRUECAR if you have questions or concerns.

Monday, October 06, 2014

MINIMIZING THE PAIN OF HAVING YOUR CAR SERVICED

The pain of buying a used or new car may be greater than the pain of having it serviced, but you need to have it serviced far more often than you have to buy a car. Below, I am listing eight suggestions to make your visit to your car dealer’s service department as pleasant as possible.

  • Choose the dealer with the best service department. Remember that you don’t have to have the same dealership service your car that sold you your car. You probably bought your car from the dealer who gave you the best price. You should have your car serviced at the dealer who can best maintain and repair your car. The price of service is important, but secondary to the quality of the service and repairs. Do a little research and “Google” the name of the business and read the online reviews on their Google+ page, on Yelp, Edmunds.com, etc… Choose a service center with a large number of positive reviews. Check with the BBB and the County Office of Consumer Affairs. Ask the service manager at the dealership to show you his factory score on CSI (customer satisfaction index). Every manufacturer surveys dealers’ service customers and ranks that dealer by how well he treats his customers.
  • Establish a personal relationship with your service advisor. The person in the service drive who writes up your repair order is very important. Be sure you get a good one. He should be knowledgeable, attentive to your needs, promptly return phone calls, and recommend only necessary services. You might not find this person on your first visit, but if you aren’t comfortable with the person you are dealing with, ask for one with whom you are. When you make an appointment to have your car serviced, always ask for that service advisor. 
  • Don’t pay the “gotcha”, miscellaneous supplies fee. Almost all car dealers tack on a phony fee when you pay your bill which is simply more profit to the dealer, but is disguised by various labels. It is also sometimes called “environmental impact fee”, “sundry shop supplies” and many others. The cashier just adds a percentage ranging from 5% to 10% to your bill. This is no different than the “dealer fee” that the sales department tacked on to the price they quoted you on the price of the car. Most dealers will waive this fee if you complain about it, especially if you threaten to call the BBB, their manufacturer, or the Florida Attorney General’s office. You can contact the Attorney General of Florida, Pam Bondi, at www.MyFloridaLegal.com
  • Always road test your car, preferably with the technician. If you brought your car in for a drivability problem such as a noise, vibration, or pulling to the right or left, don’t accept the car back until you ride in the car with the technician or service advisor and confirm that the problem has been remedied. I also recommend that you drive the car with the service advisor to demonstrate the problem when you bring it in. Experiencing what you experience always communicates your problem more accurately than listening to your description of the problem.
  • Ask for a written estimate of the total cost of repairs and maintenance. Florida law requires that the dealer give you a written estimate. By law, they may not exceed this by more than 10%.
  • Make an appointment ahead of time. You should insist on making an appointment and you should try to make that appointment at a time when the dealer’s service department will be least busy…typically the middle of the afternoon on weekdays or Saturday and Sunday. Avoid the 7:30-8:00 morning rush. When your service advisor has written up your repair order, ask him how long it will take. After he tells you, ask him to let you know ahead of time if, for any unforeseen reason, your car will not be ready in the promised time. Often times when you call a service department they will tell you to “bring the car in anytime” or “come right over”. Service advisors will tell you this because they are either too busy or too lazy to take the time to make a proper appointment. When they tell you this, tell them that your time is very valuable and that you insist on an appointment at a time when they can get you in and out quickly. Always write down the name of the person that gave you the appointment.
  • Shop and compare high cost repair prices. Most service departments are competitive on maintenance items like oil changes, wheel alignments, and tire rotations. However, the costs of major repairs can vary considerably. If you are looking at an air-conditioner, transmission, or engine repair that can cost several thousands of dollars, get bids from more than one service department. Often just suggesting that you will do this will keep the cost down from the dealership you prefer.
  • Introduce yourself to the service manager. This falls along the same philosophy as developing a good personal relationship with your service advisor. It can’t hurt to know the “boss”. If you are on first name basis with the service manager, it just might earn you a slightly higher level of treatment from those that work for him.

Monday, September 29, 2014

If You Can’t Find an Honest Service Department, You Should Be Able to Find an Honest Service Person

Servicing your car is just as scary as it probably was buying it, but you only have to buy a car every 4 or 5 years, maybe even longer. During the time between buying one you should bring it in for service at least a dozen times, and that doesn’t even count repairs.

Car dealers make more money servicing your car than they do selling you one. The more service they sell you, the more money they make. Today’s automobiles are of far better quality and require far less maintenance than those of 20 years ago. Requiring less maintenance and repairs is a threat to the car dealers’ most profitable department. One way they can overcome this is to simply sell you more service than you really need by convincing you that it’s necessary.

Did you know that virtually every employee in a service department gets a percentage of the total amount of service he sells? The guy that writes up your service order when you drive in is on commission. They are service “salesmen” but they don’t like to be called that. Their title is usually “service advisor” or “assistant service manager”. The mechanic that fixes your car is on commission. The service manager that supervises the mechanic and the service salesman is paid on commission. After the service salesman sells you as much service as he can, the mechanic’s role is to find anything that needs to be fixed on the car that the service salesman or you were unaware of. He then calls the service salesman and tells him about the additional repairs you “need”. I recommend that you stick to what your car’s manufacturer recommends for maintenance in your owner’s manual. When your service salesman tells you what he recommends, be sure that the manufacturer recommends it too. There are some exceptions to this, based on certain local environmental conditions, but very few. Always question any service not recommended by your owner’s manual. When a repair is recommended that you were unaware of, get a second opinion from another service department, especially if it’s an expensive repair.

Now, don’t get me wrong; just because people are paid on commission doesn’t make them dishonest or uncaring. However, if there’s a “rotten apple in the barrel” he will take advantage of a commissioned pay plan to maximize his earnings. There are very few companies with zero “rotten apples”. A good company does its best to ferret out the rotten apples but it’s a constant battle. In fact, there are companies that have more rotten apples than not. When you have a department or company where everybody is on commission, it takes an awfully altruistic manager to fire a top-producer. The more his “rotten apple” sells the more money the supervisor earns. This applies also to the “supervisor’s supervisor, all the way up to the guy that owns the company. The higher up the ladder you go, the harder it is to identify these more passive, unseen rotten apples that “aid and abet” the front-line apples. The head guy usually has what many CEO’s insist on…DENIABILITY. You hear a lot about that in government scandals. The press always wants to know, “Who knew what and when did they know it?” Everybody remembers Watergate where the rotten apples extended from the bottom of the barrel all the way to the top. It took Bob Woodward and Carl Bernstein over several years to follow the tracks all the way to the top of the barrel.

More often than not, there are people in all companies that are honest and caring for their customers. The point of this article is that you’re better served to look for that good person than only look for a good company. There is no surefire way to do this, but I can suggest a few methods. Clearly, you’re more likely to find a good service salesman in a company that has a good reputation. You find good companies by personal experience, recommendations by friends, and ratings by various services like Google (most reliable), Yelp, Dealer Rater, and BBB. If you read the reviews, often the individuals are mentioned. If you’ve dealt with this company before, others in that company, like the salesman sold you the car, can refer you to a particularly good service salesman. All manufacturers measure the customer satisfaction index of every service salesman. Insist on seeing these scores and find out how the service salesman ranks among his peers, both in the company and the entire region. Finally, always make an appointment to see that service salesman you’ve chosen. If he’s on vacation or not available for other reasons, wait for your service until he can see you.

Finally, when you find yourself a “good apple” for a service advisor, don’t keep it a secret. Tell all of your friends and tell the service manager and the owner of the dealership. When you do this, you’re doing your friends, the service advisor, the service manager, and the owner a great favor. You’re also spreading the word that treating customers with honesty and compassion is good for business.

Monday, September 22, 2014

Don’t be the Victim Of A Car Dealer

I receive phone calls and emails daily from “victims” of car dealers. Unfortunately most of the situations described to me are beyond anyone’s power to remedy. All of the papers have been signed and the buyer has taken the vehicle they purchased home. I always try to offer advice and help any way I can, but the chances of getting a remedy to a bad car deal “after the fact” is very low. It’s rare that a car dealer forgets to “dot the i’s and cross the t’s” in the extensive paperwork. Only if he does make a mistake in the paperwork, do you have a good chance of backing out of the deal. The only remedy now is to ask the dealer for “mercy”. I always recommend that the victim try to make an appointment to see the owner or general manager of the dealership and explain, in person, what transpired between him and the sales person and sales manager. There is a chance that you can make an appointment with the owner of the dealership or at least the general manager, but a small chance. Most of the higher ups in car dealerships like to remain insulated from their customers, especially angry ones. And even if you can get through, the chances that they will agree that you were lied to and/or deceived are small. The only thing you can do is to be more careful the next time you buy a car. These are the steps that I recommend you follow so that you never again become the victim of a car dealer:

(1) Be sure that you buy the right, type, make, and model vehicle for you. The best reference source for this is Consumers Reports magazine also available online. Even if you’re sure that you know the exact vehicle you want, be sure to take it for an extensive test drive…a minimum of a few hours. You may have owned several Chevrolet Impalas over the years and love them. The new model Impala may have some changes that you aren’t happy with. Never, never buy a vehicle, used or new, without driving it first. You would be surprised how many people make this mistake.

(2) Once you have chosen the type, make, and model you want, carefully choose the options and accessories you need. Always try to buy factory installed, rather than dealer installed, options. If you have no choice, be very careful that the dealer installed accessory is one of quality, is necessary and is worth the money you’re being charged. Dealer installed accessories normally have gigantic markups (200%+ is common) and are added to the car for only one reason…to increase the profit on the car you chose to buy. Some examples are nitrogen in tires, “protection packages” including paint sealant, fabric protection, emergency road assistance, etc., window etching, and pin stripes.

(3) Now that you know the exact vehicle you will purchase, you can calculate the exact manufacturer’s suggested retail price (MSRP) for that vehicle. Knowing the MSRP allows you to find the biggest discount from MSRP. Be very careful not to let a dealer substitute their retail price for the MSRP. This is a common trick in advertising when they refer to their retail price as “dealer list”, “list”, or “sticker”. Most dealers add “addendum stickers” alongside of the MSRP sticker. This is so they can inflate the markup of the true MSRP and make you believe you’re getting a bigger discount than you really are. The true MSRP is displayed on a federally mandated window sticker called the Monroney Label after Senator Mike Monroney. He spearheaded this law in 1958 to give car buyers a fair basis for comparing prices with several car dealers. If dealer “A” gives you a $500 discount, “B” a $1000 discount, and “C” a $2,000 discount you clearly get the best price from Dealer “C”. As simple as this sounds, car dealers will fight you “tooth and nail” to avoid giving you their best discount from MSRP. This is because this makes it too easy for you to buy the car at the best price.

(4) Rather than arguing with a car dealer about giving you his best price or discount, use the Internet. You can use a car buying service like www.TrueCar.com, Costco Auto Buying program, or simply request a price from several dealers via email. A helpful hint is to use a fictitious name and telephone number so that you’re not “hounded to death” by car salesmen. You can also create a different, free email address using Google G-Mail, MS Outlook, or Yahoo just for this purpose. The Internet is best for getting at least 3 competitive prices because car dealers know that they have just one chance at your business over the Internet. If they refuse to give you a price or give you too high a price they can’t win your business. When you choose what “appears” to be the best discount from MSRP, call the dealership and verify that it’s the “out-the-door” price with only state sales tax and state license and registration fees added. Another word of caution is that dealers often try to hide “dealer fees” by labeling them to sound like government fees related to your license plate and registration fees such as “electronic filing fee”. If the dealer has a dealer fee, doc fee, dealer prep or any other phony fee that is not levied by the local, state, or federal government, add it to the price he quoted you before you choose his price as being the lowest.

(5) Finally, never visit the dealer that you’ve chosen that has the lowest price without having shopped for the lowest finance interest rate with your credit union or bank and the highest price paid for your trade-in. You should check with at least 3 car dealers of the same make that your trade-in is. If you’re driving a Ford, visit the used car departments of at least 3 Ford dealerships. Tell the used car manager you have an “extra” car in the family and you will sell it to the highest bidder. Be sure you make it clear that you do not want to buy another car. Another good place to get a bid on your trade-in is CarMax.

If you carefully follow the 5 steps above, you will not be a victim of a car dealer. In fact you will get a very good price on the vehicle you buy, as well as a low interest rate on your financing and the highest trade-in allowance.

Monday, September 15, 2014

THE LOWEST PRICED CAR CAN END UP BEING THE MOST EXPENSIVE

Too often car buyers focus on buying the car that fulfills their preferences of styling, size, and accessories that they can buy for the lowest price. There are other important cost considerations you should look at before buying the cheapest alternative.

Resale value is the number one consideration that is most often overlooked by car buyers. All cars depreciate in value, but some hold their value a lot better than others. You might save a thousand dollars by choosing to buy one used or new car over another more expensive make and model. But if the make and model that cost $1,000 more, held its value by $2,000 more over the 3 years you owned the car before trading it back in, the “lowest priced car” was really $1,000 more expensive.

There are several ways you can check on how much cars will depreciate. A good one is to check the resale value of that same make of car that is 3 or 4 years old. You can also find this information on the Internet. Kelly Blue Book, for example is www.KBB.com. If you are thinking about buying a new 2014 car of a particular model and make, find out what a 2011 model sells for today. Compare other makes and models.

Maintenance and repair cost are the second biggest factors in measuring the true cost of a car. When a car has a relatively higher depreciation, one of the biggest reasons is probably because it is more prone to break down. Check Consumer Reports or surf the Web to find the projected repair histories of the cars you are comparing. Saving $1,000 on a particular make and model is not very significant when you are facing the cost of a blown transmission or engine. Does the manufacturer provide complimentary maintenance? This should be a factor to consider as well.

Big cash rebates and big discounts are not necessarily a good thing. First you have to ask yourself, why is it necessary for this manufacturer to giving me such a big cash rebate (I have seen them advertised as high as $11,000) to sell his car? You will generally find that the manufacturers of higher quality, higher demand cars offer fewer rebates and discounts. These are also the manufacturers of cars that depreciate less and cost less in terms of repairs. Big rebates and discounts also negatively affect a cars resale value. It’s what you could call “vicious cycle”. A car is hard to sell because of its high repair costs and high depreciation so the manufacturer pays a big cash rebate to sell it. The rebate lowers the value of the used car of that make and model because the price of a used car directly tied to the cost of that same new car.

You will be surprised how much the color of the car you buy can affect the resale value. Think about it. The color was very important to you when you bought your last car. It is just as important to the person who will be buying the car you trade in. The most popular colors are white, silver, beige, and black. If you have a “thing” for green, blue, orange, or another unusual color, it can negatively affect the resale value of that car by over $2,000. I’m not suggesting that you always buy a white car, but if you like white, silver, beige, and black you are going to get more money for that trade-in than if you like blue and green. Bright colors can be good for certain models. Red is a popular convertible color for example.

Be sure to check your cost of insurance before you make a final decision. Cars with side air-bags, highly rated in collision and rollover tests, relatively low cost of repair especially for bumpers, and non high-performance cars have much lower insurance rates.

Cars are no different than any product that you buy when it comes to the principal of “the cheapest product is usually not the best value”. You buy a quality pair of shoes, paying more than you would for a cheap, poorly made pair because they will look good and wear many times longer. Shopping for the lowest price is a very good idea, but only after you have chosen a car that has low depreciation, operating costs, and cost of repair.