Read Part 1 here.
After about 20 minutes or so, after repeated visits from the other salesmen coming into the break room telling me how awesome the new 4Runner was, and how “lucky” I was to be purchasing it (I later found out that this is another tactic employed by dealerships to boost the adrenaline of unsuspecting shoppers), Eric came back in with the “deal sheet” with the purchase price of the vehicle, my trade in, my $0 down payment, and the new monthly payment.
“$836″ I couldn’t believe what I was seeing! “I’m not going to pay $836 a month!” I was actually mad that they had gotten my hopes up to get the vehicle near my price range.
Well they got the reaction they wanted out of me. They where just setting up a high threshold for me, so that when I finally did agree on a price I would feel like I got a deal.
“Well Ben, I’m sorry, that’s what the payments come out to considering your trade, and no down payment. But, there are other options. Have you considered a lease?”
I was somewhat familiar with leases; I knew that you pay for the depreciation of the vehicle (plus a “little” profit for the dealer and manufacturer) that you are basically renting, along with wear and tear, and that you were also responsible for regular maintenance issues with the vehicle.
What I also knew, but was to caught up in the excitement of the hot new SUV that was sitting out in the parking lot waiting for me to drive it home, was that the lease was designed for people who couldn’t otherwise afford the payment had they bought the car. Yet here I was, looking at a car that cost more than half of my yearly income at the time.
“Well Ben, I thought that the monthly payment would come as a shock, so I took the liberty of preparing a couple of lease quotes for you”. Eric was quite proud of himself for anticipating my shock over the initial quote. “You can lease the truck for 36 months for $568, or $470 for $48 months, both leases will allow 15000 miles a year in mileage.”
Now I was starting to settle down a little bit, Eric had deceived me into thinking that maybe this wasn’t such a bad deal yet and we could still agree on a payment. Of course I wasn’t factoring in that I was now leasing the vehicle instead of owning it.
I probably would of settled for the $470 payment, but my financial instincts (what little of them were still functioning) took over and I tried to see if I could make my monthly payment any less painful.
Again, monthly payment shopping is DUMB!
I asked Eric, if there was anything we could do to bring the payment down.By now, the general manager, who had been listening in on our conversation the entire time, was sitting at the break room table with Eric and I as we started the final “negotiations”.
“Let’s see” said the manager. “You know it’s the end of the month and we really need to move this unit to meet our numbers, however, we’ve already factored that into the price we are offering you. But since we want your business, let me see what I can do. I’ll be right back.”
The GM slid back into his office and quickly returned with a calculator.
He said “alright, if you put down $1500 today, we can get your payment to $430, how’s that sound to you? Do we have ourselves a deal?”
“Umm…well, yeah I guess” I still wasn’t sure, but I HAD TO HAVE THAT 4RUNNER!
He hadn’t really given me any more of a discount, he just had me pay a bunch of the capitalized cost upfront which, in hindsight, defeats the whole purpose of a lease.
“OK, great! I’ll have Eric here finish up the paper work and we’ll have you on your way!”
“Congratulations Ben, you made a great decisions today! We know that your going to be thrilled with your new Toyota! Welcome to the family!”
I was so proud of myself. It was like I had entered some elite fraternity. The only problem was, the bar for entry was having a job, and being stupid!
It wasn’t that I was unhappy with my purchase. I loved the vehicle and the reality was I didn’t mind making the payments on it, I was just to stupid to know any better.
I can’t blame the dealership, they were just doing their job. They’re not just selling cars, their selling dreams and helping people realize them.
If I had bought the used 4Runner instead for the $18,000 the dealership was asking I could of paid it off in the same 4 year period as my new lease for roughly the same monthly payment. However, I would have OWNED the used 4Runner at the end of the 4 years and could still be driving it today! But instead I paid $6000 to break the lease and buy another new car 2 1/2 years later because my wife and I felt that we needed a more “economical car”.
If I had bought the used 4Runner and kept it to this day (my guess is more than 90% of 4Runners from 1997 are still on the road) I could of saved myself $54,500 in the price and interest for the two cars that I have bought since then! Man, I wish I could have a mulligan!
Fortunately, we’ve been a little better this time around and have kept our current car for 6 years. We do plan to upgrade to a larger vehicle soon, but we won’t be leasing this time around!
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{ 2 comments… read them below or add one }
Very good comments and good ones to learn for new buyers. Leasing…how dumb but so smart for car dealers.
My experience is the same. We wanted to downgrade and tried to break the lease but it would be too costly. This is our second lease (didn’t learn the first time).