I really enjoy buying a new vehicle. And by new vehicle, I mean new to me. Our most recent purchase, which was actually three years back, was our Lexus RX300. Now if you are like most people, when you hear the brand Lexus, you are assuming we must have paid a pretty hefty price tag for that SUV. Well, I think we made out like a bandit – only paying $15,000 for a four year old Lexus with 40K miles. Here was our experience, with a little advice mixed in.
Tip #1: Only buy used: First off, I need to share this. Only purchase a used vehicle. It is mind boggling how quickly your car’s value will drop in the first two years. In fact, over the lifespan of your car, the biggest drop will occur in the first three years. So why not have someone else incur that loss.
Tip #2: Dave’s Advice: Dave Ramsey gives a few great rules to go by. First, only buy a new car if you are a millionaire. Millionaires are the only people who can afford to purchase something that will drop in value so drastically. Secondly, your total value of car(s) for your family should not exceed more than half your annual household income. So if you have a MiniVan worth $29K and a second car worth $22K (which comes out to $51K, you better be making about $100K a year. Simple rule. Good rule. Live by it.
We were looking on the wrong lots. Some very good friends of ours purchased an RX300 and I fell in love with it. They found a great deal and encouraged us to look for one. We went all around the city trying to find a used Lexus RX300 and besides the Lexus dealership we had a tough time coming across them. That’s when one dealership gave us some great advice, which paid off. Look on the Higher End lots. No one is going to trade in a Lexus for a Ford. But you likely find someone trading in a Lexus for a BMW or Mercedes. So down the road to the BMW dealership we went and there she was. Sitting there surrounded by her more snobby four wheeled companions.
Know your Price. We had a budget for our car. It was $15K. We wanted to buy the best car we could for our $15K. It didn’t matter what the monthly payments were to us, or how long the dealership could stretch them out to give us the right monthly fee. We were more concerned about the overall price. This way we could compare apples to apples. You see, you can pay $240 a month for a $15K car, or a $32K car. That all depends on how many years you want to pay.
It was late and our car had a date. We pulled on the lot about 10 minutes before closing time. The salesman who came out to help us slipped and told us the Lexus had been there a while and was due to go to Auction the next day. So it was sell it or lose it for them. I told him, if he was willing to sell it for $15K, and the test drive went well, we’d buy it tonight. His eyes lit up, he grabbed his jacket and the key, and we were off on our test drive in a matter of minutes.
Ready to walk away. Amy and I loved the car. It rode perfectly and we were ready to buy. (I failed to mention that we had done plenty of research up to this point. We had test driven multiple RX300s and we knew the average price for the same year and amount of miles from other dealerships was about $23K). But most importantly, we had a price of $15K. I made it very clear. If he could do $15K, we would buy immediately. The key for us was being able to say ‘No’. It’s very easy to get caught up in the sale and buckle.
Tip #3: Your most valuable weapon: I believe your most valuable weapon is the word ‘No’. Don’t put yourself in a position where you have to buy a car. Give yourself enough time. Have a set budget amount. And be ready to walk out the door. Up to this point we had walked out of three dealerships that had cars we wanted, but would not go below $19K.
Good Husband, Bad Wife. We had Hannah with us and it was quite late, so Amy decided to stay in the truck with Hannah and I went in for the negotiations. At this point we stumbled upon an incredible strategy which we didn’t realize until after. As I sat at the sales table, sipping my free bottled water, the salesman punched all sorts of numbers into his calculator and rustled through important looking papers. And then he looked at me. “I can do 21 for this car.” Wow 6 thousand to go. It didn’t seem likely. I started to get up and explained this was way over what our budget was and reminded him the number I told him up front.
He ran some more numbers and came up with a new number of $19K. I told him the other dealerships we were at were offering at least that price and I would head back to them. This didn’t sit well with him, so he did a few more quick calculations and told me $18K.
This is when our strategy fell into place. I told him I had to check with my wife and headed out to the truck. This put Amy and I in a unique position. I didn’t have to be the bad guy who was turning down his price, and Amy was removed from the pressure the salesman was trying to apply.
Amy opened the window and I leaned in and shared with her the disappointing amount. We both agreed we were sticking to our budget and would have to keep looking. So I went back in and informed the salesman that my wife would not accept his offer. Our price was $15K.
He slouched back in his chair and reminded me of the quality and features of the car we were looking at and tried to change the tune of our negotiations to focus on monthly payment. I re-focused our attention back to the $15K and reminding him that that’s all my wife would accept.
Tire Leverage. One of the unique things about this particular car was that it had a full set of brand new snow tires in the back that the previous owner had purchased. At this point we had gotten the price down to about $15,500 and I brought that number back to ‘the bad wife’ for consideration. She again refused and said $15K. I once again told him she denied his offer and I chuckled inside as this was the very tactic we faced so often earlier in the day as salesmen would come back after their managers denied our offer. He finally buckled and offered $15 but with a condition. We would not get the snow tires.
We don’t want your stinking tires. With a little more pep in my walk I once again approached the tinted window of the truck that my wife sat behind and explained the offer. Amy told me to take it but get the better set of tires. I came back and sat down and placed my fingertips together as I shared my counter offer with a grin. We’ll take the $15K offer, but we get the better set of tires. Put the brand new snow tires on the Lexus and we’ll sign. It was a deal.
Our price and the 8 tires. He drew up the paperwork and must have realized how worthless a set of half-worn Lexus tires were to him and as he laid down the agreement in from of me, he grunted out that we could have both sets of tires.
The next day we came back and picked up our new (to us) Lexus RX300, which has earned almost 70 thousand miles since that day. Lexus’s (or should I say Lexi) on average live to about 300,000 miles, so at 110,000 today, she’s still baby.
Tip #4: Use the Strategy: I hope you enjoyed this article, learned a few good tips, and definitely consider using the Good Husband, Bad Wife Strategy the next time you purchase a new vehicle.
Tip #5: Bonus Car Buying Video: Check out this car buying video. It’s 5 minutes long and has some great advice for buying a new car. Rob Gruhl is pretty humorous too.
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Image credit: gmanviz
Steve Otto is a computer programmer for Paychex, and recently completed 14 years of service in the Army Reserves, before deciding to devote more time to his family. He has been married to his beautiful bride, Amy, for almost 10 years and they have two children, Hannah (7) and Jacob (3). Steve finds time to lead a Young Adult Ministry at his church, runs a very successful Wedding Entertainment company, and also created and runs the blog Ubervice.net.