Real Car Prices from
a Real Car Dealer

Do Your Own Math!

Car salesmen are masters at leading people down the wrong financial road with misleading numbers. Whether buying a car or a tank of gas, it is easy to be distracted by the numbers in large lettering on the signs. But always think about the difference between the total amount of money in your pocket before and after the transaction. That sounds obvious, but consider these common examples where numbers send the consumer off in the wrong direction.

Buying A Car: Dealers have found 0% financing offers to be one of their best marketing tools. The idea is to distract buyers from looking at used cars by making it appear that they will save money financing a new car. But if you look at the fine print, almost all 0% financing offers are in lieu of a rebate.

Auto manufacturers have created other complicated offers in place of rebates to distract buyers. Before you agree to exchange your rebate for gas you will need to do an extensive mathematical analysis of your driving habits, gas buying, and most importantly all the complicated rules and restrictions attached to the offer.

Buying Gas:  If you focus only on the numbers shown on the signs you might pay more. Before you set off on a trip to the station with the lowest price, think about the total cost.

Let’s do the math. If you drive 5 miles out of the way to purchase gas in a car that gets 20 miles per gallon, that 10-mile round trip will burn 0.5 gallons. If you drive that distance to pay $3.95 per gallon to fill a 15-gallon tank, instead of paying $4.00 at your local station, you only save 75 cents. But your trip to save $0.75 will cost nearly $2.

Extended Warranties:  The reason for pushing service contracts is that the money spent on them is pure profit for the dealer. Extended warranties on cars typically have deductibles and exclude many parts — usually the parts most likely to fail.

Despite what the salesperson says, if you do the math you will usually find that cash is your best bet.

This entry was posted on Monday, August 4th, 2008 at 5:49 pm and is filed under How Much Should I Pay?. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.