If it sounds too good to be true question on a new vehicle.

[spikerS]

Hi guys, Wife and I just came back from car shopping. We went out with the idea that we will not be purchasing a new vehicle until December.

Most of you remember the story behind buying the PT back in February, so I am not going to re-iterate it.

Long story short...ok, not too short....

Went to a dodge dealership, and talked to new car sales. After telling the guy what we wanted, he offered up a few ideas, and one of them was a brand new '07 Dodge Ram 1500 SLT quad cab.

My wife and I looked at each other in astonishment! We had a budget of $400 a month, and while we both want a full sized truck, knew they were priced out of our budget. When we had done this before, we found they were usually $6-700/month.

Now it does not have a HEMI, but the 4.7L V8, auto, quad cab, 4x4 and trailer tow package, plus a few other things.

Now the guy says that he will have to bring the truck in from Nanimo, BC. payments are going to be $399/month for 48 months on a in house lease with a rate of 2.99%.

Now we told him that we were not looking to buy until December, (I have negative equity in the PT right now, and need my stock options from work in december to cover it), and says well, put a $250 deposit down, they will bring the truck in. I can take a look, decide if we like it kinda thing. Basically, he gets us approved for the truck, put our deposit down, bring the truck in, and he puts the truck on the lot till December with a sold sign in it.

Is it just me, or does this seem really fishy. I went to A Ford dealership right after, asking if they could match this price at all, and the salesman said it is a good deal, and that they could not even come close to matching it....

what do you guys think? is there anything I should be asking, and how can I protect myself if things don't work out like the salses guy is leading me to believe.....

[Supa Dexta]

I think your digging a bigger hole for yourself on each of these vehicle purchases... :dunno:

[canuckcarguy]

Clearly, they're quoting you a 4 year lease, and at $400 per month, and a very low rate of interest, you're basically paying about $20K toward the price of the brand new truck, plus whatever you're giving him as a down payment. That's the key - what is the down payment?

Figure out what's actually due at signing, and do the math. It's a pretty low payment, but it's a lease - you're essentially renting the truck for 4 years, at which time you'll have absolutely no equity - which is the position you're in already with the PT cruiser. Have you considered actually finishing paying for the PT Cruiser, so that you own something?

Not trying to be judgmental, but you'll never break the cycle unless you finish paying for at least one car. The dealer knows that you're going to return during or at the end of your lease, and they have another opportunity to talk you into another vehicle.

Anyway, just my 2 cents. Good luck.

[spikerS]

sorry, this is Zero down. and the $399 payment is including all taxes.

And the reason I don't want to keep the PT is that we don't really like it, but what we could afford.

The truck fits all our needs, 4 door, room in the back for the kid, box for the 2 dogs, and can pull a trailer.

Having said that, a SUV will work as well, but we both want a full size truck.

This truck will probably be with us for 5 or 6 years, so we should be ok that way.

[canuckcarguy]

Well, it's the end of the year, so the prices are probably good for that reason. any rebates offered by Chrysler Canada will be retained by the dealer. It sounds like it might be a pretty good deal, just make sure you read the fine print on the contract. It's weird that they're going to offer you in-house financing at such a low rate, that's not typical for sure.

I still think the better financial move is to keep the current car, or if it doesn't work for you, shop for a used truck. Plenty of 3-4 year old club cabs with low mileage in the mid-20s, and even though you might pay a slightly higher interest rate, you'll own an 8 year old truck in 5 years, rather than having to refinance, or purchase new, in 4 years. For the big savings, shop in the US - the combination of their slow economy and our strong dollar makes for some awesome deals.

If you're building credit or whatever, it still makes sense to buy used, and let somebody else eat that big depreciation that occurs in the first couple of years.

Good luck with the decision, make sure you let us know how it works out.

[spikerS]

what i am really wondering about, Why are they offering to keep the truck on the lot for so long? i mean, they can probably sell this truck off 20 times between now and december.....

[canuckcarguy]

Yeah, it sounds a bit suspect, but I guess if they have your offer, they can bring the truck in from another dealership, and then if you decide to buy it, they've got a guaranteed sale. If you decline the deal, they sell it to somebody else...

[Mitsu3000gt]

I'd be a little skeptical but the american car manufactuers are all hurting right now so they often have some pretty ridiculous deals floating around. Also that $250 deposit sounds like what it costs to truck a car from BC to Calgary, so make sure you can get that money back if you choose not to accept the deal. Also, check about any mileage obligations in the lease. Sometimes a lease can look great but if you go over your contract kilometers they bend you over and you will feel like Jodie Foster in "The Accused".

On another note, does anyone know how jeep's lifetime powertrain warranty works? Do they consider "lifetime" 10 years or something like that? They sure seem desperate to sell cars these days.

[urban.one]

I agree with the 2nd poster in this thread in that youre just digging a hole for youself with these purchases. I searched and tried to find the PT thread and couldnt but found threads about some of your other car buying/selling.

As for your question if its too good to be true... The thing to remember is that the dealer isnt your friend. The dealer isnt going to sell you a vehicle and lose money on it. Theyll sell the vehicle at market value. Theres no way this dealer is going to set you up with a lease at $400 per month where another dealer with similar terms can only offer you $600 or $700 per month. This is an American manufacturer so low rates should normally always be available. So if you look at equal lengths of leases, the monthly rates should be similar unless one dealer is selling you the truck at a significant discount and thats unlikely.

Id recommend that you step back and look at how much the total cost of the vehicle is going to be. What have you paid for your vehicles in the past couple of years? With negative equity in the PT and the cost of this lease, how much will you have paid for this truck at the end of the lease in total if you decide to buy it out? What if you walk away from it, how much will it have cost you?

December is a long time away and you might change your mind on the truck in that time. If you cant afford it now, then dont do it.


Originally posted by spikers
Hi guys, Wife and I just came back from car shopping. We went out with the idea that we will not be purchasing a new vehicle until December.

Most of you remember the story behind buying the PT back in February, so I am not going to re-iterate it.

Long story short...ok, not too short....

Went to a dodge dealership, and talked to new car sales. After telling the guy what we wanted, he offered up a few ideas, and one of them was a brand new '07 Dodge Ram 1500 SLT quad cab.

My wife and I looked at each other in astonishment! We had a budget of $400 a month, and while we both want a full sized truck, knew they were priced out of our budget. When we had done this before, we found they were usually $6-700/month.

Now it does not have a HEMI, but the 4.7L V8, auto, quad cab, 4x4 and trailer tow package, plus a few other things.

Now the guy says that he will have to bring the truck in from Nanimo, BC. payments are going to be $399/month for 48 months on a in house lease with a rate of 2.99%.

Now we told him that we were not looking to buy until December, (I have negative equity in the PT right now, and need my stock options from work in december to cover it), and says well, put a $250 deposit down, they will bring the truck in. I can take a look, decide if we like it kinda thing. Basically, he gets us approved for the truck, put our deposit down, bring the truck in, and he puts the truck on the lot till December with a sold sign in it.

Is it just me, or does this seem really fishy. I went to A Ford dealership right after, asking if they could match this price at all, and the salesman said it is a good deal, and that they could not even come close to matching it....

what do you guys think? is there anything I should be asking, and how can I protect myself if things don't work out like the salses guy is leading me to believe.....

[canuckcarguy]

+1

[Supa Dexta]

Also note, gas will be a lot more, even in a 4.7 it will drink it, it still has to lug a big truck around...

[Redlyne_mr2]

I imagine the residual is going to be sky high.. reason for the super low payment. He cannot guarantee you the rate so at the time of delivery, if the rate is higher, you will end up with a higher payment. But yah holding a truck for that long isnt really that big of a deal.

[simke]

That sounds too good of a deal. I just leased a '07 Ram ST 4x4 with Hemi from Renfrew back in February and I think I got a sweet deal on it. 48 month term, 0% lease, with zero down, and 24k a year (when everyone gives only 20k) and with maintenance plan.. all for $535 tax in!

I don't think you gonna find a full size truck for $400 unless you give $3000-4000 down.

I'm actually thinking of seeing if anyone will take over my lease since I plan to be house shopping sometime next year. So, if you interested hehe:D

[urban.one]

Theres a Dodge ad in the Herald today. I took a look at the Dodge Canada website. Based on MSRP, 2007 DODGE TRUCK Ram 1500 SLT Quad Cab 4X4 SB payments are $454. I think the long box is cheaper at about $433.

Without killing too much time looking into the details, I dont think youre getting a hot deal at all. Depending on your truck, theres $1000 cash back now as well.

How are you working it with your PT? Whats the value youre getting on that?

If you know the exact details on the truck you want, call around to a number of dealers and ask what the best deal you can get? Ask them to fax you the lease details.

This sounds like a King of Cars episode where the buyer doesnt care about anything except a low monthly payment.

[Lex350]

While I somewhat agree with most of the posters in this thread using the words Equity and Buying a car in the same sentence is just not vaild.


UNless you have a highly collectible car you will alway lose money whether you buy it or lease it. Sometimes a lease does make sense.

[urban.one]

Leases can be great for a lot of people and a lot of different situations.

BUT its probably not a good idea to lease a car and then change your mind and decide to lease something else. Especially when youre looking to lease something more expensive and do not have the cash on hand to make up for being upsidedown on the lease of the first vehicle.


Originally posted by rotten42
While I somewhat agree with most of the posters in this thread using the words Equity and Buying a car in the same sentence is just not vaild.


UNless you have a highly collectible car you will alway lose money whether you buy it or lease it. Sometimes a lease does make sense.

[canuckcarguy]

Leasing is not a bad way to go if you can write off the payments against business income (your situation has to allow this, talk to your accountant), or if you plan on buying it out in the long term.

However, whenever you aquire a new vehicle, whether you're leasing or financing, you're eating the depreciation. If you buy a used vehicle, somebody else has paid it.

With these leases nowadays, you own nothing at the end of the term except the option to buy the vehicle, and with today's high residuals, it's usually not worth buying (especially on Domestics, which tend to be worth the same as or often less than the residual value). Unless you've got a ton of cash, it doesn't make sense. If you're looking to build some equity in your life and improve your credit, buy used. If the OP was to buy a 3-4 year old well-equipped club cab, he'd easily find something in the low to mid $20K range, and own it outright in five years within the same payment range. Even with heavy depreciation, he'll have improved his net worth by $5K-$12K, and he won't need to necessarily buy a vehicle immediately, so can bank those monthly payments for a while. But people get in a cycle, need the shiny new car, and never break away. Ever look around you at a parking lot at all the new cars? I always wonder what percentage of these people are actually wealthy, and what percentage owe more than they own.

[Aleks]

Originally posted by canuckcarguy
Leasing is not a bad way to go if you can write off the payments against business income (your situation has to allow this, talk to your accountant), or if you plan on buying it out in the long term.

However, whenever you aquire a new vehicle, whether you're leasing or financing, you're eating the depreciation. If you buy a used vehicle, somebody else has paid it.

With these leases nowadays, you own nothing at the end of the term except the option to buy the vehicle, and with today's high residuals, it's usually not worth buying (especially on Domestics, which tend to be worth the same as or often less than the residual value). Unless you've got a ton of cash, it doesn't make sense. If you're looking to build some equity in your life and improve your credit, buy used. If the OP was to buy a 3-4 year old well-equipped club cab, he'd easily find something in the low to mid $20K range, and own it outright in five years within the same payment range. Even with heavy depreciation, he'll have improved his net worth by $5K-$12K, and he won't need to necessarily buy a vehicle immediately, so can bank those monthly payments for a while. But people get in a cycle, need the shiny new car, and never break away. Ever look around you at a parking lot at all the new cars? I always wonder what percentage of these people are actually wealthy, and what percentage owe more than they own.

You don't own a financed vehicle until the last payment is done either. In most cases leasing vs financing will come out to very close in the end. With some Cars leasing is actually cheaper.

To the OP. You should not be going in there and saying 400/month is my budget. You should negotiate the price of the truck, find out the residual for each term and go from there. Any dealer can make your payments work (within reason) via Down payment, residuals, interest rate etc...

[canuckcarguy]

Originally posted by Aleks


You don't own a financed vehicle until the last payment is done either. In most cases leasing vs financing will come out to very close in the end. With some Cars leasing is actually cheaper.

Leasing can definitely be cheaper in terms of payments, and often the first years of ownership are cheaper under a lease. Clearly, if you're leasing a vehicle over 3-4 years, rather than buying it over 3-4 years, your payments will be lower. And, as I wrote in my post, leasing can be a good deal if you're planning on eventually paying the vehicle out.

If you're financing, you might not own the vehicle outright until the final payment, but you'll have equity once your payments catch up to the depreciation. I might still have a mortgage on my house, but I own it. I have equity in it. And if I sold it, I'd pay off the bank and still get a cheque. That won't happen with a no-down-payment lease, but it can happen toward the tail end of a financing agreement.

I'm in finance, and I've seen this scenario too many times to count. I'd bet dollars to doughnuts that the OP will not own the Dodge, ever, the same way he's determined not to own the PT Cruiser. He'll visit the dealership at or near the end of the lease term, and they'll talk him into another payment. The problem with a lease is that you never save up a downpayment, so you become addicted to the payment plan.

[urban.one]

Sure it will. Residuals often times are lower than market value at the end of the lease.


Originally posted by canuckcarguy

If you're financing, you might not own the vehicle outright until the final payment, but you'll have equity once your payments catch up to the depreciation. I might still have a mortgage on my house, but I own it. I have equity in it. And if I sold it, I'd pay off the bank and still get a cheque. That won't happen with a no-down-payment lease, but it can happen toward the tail end of a financing agreement.

I'm in finance, .

[sputnik]

Originally posted by rotten42
While I somewhat agree with most of the posters in this thread using the words Equity and Buying a car in the same sentence is just not vaild.

Perhaps you should look up the word "equity" in the dictionary.

Most people that lease Honda's have equity in their cars because when it comes time to buyout the lease the car is usually worth more than the buyout because they tend to depreciate slower.

So people will use that equity as leverage when trading in the car for a new lease.

[canuckcarguy]

Granted, you will occasionally have equity toward the end of a lease, especially on imports, where the residuals are typically lower. But good luck ever having equity on the Dodge the OP is considering...

[Redlyne_mr2]

Originally posted by canuckcarguy
Granted, you will occasionally have equity toward the end of a lease, especially on imports, where the residuals are typically lower. But good luck ever having equity on the Dodge the OP is considering...
Yah this is the never never plan... he'll never see equity but if he's all about the payment and use of the vehicle then its perfect for him.

[spikerS]

well, the truck suits our needs perfectly, while a SUV would as well, we both would rather the full size truck, Hell, up until 6 years ago, i lived on a farm! The truck is in my blood!

we are not looking at the equity side of things. we are shopping for the car we want, and were just surprised at the payments for a vehicle that up until this point was priced out of our budget...

[20incheyes]

I don't have the time to read through the thread fully but I suspect you aren't trading in the PT with the $399 deal. When I bought my last Ram recently the hemi option was $1050, which equals to about $700 on a 48 montt lease, I'd get the same truck with the hemi for the additional $15 a month if you're planning to keep it past the lease. The fuel milage b/w the two is very similar as long as you don't stomp on that hemi too often.