2. Buying New vs Used

Hello, and welcome to this module Buying New versus Used. So at this point you have already decided to purchase a new car and you understand how much car are you going to afford? Now we have to make a decision as to, should we go new? Should we go use, how does this even take into account with the amount of finances that I have and how can I really, really identify the best thing? So a lot of people ask this question and I’ll share my opinion regarding the type of car that I would purchase, but I’m just going to cover the details, show you how to go about getting into the nitty gritty, and then you can make your own decision. Again, I’m going to share what my personal opinion is in terms of what you should do at the end of the day. You can do with what you think is best.

And then the other thing too, you want to take into account is if you are a business owner and if you own your own business, and if you’re trying to do this for tax reasons as well. So again, everybody’s situation is different. So here is what we’re going to cover. So the first thing I’m gonna break down is the most effective and efficient way to purchase. Not even purchase to find your car that way you can truly, truly, truly, really get clear and enhance your results to find the car that you want. Then I’m going to break down and I’m gonna say, find your car, really find your car, the quickest, easiest, simplest, most efficient way possible. Then I’m going to break down understanding vehicle stickers, especially this really relates to brand new cars, but you need to understand these stickers because some of these stickers would still be on used cars as well, but you need to really get a handle on what these stickers mean.

I’m going to get into the pros of purchasing a brand new car, along with the cons of purchasing a brand new car. I’m also going to get into the pros of purchasing a used car, and I’m going to get into the cons of purchasing a used car. So at the end of this module, you’ll know what direction to go in, because at this point you already know how much car you can afford. Now we need to go into what you have a rough estimate of how much you have in your cashflow that you can afford. Now we need to go into seeing which type of car is going to be the best fit. So, um, how do you find your new car? What’s the most effective way to find your new or gently used car? Well, um, what I suggest you do is you use the internet, okay?

You go to the internet and you find that type of car and you search that specific car. And one of the best sites that I recently found out about, because before we use all these other sites like true car and auto trailer, cars.com, all these other different resources that had information about cars, car gurus is another good one, but autotempest connects all of those websites on its website. And you can search on this site with all of those resources and it’ll give you, it will pull all of those resources across the internet, across the country, in the United States. So that is huge. It’s almost like the kayak for car buying. So this will significantly increase your, um, will decrease your search time, but also figure out how you can get the best deal going into it, because you can see what the price is going for.

Uh, and, and then once you have identified that car you’ll know whether you want to go used or new and how to use it. And then the other thing is does too. This really allows you to see, because you’re searching all over the internet. You don’t necessarily just have to say, Hey, look, I only want to see cars in my state. You can say, Hey, look, I want to see this specific vehicle all across the country. And if it’s cheaper in, let’s say California, and you live in North Carolina and the shipping costs to ship the vehicle. Is still cheaper than if you were to buy a vehicle that was more expensive locally. Then I would suggest you go down that road, or let’s just say, if you ship it versus buying locally, it will end up being more expensive. You kind of get the point.

So the other, the other extreme pro of this website, and because we have the internet is we can use this resource to literally shop all over the country. So I’m just going to pull it up really quickly just to show you guys how I would use this. So I’ve had my heart set on this S63 AMG Coupe, and I have had my heart set on that and also a AMG GTS and an E63. And I just keep going back and forth, back and forth between the three and what I’ve identified there are really priced about the same. So I’m just going to pull up a search in terms of, if I were going to look for the S63 Coupe, that I like to say that’s bigger than expected. I currently have the, uh, XCL 550, um, which is essentially the, the, the previous version of the Coupe.

So what I would do, and you can kind of see right here, I already have AMG GTS pulled up. Um, but I would just go to, you would just find what vehicle you’re looking for. So you would need to be real specific. So that way, and I would say, go into this, knowing what kind of car you want, you already kind of know what kind of car you want. You don’t want to just say, Hey, look, I want to get approved for a car, because if you’ve gone through this process, you, you have good credit. So I’m going to look at that S63, I’m going to do used, I’m going to do, this is the zip code. I’m going to search for them and I’m going to do any miles so I can do within 10 miles, or I can do all three all the way. Any, my suggestion would be just do any, and we’re going to hit search. Okay? Now all of these vehicles are going to pop up. Now what’s going to pull up the S63 for the four-door, but I want the Coupe. I’m not really a four door kind of guy. So although the, the four doors are significantly cheaper than the Coupe. So what I would do is on the left-hand side, you can see that you can, you can, you can kind

Of categorize some of this stuff. So let’s just say, I went to.. All right, so we can use the filter. So S63,

So you we’re gonna keep it with S63, but I don’t want to do the Coupe. So we would do body style and then I would choose Coupe. And then what I can also do

Is if I want to search within a number of miles or within a certain color, but I’m just going to keep it simple. And I’m going to say, I want to search between 2015

and 2017, right.

Is currently 2020s hours of recording this. So if I wonder, and the reason why I’m doing this, this timeframe is because you’ll notice. And again, I’m not going to skew you here, but you’ll notice that when this car first came out, this S63, this car was like $200,000. Now the car, because it’s not just the S class, it’s the S63 AMG class. So it was the couped up version. Basically the highest version that you can get as a Mercedes, and you’re getting it for basically close to 75% off. So we can see right here, here’s one for, um, uh, 2015, 62,000, it’s got 49,000 miles on it. Then here’s another one. You’ll notice it’s 99,000, but it’s got 10,000 miles. Probably wouldn’t go with that one. Here’s another one, uh, 2016, 84,000. And you just kind of keep going through and you can see this one is significantly more higher than this, because it’s probably this, that this body kit, but it’s got low miles, but it’s way, way more expensive.

So you just kind of go here and you see here’s one, um, 50,000. This is an awesome one. This is awesome. Look at this. So you can see it as a 2015 is right under 70 grand has got 17,000 miles on it and it’s on cars.com. So this would be one that I would definitely look at. So we just, while we’re here open up a new tab and that would just keep that there. Then we keep going down. Here’s another one that’s very competitive, but notice, would you rather go with one that’s 69 95 with 17,000 miles or 33,000 miles, obviously go with the one that’s got less miles. So it’s the same cost. So this just shows you the power of looking at a national search, because even if you’re looking at it from the perspective of, Hey,

Hey, look, maybe I’ll end up paying more. If I buy local, well, you will.

We also need to think about the amount of miles. Okay? So this one, this one’s literally half the miles for the same call. So it might make more sense. This one, and they’re both 744 miles away. This one’s 744 miles away from where I am. And this is in New York. This was a New Jersey. Um, and then you, you kind of, I think you’d get the point in terms of how you would go about looking at this. So you just find which one you feel would be the best fit for your scenario. Here’s one for 60 days, got little bit more miles. And all of these cars that are at this price are going to pop up and you’ll be able to see competitively, which one is going to be the best deal. So again, this one’s probably a little bit overpriced, 92,000, it’s a 2017.

So it’s new. Are you new? Are you an, a little bit newer, but the other thing too, you’ll, you’ll notice at least what I’ve noticed is you can’t tell the difference between the 2015 and the 2017. You, you really, I mean, you really can’t. So if I were you, I would just go well with the older one, because it’s already going to have, if that’s what you’re looking for. So I know these cars basically are the same exact car. Literally, the only difference is, is the year. So, Oh, here’s the thing, another good one. This one’s solid 67,036. So I’m gonna get out of this because I, I don’t want to go car shopping while I am teaching you how to do car shopping, but you get the point in terms of how powerful autotempest is when it comes to searching your car.

You want to get real specific and identify the car that you know, you want, okay. That is the moral of the story invented for whatever reason, the car that the other thing I noticed about this site as well is it gives you all the options. And then if there’s no other options, um, for true car was saying, Hey, look, there’s a true car option. You can go directly to a true car. But the other thing is, is that I want to say this one isn’t, you can, you can compare on other sites. So it’s going through these other sites. If I wanted to compare this on another site, let’s just say, I want to go to Facebook marketplace, which is fairly new. I can pull up Facebook marketplace, and they’re not going to go through all of the cars that are similar on Facebook right now on Facebook marketplace.

So I can see there’s one going for 55,000, but it’s not an AMG 63. It’s a five, it’s a 550. So moral of the story is you have the ability to really, um, use these other sites is, um, as resources. So if you want to go over to auto trader, it’s not going to pull in auto trader, but it’s going to give you the direct link to orders trader, and you can really just get into the weeds, right? Here’s another, this is a really nice guy. I wouldn’t get that one and same thing with car brews versus another compare site. So really this is the resource to use when you’re searching for your car. So find the car that you want, use this resource, do all your research on the front end before you even get to the point of use before you, even before you would, I’m going to show you new versus used, but once you’ve identified that, then you do what I’m showing you.

Okay? So let’s get into the pros and cons. So I just showed you the final car in great detail. So now that’s understanding, let’s understand stickers. Okay? So the Monroney sticker, AKA the window sticker. This is going to be a sticker that is on all brand new cars. And the reason why this is important for you to understand this window sticker or the Monroney sticker is because you to really get a feel for what’s going to be included on the sticker and what you need to do as an informed consumer. So that way you don’t overpay and end up paying unnecessary money for something that you could have gotten for a lot more cost effectively. So this sticker is going to include the MSRP, which stands for the manufacturer, suggested retail price. And when you do research on this 1% of consumers pay the manufacturer’s suggested retail price at the end of the day.

So you want to know if this is a brand new car, what the manufacturer suggest to retail prices, and you want to pay that price or below what the dealer won’t tell you is. Even if that’s the manufacturer suggested retail price that you’re paying, they still got the price for a dealer wholesale price, right, or a dealer or a dealer like a dealer wholesale price. I don’t have the specific terminology, but essentially even if that’s what the manufacturer is saying, that they should sell it for. That’s not what they bought it for. So there’s still going to be profit margin in there. So you need to understand what that price is. Then it’s going to be VIN specific. So it’s going to have your, that then of that bill code. So that way you can look it up. There’s a lot of different resources that you can look up.

Vehicle Benz. Carfax is one of them will probably be as relevant for a new car, but you still want to take a peak at the VIN. Any options that are associated with this car is going to be included on this sticker, all the options. So if it’s got, if it has GPS, automatic window, heated seats, Cyrus radio, whatever the options are, it’s going to be included also is going to give you a few estimate and then environmental ratings, what I’ve noticed, uh, could be wrong here, but typically it doesn’t seem like the, the S the sticker rating is, is the, whatever they’re saying for the viewers is pretty accurate. I remember when I purchased. And the other thing too is typically, this is only on new cars, but what you’ll notice is on used cars, this sticker will still be included. They’ll just kind of just have it as a, as a copy to give you so that way you can see, and I’m only bringing this story up, because I remember when I purchased a, uh, uh, used, uh, a gently used car and it had the Monroney sticker on there, and it had the vehicle estimate.

And as, Oh, I’m only gonna pay this much for gas. And I ended up paying way more for gas. I’m like, what is this? So just, just be, uh, you know, be aware of that. Then it’s going to include the parts that are associated with this particular vehicle, any warranty information for this vehicle. And then that’s typically what is covered on the window sticker, AKA, the Monroney sticker. Now, you know what that really means beside that sticker, there’s going to be in some scenarios, and this is real big on used cars in adendum. This is going to be on both used and new, but the addendum you need to pay close attention to, because this is where the dealer really, really makes a lot of money

And everything on this addendum is negotiable. Okay? It’s not as negotiable on the Monroney sticker outside of the MSRP. You can really negotiate the MSRP I’m going to get into in this auto financing module, not in this particular, um, not this module, but in another module about getting financing, how to get the best price. But what you need to know is that everything on this addendum is negotiable, everything. So don’t let them try to give you the straight face with, with the, with the glasses. And if they have a beard, you know, I always say straight face when aggressive beard, give them back your face. If you happen to be a woman, give them back the straight face with lipstick. What do you want from me? Right? And just give them the stern face. Hey, look, this is negotiable. I don’t want that straight face.

Right. Then you just need to know this is where the dealer is going to make their money. Okay? So the moral of the story is this addendum. You need to pay close attention to and get as much stuff off of there that you don’t necessarily need, because it’s going straight to their pockets. Now, uh, there’s another sticker that in some scenarios could be included, but not always is included in this really happens. It’s called the ADM and the ADM really stands for Additional Dealer Markup. And this typically happens with vehicles that are, that are in low, low supply, but high demands case in point I still want. And I don’t think I will get, I still really, really want a, I want a couple of cars actually being to be honest, cars are a soft spot for me, but there’s this car. It’s a Ford Mustang GT 500 2020 model with 720.

You heard me right. Horsepower crazy. It’s just ridiculous. That has that much horsepower. However, that would be an, that, that would be an example of a vehicle that would have an additional dealer markup because they’re saying, Hey, look, my supply of this vehicle is low. So I feel like I can charge more. That’s negotiable too. So you just need to be aware of that, that ADM fee. Now, what are some of the pros of a brand new car? So let’s go and hop in. So the pro is everything that’s going to be included on them. And no more Monroney sticker will be your sticker. You will be the one to experience the new car. You have that new car smell. You will have the ability to customize your car down to the seats that the color, the wheels, the rims, it will truly be your baby.

It will be a reflection of where you are at that point in your life. You typically are going to get better financing options with new cars. I have yet to see a financing option that was 0% interest for a used car, but you see those 0% interest financing options on the TVs and cars all the time. And that’s because it’s a brand new car. Uh, you get the latest model. So you’re going to have the best, you know, so you’re going to have like the.. The cream of the crop when you get it that year, and you’re going to feel really good. You know, I bought a brand new car. I still own that car, but I bought that car 10 years ago, brand new had 79 miles on it. I didn’t get a chance to customize it, but it was a brand new car had that new car smell, brand new leather seats, awesome system.

I washed it all the time, but then I paid through the nose for that car. You’re going to typically get the best manufacturers warranty. And in some scenarios you can get maintenance for maintenance free for a few years, depending upon how good you are at negotiating. So that is a huge thing. So that was, remember, that was one of the things we want to think about when we’re looking at our car buying ratio is maintenance. Now, some of the, some of the cons of a new car, well, you’re going to get less value for the money because you’re going to pay more in the long run for that new car. And the reason why is because as soon as you drive off the lot, that is correct, 30% depreciation, the moment you drive off that lot. So that car is typically going to be, if you bought a $10,000 car, it’s going to be worth 7,000.

The moment you try to drive off when you drive off the lot. So if you try to come back and sell that car to the dealer, they were like, all right, well, we’ll give you 7,000 for what you want from us. So, which is very, very, a huge, a huge disadvantage, which leads me to the next thing, which again, even though you got great financing on the car, let’s just say you got 1% or 2% or 0% interest. The fact that you lost 30% in value, cancels out the fact that you got that better financing, right. Or that low interest rate. And you’re going to end up paying higher vehicle taxes because it’s a higher price for that new car. And new cars are going to have higher insurance premiums because it’s a brand new car. So it’s going to cost the insurance company much more money to fix that car, assuming you get into an accident.

So these are some of the kinds that you have to take into account when purchasing a new car. The biggest one though, is you will pay more because of instant depreciation. And in my opinion is just not worth it. Right. So I just showed you on the previous slide. How, how I’m looking for actively, actively, but inactively for a car that’s 75% off because it’s used. Okay. So in my opinion, new cars, I’ve, I’ve only purchased one new car. And I paid through the nose for that new car. It was really, it was not worth what I paid for it, but I got all those bells and whistles. I won’t do it again. And what I typically do now is I look for used cars, because think about it, look at the CL 60, look at the car that I’m looking at, right?

And then I get into the cons, right? I mean, the pros the media pro is it’s more cost effective, right? You can get the same car, um, as a bringing it the same type of car for significantly cheaper. So think of it this way. So if I went out and I bought a brand new Mercedes, right, and I wanted to buy a brand new Mercedes for $60,000, well, I can probably get an E-Class. E-Class like a regular E-Class 2020 for $63,000. Or I can go purchase a gently used S63, $200,000 car. When it first came out for the same exact price. Why wouldn’t you do that? Why wouldn’t you want to get a car 75% off or 70% off again, I’m, I’m, I’m going to be skewed here because I’m all about cost effectiveness. So I won’t go too far, but you get the point between new versus used and how you can get way more bang for the buck when you go used.

And you can still have a significantly nice car not to mention, am I getting the cheaper, the S coupe or the S version in Mercedes is much more, um, it’s the highest, it’s a higher, highest set next to the may back under the Maybach that you can get from Mercedes. And I just happened to be talking about Mercedes, but this happens to be the same with Ford Lincoln, Lexus BMW, you name it, they’re all gonna work the same way. I’m really breaking down a philosophy. You’re going to get lower insurance, because again, the, the, the dealer does not have to finance. Let’s just use my example of $200,000 car. Now, the insurance company, they’re going to finance a $60,000 car, and it’s not going to be brand new. And there’s going to be a lot more parts and things available for that car because I’m buying it because it’s already been out in the market.

The other thing I’m gonna pay less taxes as well, because it’s by them, I’m purchasing a used car. And then depending upon how I purchase this car, um, there’s typically I’m showing there’s no 30% depreciation, but again, you can pop, you can purchase a used car and have positive equity. So you can purchase a used car that may be worth $75,000. Kelley blue book value and Kelly blue book is it’s a tool that you can use Kelly blue book. And then there is another research tool called Carfax, which these are common things, but you may purchase a used car that the dealership is trying to get rid of, and you might purchase it for four or $5,000 under the retail price. And guess what? The bank is going to finance that car at that amount, because that’s how much they’re, they’re selling it to you for.

So that means you stop you, you can resell that used car. If you don’t go to, if you don’t use it too much for, and not being a negative, you can be in a positive equity position. So that’s another pro you can, when you purchase correctly, you do your research. You can be in positive equity. Um, and again, you get way more value for the car and what I was just explaining, because again, when you do your research, like you can find really, really great scenarios. Like, again, I’ll, I’ll just pull this up. Cause I had this up right here. So if we’re looking at this Mercedes, they went in ’69, 954, and then there was another one that they’re wanting. Um, here, here’s a good example, then wanting 59,000 for this one, but it’s got 69,000 miles on it. This one, again, we can just use apples, apples, 6,981, 52,000 miles.

This one’s going to be less the dealers making more on this. And they have the Kelley blue book rating here versus this one. I will be getting way more car with 17,000. So this one’s actually worth more, but I’m getting a good deal as an, as an example, right? So that way you can kind of, I can really drive that home. Uh, the other thing is, is that when you looking at the used car, this is what I typically suggest you look at. You want to look at a car that’s two to five years old because it’s going to have a depreciation. You’re going to really, really get a good bang for your money, um, less than 50,000 miles, in my opinion, the lower the miles, the better and no accidents with a clean Carfax. So you can really look into the Carfax. You can see if they have, how many drivers, how many owners has been.

So I would say two to four owners is cool, but what you’re really looking at is no accidents with the Carfax. Cause there are dealers that won’t tell you about the accidents and they won’t tell you about the Carfax and you’ll pull the Carfax. And you’ll notice that this is this isn’t a good deal, which leads me right into the cons. So the first time when it comes to purchasing a used car is there’s fewer financing options at low interest rates. Like I covered before, when we covered the tiers for auto lending, you noticed that used are going to pay more. You’re going to pay more financing for used car. But however, when you look at the conundrum here, what I’d rather pay a slightly higher interest rate with a lot less depreciation with a car that I’m in positive equity at, at a discount, or would I rather pay a low interest rate for a car that I know is going to depreciate by 30,000 up 30%, as soon as I drive off the lot.

And then now I’m in a negative equity type of situation. You get what I’m saying? So yes, this has fewer options, but again, if you’re financing options going to pay more, but that’s just a con. The other thing is, is that you have to make sure you do a thorough background check of the car. So you need to do your research. So you don’t want to just look at the price. You can look at the price, you will look at the Kelley blue book value. Do you want to understand if it’s a limit, you want to look at the Carfax, you want to get it inspected. You want to do all these things, because this is something that you’re going to be purchasing, right? For 20,000, 30,000, 40 or $50,000. This isn’t a cheap thing. And this is a major purchase. Uh, there are no lease options for used cars.

So you won’t be able to lease a new, uh, a used car. That is an option that is a pro. I should have concluded that that is a pro for you, new cars, you can lease, but you cannot lease used cars. You can only finance them. Um, you could potentially buy limit. So that’s and you can literally buy..they sell them. And I won’t go into this dissertation about lemons, but they do. You can purchase a vehicle that sells lemons. And what happens is like state the state of California, huge on this many consumers got wind of able to buy a brand new car. And then they would say, Hey, look, this car isn’t doing something. And then they would complain to the dealer directly or complain to the state that this car is having manufacturer issue, warranty issues. And then what would happen is that the manufacturer would have to, or, you know, the manufacturer or the car company would have to buy the car back.

And then the state would force them to buy the car back. And then the consumer gets himself out of that car. And they basically get the brand new car, the brand new equivalent without having to buy a, you know, basically without, without the depreciation, so to speak. So that’s a way that you can still buy a limit, but they could say, look, the, the clock wasn’t working in the car, then it gets put as a limit. If it, now you purchase, you purchase a limit who was deemed as a limit, but it wasn’t necessarily a limit to start with because of the scenario I painted. So, but you could potentially buy a limit that is literally a lemon, so it’s bad, or you can buy a lemon that was deemed as lemon, but it really wasn’t an actual limit. So that’s something that is a con it’s, you have to be aware of.

And then there’s going to be a limited manufacturer’s warranty if limited or no manufacturer’s warranty, which means you have to think about the overall cost and the thoroughness of the background check that you do for that car. Because if you purchase a car and it’s got a problems noticeable, and the manufacturer’s warranty is about to be gone, now you’re purchasing somebody else’s problems. Okay. But that really wraps up the new versus used car scenario. In my opinion, I suggest you purchase a used car because of all the reasons that I’ve already covered. However, if you do want to purchase a new car, I’m going to break down in the next module in either way new or use how to get the car for the best price. But again, my suggestion gently used 2 to 5 years old. That’s already depreciated get great financing, and you will be able to get a win-win situation. All right. And I will see you in the next module.