Buying a slightly used truck, need some input.

General Questions
#1

So I am looking at a 2009 Ford Ranger Sport 4WD Extended cab. The truck appears to be fully loaded with all options and only has 8200 kilometers on it. The sticker price is $21,995 Canadian. The payments worked out to be $190.00 bi-weekly for 7 years, or $34,580.00 when paid. Needless to say I walked away and told him he was not even in the ballpark. He called about an hour later and offered a payment of $148.00 bi-weekly over 8 years
($30,784.00) or 165.00 bi-weekly for 7 years ($30,030.00). He said he lowered the price and got me a “preferred interest rate”. I can pay the loan out at any time with no penalty. I’m just trying to figure out if I am actually getting a deal here or not and I have to go see him in the morning to get the details. My neighbor bought a new one two months ago and paid $16,00 for it, but it is a two wheel drive with no options. Also they are throwing in a free 42 inch lcd television. I checked carfax and it said there was one report but I don’t want to waste $30.00 bucks to find out that the truck was bought by someone at such and such a date.

So what do you guys think? Any ideas for bargaining on this kind of deal, where the truck is practically brand new?

#2

Black book say $15950 average trade in and $18600 average retail. Personally, I would get the carfax. I did it [thread=541285] as I mentioned in this thread[/thread], and found out some interesting and potentially deal-breaking stuff. If there is any information in carfax, that may act as a bargaining chip for you.

#3

Assuming you’ve made up your mind that you need to finance an expensive practically new truck instead of paying cash for an older one… (you could probably pick up a decent early 2000’s Ranger for the interest alone on this deal)

Have you figured out the numbers on a new one? You can probably get a lower interest rate on the new one and (though I’m not familiar with the Canadian market) it sounds like this truck is pretty darn close to full price, so you might end up paying less for a new truck in the long run. The dealership is going to try to steer you towards the used truck because they make much, much more money on used vehicle sales than new, especially if you’re financing.

Honestly, if it were me the TV thing would be enough to make me walk… that just screams “funny business” to me. I personally believe that unless you’re buying new, in which case the carmakers usually have heavily subsidized loans, you’re better off getting the financing in advance from a bank or credit union. Not only are the rates usually lower, but having the cash ready to go gives you an edge in negotiating and prevents the dealer from bambooziling you by manipulating the interest rates, sticker price, trade-in allowance, free TV’s, etc.

#4

One other thing to keep in mind is that the depreciation on Rangers is very high-- which is part of why they make such great used buys. If you’re one of those people who buys a new car/truck every 5 years, you might also consider a Toyota Tacoma instead. It’ll probably cost you a bit more to buy new or practically new, but 5 years down the line it might be worth close to twice as much as the Ranger. (A quick scan of my local craigslist shows '04 Rangers at US$5-8k and '04 Tacomas at US$12-15k).

Not only might depreciation affect the total bottom line of this deal if you’re going to sell soon, but you’ll also probably be upside down on the Ranger for almost the entire 7 or 8 years, which in addition to being disheartening, is something to seriously consider if there’s a chance something will happen that will cause you to not be able to keep up on payments. You’ll be in a much more flexible position if you can sell the truck and pay off at least most of the note at any time.

Personally, I think the Rangers are great trucks and that the Tacomas are also nice but overrated, but alas these are the realities of the situation. At least stateside-- maybe Canadians have more loyalty to North American marques and value used Rangers more than we do down here.

#5

Attack,

Where did you get the black book from?

Greasy,

Some good points!
As far as getting something older, I’m just not interested in that right now. I really want something that has some warranty, like this one…3 years bumper to bumper and 5 years powertrain. I usually drive my vehicles till they die and I am getting sick of fixing them all the time. Then there’s the reliability factor, I am getting to old to worry about whether or not I am going to get there, lol.

In the morning I am going to call up the line and get some pricing from them on a new one. I am not sure what the original sticker was but I am guessing that it would be around 28,000, given all the options.

As far as the tv thing goes, they are always doing stuff like that around here. They are a pretty reputable dealer and are quite large. Locally they own Kia, Suzuki, Ford, Nissan Toyota dealerships plus one or two smaller used car lots. Also according to my bank, the dealer can usually shop a better interest rate and I have no credit issues so they should be able to secure me a good rate. 6 to 8% is about the norm for used cars so I’ll be looking for the very lowest I can get.

#6

I can’t imagine why you would want to still be paying for this truck for seven or eight years. Is there any way you can put money into it and have a shorter payback period? If not, have you looked for financing elsewhere (bank, credit union, etc)?

I think it’s best to negotiate the price of the vehicle separately from the financing.

#7

Dewey,
I usually either buy a vehicle for a one or two thousand dollars drive the guts out of it and fix it as I go, or I will finance one for 10 or 12 thousand over 3 or 4 years and pay it out. I just want to get a relatively new, reliable truck. What I don’t want to do is throw 4 or 5 hundred dollars a month at it. As I said before the truck only has 8,200 kilometers (5000 miles) on it so I am hoping to cash in on all the depreciation with none of the miles.

My plan on the financing is to get them to get to a payment I am happy with then I will look for the price I am willing to pay at the lower financing, which should give me the best possible deal. As an example: Over 7 years they wanted 190 bi-weekly. I have them at 165 bi-weekly now, so they either lowered the price and kept the interest rate or they kept the price and lowered the interest rate. Hopefully the latter, and from what he said it is. If this is the case I know that I am willing to pay 18,500 for the truck and I know what the lower interest rate is now, so now I just combine the new interest rate with my price and ta-daaaa, I got my truck. If not, I walk because it’s just not all that important to me. I think, given the economy, they are way more desperate to sell a car than I am to buy one.

#8

Here is a bi-weekly car pmt calculator. You can use it to figure out what they are charging you.

If you paid full 21,995.00 asking price for the vehicle (which I hope you don’t do) a 7 year biweekly payment of 163.00 is approx a 9% interest rate. Not much of a “deal”. Current used car loan rates in the US appear to running between high 6 and low 7%.

If you negotiate by payment with the dealership you are just asking (begging actually) to get screwed. If you have good credit they can play with the term and rate so you are paying for this car forever. I’m stunned that you are actually contemplating a 7 or 8 year financing deal on a $ 20,000 automobile. They’re playing with you and you’re getting boned on these “deals”.

#9

BCAA members can get online black book quotes. I suspect CAA can as well. There might also be a shortcut published in the Lemonade book, which I will look for tomorrow. I’ll PM you if I find it.

#10

You’ve got too many transactions all bundled up together. You want to separate the things.

  1. What is the seller willing to sell the truck for, cash, paid in full? Is that a price you’re satisfied with? Could you buy a similar truck for less elsewhere?

  2. What is the interest rate on the car loan the seller is offering you? Are you satisfied with that? Could you get a better rate elsewhere?

  3. There’s no such thing as a free lunch, nor a free television.

The fact that the seller is selling you on “payments” instead of price already points to him having the upper hand. The “free” TV is yet another sign that he doesn’t do business in a straightforward matter.

If you went to the supermarket for milk and bread, you’d want to see the pricing for the various brands of bread, and all the available milk, correct? And you wouldn’t allow a great deal on a loaf of bread to make you overpay for the milk, would you?

Just like the milk and bread, you’re shopping for two separate items: A car, and a car loan.

#11

Take my advice, and walk far, far away from this truck and this dealership.

Ford, as well as GM and Chrysler, are DESPERATE to sell new, not used trucks.

For instance, in May 2008 I landed a F150 for $19,400 and a 4 year loan at a little over $400 a month (IIRC $433). More truck, less total payments. No one wants the V8s but the dirty little secret of the car industry is that the V8s don’t really consume that much more gas!

Even if you go on a 5-7 year plan, you’ll make out better, and get more truck. The problem is Ford cant sell their V8s but the fact is, they really don’t use up that much more gas than a Ranger . . . . . .bottom line, there’s no reason to get a used or slightly used truck, especially at those usurious payments. They are ripping you off, dude.

#12

What **St. Anger **said.

What the deals are right now, I’m not sure. But if my conversion is accurate, $21,995 Canadian dollars is approximately $20,945 US dollars. And in August of last year (2008), I got a nicely loaded brand new Nissan Frontier 4-dorr pick 'em up with automatic, air, cruise, power windows, CD player, etc, etc. for $17,900 US dollars. The full size V8 trucks from Ford, Dodge, etc., were even cheaper.

Yes, that was the height of the $4 a gallon gas crunch, and the deals might not be quite as good right now, but still…I think you should look at prices for new 2009 (not 2010) trucks, especially the V8s like St. Anger said. I think there are still 2009 models for sale and the delaers would be anxious to ge thtem off their lots.

Again, I could be wrong, but I really believe it would be worth the time to check this out.

#13

Agree.

I know this is IMHO territory, but paying on a vehicle for seven or eight years means - IMHO - that you’re in over your head.

My own rule is this: If I cannot pay off a vehicle in three years or less, I have no business owning the vehicle.

#14

I drive a 2003 Ford F-150 with 43,000 miles on it. It works beautifully. I couldn’t have asked for a better truck. Private party book value is $4,000.

I think that you are getting some good advice here. I don’t think you need to pay that much for the truck you are looking for, and those terms are atrocious. Open an account at a credit union. My local credit union is offering 4.5% on new cars and 5.5% on used cars. This assumes a 740 credit score. It is 4.9% and 5.9% respectively for a 680 or above.

You’ll still be making payments on that beast when it is rusting in the junkyard.

#15

I have a 1995 GMC Sierra with extended cab. I bought it from my neighbor in 2001 for $6K. Paid cash. It now has 160,000 miles on it and still runs great. That’s the smart way to do it… :slight_smile:

#16

All great advice, thanks.

Ford currently has 0% financing on new trucks and I can get the same Ranger, brand new for a little under $400.00 a month for five years. I would prefer a fullsize truck anyway so I think I will go this route. Thanks for all the input, it certainly helped. i wish i had of had more info on the numbers as I ws doing this for you guys, but after the first quote I walked away and the rest was done on the phone. I’ll let you know what happens.

#17

jtgain, Crafter Man,

That’s the way I usually do things also. I think that the last few weeks I thought a nice shiny new truck would be just what I needed. The last one I bought was from a company I used to work for. I paid $2500.00 for a four year old, fully loaded 2000 Blazer (my work truck, that I alone drove) that was dealer maintained at their cost and just had a new tranny put in and 700 dollars in front end work. They did not want to drive it back to the head office a few thousand kilometers away. It’s sitting in the driveway taking up space now. If I had any sense I would just use that.

#18

Another thing is that when I’m at the dealer, I never, ever talk about monthly payments; that can only get you screwed. I’m not trying to say that you aren’t intelligent, but these people do this every day for a living. They can get you the vehicle you want at whatever payment you want. However the terms end up being very bad in the long run: 7 or 8 year financing, a balloon payment at the end, try to pigeonhole you into a lease when that clearly is not in your best interest, and all kinds of extra nonsense fees being built into it that you never think of. You just see “Wow! Three hundred per month! I can swing that!” and you end up getting screwed.

What I always do is get a pre-approval letter from the credit union for the full amount of purchase. If I know that I am looking in the $24k to $28k range, I’ll just get a pre-approval letter for $30k and show it to the salesman right up front.

Now, I’ll tell him that I’ll be glad to hear any financing offers that he may have, and if it can beat what I have in hand, then he will certainly get my business there as well. But again, I only want to hear the terms and let me calculate what that payment will be. I never, never, never speak of payments at the dealership.