Hey Cool Car Fans,

I have people ask me all the time to get them Kelley Blue Book for their trade-in vehicle.  Some people get confused when I cannot get the NADA or Kelley Blue Book wholesale trade value for their vehicle.  I believe it’s because they have a misunderstanding of what Kelley Blue Book and NADA book values really are designed for.  Understanding the history of the Kelley Blue Book will help to see how this tool came into being and what it has become over the years.  I decided that I would write a quick post about this topic to educate my visitors about the subject.

In the early 1920s, there was an auto dealer named Les Kelley who sold a ton of vehicles through his very successful car dealership.  He created a list of cars that he wanted to buy from dealers and banks and he promised to pay a stated amount to any dealer or bank that would bring him one of the vehicles on his Kelley list.  Dealers would get people who would come into their office wanting to trade their vehicle and because Les was so good at estimating what a car was worth, the salesman would pull out Kelley’s list, see if the car was on it and then use it to make an offer on their vehicle.  His list eventually evolved into what became the Kelly Blue Book, which is an actual book, but more people go to KBB.com today.

However, Kelly Blue Book today doesn’t buy cars for what they say they’re worth anymore, like Les would do.  He wanted the vehicles for his used car inventory, so that he could turn a profit on selling them.  What they are actually doing today is just giving an “opinion” and they make it clear on their site that actual prices depend on market conditions, vehicle conditions and all kinds of other disclaimers that they have in their fine print.  This is because every vehicle is different and no two used cars are the same.

Think about it logically for a minute and take the emotion out of the equation.  You and your neighbor could own the same exact 2008 Jeep Grand Cherokee, but your neighbor may be letting her teenager son drive her Jeep.  The 17 year old is bouncing it off curbs periodically, taking it off-road with his buddies and your neighbor hardly ever changes the oil.  In the meantime, you baby your Jeep, it looks like the day it left the showroom floor and has 5,000 fewer miles, regular maintenance, every time a light bulb gets dim you change it.  Are these two vehicles both really worth the same?  According to Kelly Blue Book they are because they are the same year, make and model.

Many of the pricing guides, like The Black Book, Kelly Blue Book and NADA also pull auction data now as well.  I’ve stood in the lane at the Dealer Auctions right next to someone working for these “sources”, who will write down what vehicles are selling for at the auction.  They don’t take into consideration though that one vehicle may be a condition of 2.0 out of 5.0 and another may have a condition of 4.0 out of 5.0, so they are not exactly the same vehicle.  A vehicle may not have a clean CARFAX and might have been in an accident that isn’t disclosed in the dealer lane either.  They have to average all the vehicles to arrive at what they believe that one is worth for their book values.

When it’s time for you to sell your vehicle, you go into your local Dealership and the Used Car Manager looks up what your vehicle has been selling for at the dealer auctions.  He gives you a price for your vehicle based on the average of recent sales without considering the condition of your vehicle because he may have to sell it at the Dealer Auction himself in 30 to 60 days, if it doesn’t sell on his lot.  He is also going to subtract for if the tires are worn, the windshield needs to be replaced or there are other problems with the vehicle that need to be repaired, should he want to try to retail  your vehicle.

This is the reality of the automotive business, which is why Kelly Blue Book and NADA are vehicle guidelines.   The real purpose of these resources are so that banks and credit unions can loan money on a particular vehicle.  The banks need some way to know that the money they are loaning on a vehicle has collateral that can be taken back and sold to recover their investment, should the borrower default on the loan.  This is the real value of knowing the “book value” of a vehicle.

________________________________________________________________________

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

REAL STORIES OF CARFAX PROBLEMS

Hey Cool Car Fans,

A few years ago I wrote an article about the problems with CARFAX and how it’s not a fool proof system for checking out a vehicle.  The problem of course is that most people think that it’s Gospel and fail to thoroughly investigate a vehicle from multiple sources before purchasing or selling their vehicles.  Since I first wrote that article, I have been contacted by television station reporters, who have interviewed me as an expert and individuals telling me their horror stories and challenges, asking for advice.  I can’t post all of the emails that I have received over the years, but here are just a couple examples that will give you an idea of what it’s like to be a “seller” instead of a “buyer” with a third-party website service devaluing your vehicle.

In other words, CARFAX and other online car history reporting services can be great tool for buyers, but it can be a nightmare for sellers when the information provided is not correct. The two emails I’m showing here are mild compared to some of the stories I have received where people have lost thousands of dollars trying to sell their vehicles that reported wrong information or information after they have purchased their vehicles.

My own vehicle is a great case in point on how CARFAX can miss the boat and give people the wrong impression about a vehicle and its history.  I purchased a 2010 Mercedes C300 4Matic off the show room floor.  When I recently pulled the CARFAX to sell it, the vehicles history show that there were two owners.  This is because I originally leased it, but I bought out the lease.  There were not actually two owners of the vehicle, but really just one owner.  The CARFAX doesn’t know this though because it just sees that a lease was bought out.  It doesn’t tell the whole story, but only part of the story, so someone buying it would think that two people owned the vehicle based on the CARFAX report instead of one person.  You can see the report below.

The Dealer Didn’t Know About The Carfax Report At The Time Of Sale…

“Hey John,

I read your piece on incorrect Carfax reports.  I am dealing with them on an issue right now similar to what you described in the article- they are reporting “structural and frame damage.”  The report has this accident happening 13 days before I bought the car- clearly I wouldn’t have bought it if that were the case, and the Carfax was clean at this time.  I’ve owned it for over three years now and haven’t had a problem at all.  I took it to a local auto rebuild shop and they inspected every part of it and said there is absolutely no structural or frame damage whatsoever.

I emailed their data team and have talked with a few of their reps- they said there next step is to discuss the matter with whatever entity reported the structural issue in the first place.  I feel like because it was so long ago I’m going to get almost certainly screwed.  Have you had luck with getting something like this removed before? 

Any words or advice you can offer would be great.

Best,

E”

I Don’t Need The Vehicle Anymore And Carfax Is Now Bad…

“Hey John,

I have a problem with my infinity G 35. It is a 2008 at 62,000 miles on it.

My company is putting me in a fleet vehicle and I need to sell this car is I will have no use for it. When I took it to the Infiniti dealership to see if there was any price they could offer I was informed the Carfax was not clean, that is it been in an accident.  They indicated that they were surprised at this and pulled another auto report auto check, another version of Carfax which showed it clean.  

They then took the car into the service area put it up on the blocks to show me that the screws all around the frame had not been changed and that the original frame had not been touched. I believe what they are saying about it never having been in a wreck that altered the frame. They indicated they were going to try to contact the Carfax people and changed Carfax but did not offer anything on the car.

I realize it going to an auto dealership is not the place to sell your car back, but I was shocked to learn about the Carfax situation. Do you have any advice for me on how to best sell a car that is in good shape 62,000 miles, and great working condition? Again I love the car, I just have no more use for it as a result of my companies changing the policy.

 Thanks,

B”

WHAT SHOULD YOU DO?

These situations are actually quite common.  Since I wrote the first article, CARFAX now has a “minor damage” report as well.  They used to just say “accident”, but many people still read “minor damage” and immediately think the vehicle is a lemon.  In other words, someone could have been bumped in a parking lot, had their bumper repainted and many people think the car is not worth what it should be anymore, which is ridiculous.

The fact is that Carfax is a third-party service and pulls information on vehicles, but it’s not 100% accurate.  It’s a tool to check out a vehicle and I always recommend that you check CARFAX and AutoCheck to compare the vehicle reports and have the vehicle inspected by a mechanic.  The second person’s situation shows that the vehicle is fine and the data happens to be incorrect at CARFAX.  I’m not saying CARFAX isn’t a good tool, but it’s not a fool proof service.  In fact, on their website they have the following disclaimer…

Indemnification. You agree to defend, indemnify, and hold harmless CARFAX and its affiliates and their respective directors, officers, employees, and agents from and against any and all claims, actions, demands, damages, costs, liabilities, losses, and expenses (including reasonable attorneys’ fees) arising out of your use of the Site or any information you obtain from the Site or its reports.

Much like Kelly Blue Book and other resources that have disclaimers for their services, CARFAX is just a tool to assist you in checking out a vehicle, but it can create a huge problem when people see information that they believe to be true.  It can greatly affect the price of a vehicle, when it’s accurate or when it’s not accurate and as you can see from the emails that I have received it can be very frustrating for the owner of a vehicle when the data is not accurate.

TRUST BUT VERIFY

In the end, you need to trust, but verify the data when purchasing a used vehicle.  Sometimes you’re much better off just buying or leasing a new vehicle and keeping it for four or five years and letting someone else worry about buying used cars.

________________________________________________________________________

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Hey Cool Car Fans,

I’ve been meaning to discuss this topic for sometime now and figured that since I’ve been behind at writing articles for my visitors, I might as well take the time to talk about the 800 pound Gorilla in the room – mechanics!  If you’re an automotive mechanic let me first say that I really appreciate what you guys do and I wouldn’t want to turn a wrench everyday, but I also spend around $60,000 a year fixing vehicles, so I have a slightly different perspective than most people.  Over the past 8 years, I’ve spent close to $500,000 fixing cars and trucks, with a variety of mechanics, so I think I’m qualified to write about this particular topic.

Let me share with you a few stories though, so that you can get an idea of some of the things that I’ve had to deal with over the years as The Cool Car Guy and hopefully it’s entertaining as well as educational.

THE LITTLE OLD LADY
I met an elderly woman a few years ago who had asked me to sell her vehicle for her.  She had her “favorite mechanic who always took care of her” that she used in Cherry Creek to service her Lexus ES 330 and she told me that her car needed nothing.  I still went ahead and had a safety inspection done on the vehicle, the oil changed and delivered it to another client of mine in good faith, since it only had 110,000 miles on the vehicle at the time.

It was only about two weeks later that I got a phone call from the Dad of the young guy who purchased the vehicle and he was irate that I had sold his son a lemon with the transmission having problems.  Needless to say, I was caught off guard, since I paid a mechanic to look at it and her “favorite mechanic” had done all the maintenance on the vehicle.

Well, I got the vehicle back and took it to a third mechanic, who I was using at the time as well, who specialized in transmissions and he was a very good mechanic.  He called me up and said, “John, did this lady ever change the oil or transmission fluid on this thing?  I don’t think she ever had the thing serviced!”  Now, keep in mind that she had showed me receipts from her service work, so the big question for me was if her “favorite mechanic” ever did anything to the vehicle or took the money and went on vacation.  It was my word against his, so I just paid to get the transmission fixed and the Dad agreed to pay for part of it too, so that his son would get a rebuilt transmission at a huge discount and it all worked out.  Once the engine had been cleaned out and the transmission had been properly rebuilt and put back together the vehicle ran great and the Dad actually called me about a year and half later to tell me how great that vehicle had been for his son.  The bottom line is that you always need to trust, but verify and make sure the work you’re paying for is actually being done.

THE BRAKE CLAMP
I had a service center that I was working with a few years ago and sending quite a bit of business do the brakes on my personal 2007 Subaru WRX.  I had the tires done at the same time at a different company because the cost savings on the tires covered the brakes at the other place.   I often will get repair work done from multiple sources that I trust because you can sometimes cover the cost of getting some other work done by using multiple sources.  However, if it’s not done correctly it can be a nightmare too and be careful who is working on your vehicle.  Seriously, this one almost cost me my life and the life of another driver.  Here’s what happened.

I had my new set of tires put on and went to the second place the same day to get the brakes done.  What I didn’t know was that they had a new guy putting on the brakes and they didn’t have someone supervising what he was doing.  He wasn’t a Master Technician and was just starting as a technician.  It was a busy Saturday, which I’ve since learned to get my cars repaired during the week, on a Tuesday or Wednesday, if possible when they are not super busy.

Anyway, I’m driving down Highway 85 toward Castle Rock at about 60 mph and I get near the stoplight that is near Sedalia and I put on the brakes.  Suddenly my car pulls hard to the left into the oncoming traffic!  I immediately let up on the brake, cranked right on the steering wheel and downshifted (I was so glad I had a manual transmission) and then slowly applied the brakes as my heart was coming out of my throat.  The person in the other car coming toward me gave me the sign of the Evangelist because they saw their life flash before them.  I was thankful that I didn’t hit them.  I pulled into Sedalia and tried to figure out what was going on with my car.

I turned around and drove back to the shop that had put on the tires and told them what had happened and asked them to check out my brakes because I knew the guy there was experienced.  I didn’t want to have the other shop find something and try to cover it up.  The lead mechanic took me into the shop and showed me a clamp that had been left on my brake line by the rookie technician at the other store that he had used when he was bleeding the brakes.  I’m not sure why he even had used it.  He said, “I don’t know how he could put a tire back on and not see this clamp staring right at him.”  Crazy!  He asked if I wanted him to take pictures, etc., but it was an honest mistake that could have been deadly for me and someone else.  It wasn’t as if it was intentional or malicious and accidents happen, but thank God one didn’t happen for me.  I went back and explained to the Manager what had happened, the guy who worked on my car felt terrible and I’m sure he’ll never do that again.  When it comes to getting brakes done though, I make sure that the people who are doing it are experienced technicians after that experience.

THE ALL IMPORTANT OIL CHANGE
We’ve all heard nightmares of the people who have gone in to get an oil change only to have the technician leave the drain plug out and blow a motor.  If you haven’t heard that story, just ask around or I’m sure you can find one on the Internet.  I have one that didn’t end that bad, but it was still a mishap by a mechanic that wasn’t paying attention.

Recently, I had my 2010 Mercedes C300 4Matic in for an oil change at a local shop that I’ve used for many years.  A few days later, my wife Becky called to tell me that there were oil spots on the garage floor, which was not normal.  I parked the car and noticed that the spots were sporadic in nature, unlike a drain plug, but I took it in to get it checked out at another shop.  As you’re probably catching on, unlike what most people do when they have a problem and take it back to the same shop that did the work, I take it somewhere else and pay for a quick diagnosis of the problem.  I’ve been doing this too long and I know that mechanics, just like anyone else are going to want to cover their butts, so I prefer to get an opinion from a third-party.  It turned out that they forgot to put a gasket on the oil filter, so the filter was spraying oil.  It didn’t do enough damage to cause problems, although it had gotten all over the engine that needed a good cleaning and the Serpentine Belt  had started to fray and was needing replacement as well, so just $167 later and my car was back on the road.

These are just a few of many stories that I have accumulated over the years, that illustrate the many situations that you can find yourself in depending on who is working on your vehicle.  It’s a good idea to get a second set of eyes on your vehicle whenever you get work done.  This is why I always pay for a Frame and Mechanical inspection when I purchase vehicles for clients at a Dealer Auction and then I get a second safety inspection and oil change done after the first inspection.  It costs a little more, but in the end it can save time and headaches.

________________________________________________________________________

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

BEWARE OF THE INSURANCE COMPANY YOU KEEP

Hey Cool Car Fans,

Each year I get calls from clients who have gotten in an accident and their car is getting repaired or totaled by the insurance company, but they have questions for me about getting a replacement vehicle.  However, what I’ve discovered is that the insurance company is more often than not pulling a fast one on them for replacement cost on their vehicle.  What people don’t realize is that insurance companies used to be able to do a scheme called “title washing” on vehicles, which means that they would take a vehicle that was a total loss and send it to another State to get registered and presto change’o it would have a clean title.

Wikipedia explains it like this…

“In North America, vehicle licenses are normally issued by individual provinces and states. Each operates under different regulations.

In some cases, the criteria to define a “total loss” vary – some base the cutoff amount on the nominal value of the vehicle in working condition, others look instead at the value of a working vehicle minus the value of a collision vehicle as scrap, salvage or parts. The percentage of the original value at which the “total loss” label is applied also varies.

These differences are sometimes exploited by schemes such as “title washing“, in which a vehicle branded as ‘junk’ in one jurisdiction is registered in another, moving from state to state until one state with slightly different regulations brands the same vehicle as ‘salvage’ but repairable. A vehicle with Arizona registration and a ‘salvage’ title for salt water damage would, for instance, represent a red flag as a vehicle possibly once affected by environmental conditions and events elsewhere such as Hurricane Katrina. Vehicles with salt water or hurricane flood damage often have severe corrosion and electrical problems which cannot be properly repaired, so are best avoided.”

BEWARE OF DIMINISHED VALUE

This is much more difficult to do today with the introduction of CARFAX, AutoCheck and State Laws that have changed.  The rising costs of vehicles has created a situation where insurance companies are much more reluctant to total out a vehicle that has been damaged.  I had a neighbor a few years ago, who was in an accident with her Ford Explorer and the vehicle had over $24,000 in damage that the insurance company did in repairs instead of calling the vehicle a total loss.  When my neighbor came to me because the vehicle had major problems to trade it there was no way that I could get her near Market Value for her vehicle.

Who would want to buy a used Ford Explorer without a clean CARFAX and that had $24,000 in repairs?  So the insurance company got a great deal by not totaling out her vehicle for her, while my neighbor got screwed and lost thousands of dollars when she eventually traded her vehicle.  This happens more often than people realize and many States no longer will allow you to go back to the insurance company and ask for diminished value.  It’s nice that the Insurance Lobby has done such a great job getting our politicians to represent their best interest instead of the consumer.

Another example recently was a client of mine who had a Scion XA that was in an accident and in this case the insurance company did total out their vehicle.  There was a problem though because their nice little car that they had purchased new and barely drove only had 50,000 miles on the vehicle.  In order to replace it for the amount of money the insurance company had given them, they had to find one similar with 80,000 miles on it.  When they contacted me, I showed them that the insurance company had only gave them 5 cents a mile for the low mileage on their vehicle!  If you leased a vehicle and went over the miles you would pay anywhere from $.15 to $.25 per mile, which at 30,000 miles would cost you a minimum of $4,500 in depreciation at the low end.  The insurance company though made out on that deal and only paid them $1,500 for having a vehicle with low miles.

MAKE SURE YOU HAVE GAP INSURANCE

I had a client a few years ago who purchased a really nice loaded vehicle from me.  They ended up getting in an accident and the insurance company pulled a fast one on them and told them that it was worth less than what they owed on the vehicle.  There was absolutely no way that was possible and they only contacted me after they had already settled with their insurance company, so they were totally screwed over.  The insurance company didn’t include GAP insurance to pay off the loan and they had declined it when they purchased the vehicle from me, which I usually offer for a few hundred dollars at the time of the purchase.  However in this case, they should have been fine because of the value of the vehicle compared to their loan and the insurance adjuster had booked the vehicle out wrong and gave them trade value instead of retail value on the vehicle.

The insurance company shorted them and they ended up owing several thousand dollars after their “budget” insurance company refused to pay off their vehicle.  They were upset with me for their choice of a terrible insurance company as though I had ripped them off, when it was their insurance company!  I’m writing this article to let people know that you had better know whether or not you have GAP insurance on your insurance policy or what their idea of “replacement cost” is if you do need to replace your vehicle.  If your insurance company doesn’t offer it – find a new company that offers GAP or refinance your loan and add it onto your loan through the lender or a car dealership.  A few hundred dollars in your loan could save you thousands if your insurance company refuses to pay.

One more story that illustrates the benefits of having GAP insurance.  I have a great client who is a lawyer and I leased him a new Nissan Maxima a few years ago.  He was in an accident shortly after he had leased the vehicle.  He called me first and I reminded him that he had GAP insurance built into the lease to cover the cost of the vehicle and pay off the loan since the vehicle was seriously damaged.  I suggested he let his insurance company know this and that he didn’t want to have this vehicle going forward because of the damage and it was a new car.  That’s a benefit of leasing a vehicle by the way because had he owned it, he would have had a vehicle that was smacked for resale and it could have been a problem down the road.  Since he leased it, he could give it back to Nissan at the end of the lease period and walk away unscathed.  Anyway, he worked with his insurance agent and the vehicle ended up being totaled and he called me back and had me get him a new BMW.  That was pretty cool.

WHAT SHOULD YOU DO AS A CONSUMER

Just be sure you understand what kind of insurance you have because if you end up having to use it you can find yourself in deep water.  Also be aware that looks can be deceiving.  This photo of this 2009 BMW 6 series is of a vehicle that was rebuilt from a salvage title, which means the vehicle was totaled by the insurance company like the vehicles above.  An insurance company isn’t going to stroke a check for a vehicle and lose thousands of dollars, unless the vehicle was whacked.

The money you save on premiums for cut-rate insurance you could very quickly lose and then some and I see it more often than I would like.  It could be even a big name company, so know what they are doing before you have to use the insurance you are paying for.  This is one of the benefits of knowing this industry.  Also, not every manufacturer lease includes GAP insurance like they used to, so make sure you understand what you have in the way of insurance, financing and leasing structure, so that you don’t get burned.  If you don’t have GAP on your lease then check with your insurance agent how to cover a potential loss on a leased vehicle you have insured with them.

________________________________________________________________________

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

SHOULD I LEASE A VEHICLE?

I get this question all the time from my clients about whether it makes sense to lease a vehicle or buy a used vehicle.  I decided to address this issue this week on CoolCarGuy.com and give the pro’s and con’s to both since there is so much misinformation on the Internet about this topic.  Especially, from the famous “financial guru’s” who for the most part know nothing about the automotive industry other than that they drive a personal vehicle themselves.  However, if you structure a lease wrong it can be a bit like Alice in Wonderland doing business with the Red Queen.

First of all, a lease is nothing more than a way to drive a vehicle for less money by paying for the “depreciation” that the leasing company believes is going to take place on the vehicle.  That’s it.  What does this mean?  It’s pretty simple actually.  When you drive a new or a used vehicle off of the lot, it immediately starts to depreciate.  This is the only industry that I know of where a “third-party” in the way of Kelly Blue Book, NADA or a number of other “experts” determines that your product is going down in value each month, but that can benefit you with a lease since you’re paying for that depreciation.

The computer I’m typing this on is a Toshiba laptop that I bought a few years ago and at the time it was “state of the art”, but today who knows what it’s worth.  It’s depreciated down to next to nothing, it’s like a paper weight on my desk, but I can’t pull up the “book value” of this computer model this month and see what it’s worth.  You can do that with an automobile though and it’s needed for banks to put a value on a vehicle they are going to loan money on.

The real reason why these automotive value based books exist is not so that you as a consumer can know what a car is worth.  You may think that’s the case, but they really exist for the banks and lending institutions.  It’s so that a bank, leasing company or credit union doesn’t get burned loaning money on a vehicle that they haven’t had a professional appraisal done on, like you have to have done when buying a home, a business or other types of real estate.

What does this have to do with leasing?  Everything!  There are a number of components involved to leasing a vehicle:

1. The retail price.
2. The capitalization cost
3. The money factor
4. The residual value.
5. The miles per year.
6. Your credit rating.

All of these factors come into play when leasing a vehicle and you have to watch out because you can get stung on a lease the same as you can on a purchase.

WHAT ABOUT THE MONTHLY PAYMENT?

Miles are what cause a vehicle to depreciate the most, which is why you see so many vehicles advertised on television with a low payment showing the fine print at the bottom of the screen.  If you look closely you will discover that you have to put a huge chunk of change down on the lease they are advertising and then they are basing the payment on as little as 10,000 a year!  12,000 miles a year is usually the standard and some manufacturers and leasing companies even put 15,000 miles as the standard, but many of the ads are showing 10,000 miles a year for that really low monthly payment.  This is because if someone puts on 30,000 miles in three years, the car is worth more than if they put on 45,000 miles in three years.

Used Vehicles Leases:  The benefit of a lease is that you are only paying for the depreciation of the vehicle and not for the full amount of the car or truck you’re driving.  If you lease a low mileage vehicle that already has a great deal of depreciation that has taken place and may still be under warranty, you can really save some money depending on the vehicle and the lease structure.  I expect that at least 30 people will contact me this year about how to do a Used Vehicle Lease, since few people really know how to structure them and most dealerships won’t touch them.  A used vehicle lease can give you equity at the end of the lease term compared to a new vehicle lease and they are simple interest leases that also come with GAP insurance.

Manufacturer Leases:  There are some great manufacturer leases and there are some nightmares!  I recently looked at a lease for a client of a high-line SUV vehicle, which I won’t say what the company is here, but their lease was terrible.  The money factor was high, even though my client thought it was low and the residual was terrible.  I was able to structure a lease through a third-party leasing company for her new vehicle and save my client, get this, $5,750 over the three years she was leasing the vehicle.  That’s $159.72 a month over three years, which many people do not investigate what their total cost of leasing is for a vehicle.  The manufacturer still sold a new vehicle, but we structured it to favor my client, rather than the new car leasing company.  Keep in mind too that many new car leases are actually pushed through third-party banks anyway.

Auction Vehicles:  Each year I have quite a number of clients who contact me about having me find them a vehicle through the Dealer Auction.  Last year, I was able to get a number of great vehicles here in Colorado and around the country from Dealer Only Auctions and ship them in for my clients and save them thousands of dollars.  This can work great for certain vehicles that are selling for too much money in this market.  I recently saved a client thousands of dollars on a 2010 Mercedes-Benz ML350 that was still under the MB warranty with great options and miles.  This is something unique to The Cool Car Guy experience since most Auto Brokers and Car Dealers are not experienced in this type of service.  Auto Buying Agents do not have access to dealer auctions by the way, which is one difference between a Auto Buying Service and a Car Dealership.  They have to get the vehicle from a car dealer rather than going directly to the auctions for additional savings.

Financing, Special Financing And Refinancing:  Last year, I had several people contact me who had credit challenges. One client of mine filed bankruptcy two years ago and couldn’t get financed through VW, Nissan or a number of other dealerships.  I was able to lease him a brand new Toyota through a special program I knew about at a price that fit his budget.  He told me that he used to work in accounting for a dealership that worked with people with bad credit and he saw how bad these people got ripped off with super high interest rate loans.  It’s all about the structure and relationships and knowing how to do what others can’t do.

Another client had found the car of his dreams on Craigslist and he couldn’t get the financing done on his own, while trying to buy it from a private party hundreds of miles away.  He asked me to assist him, so we marked the vehicle up to compensate me for my time and I arranged to have him pick the vehicle up at a dealership on the other side of Colorado, even though it was being sold by a Private Party.

The bottom line is that leases can be a great option for people, if they know what they are doing with the proper structure.  You can get burned with a lease as the experts often tell people, but that’s because people do not understand what they are getting into from the beginning.  If the residual is too high for the marketplace and they go over their miles they can really get burned, even though they have a lower payment during the lease term.  If the charge for miles is too high on the back-end they can get pounded as well, if they turn it back into the manufacturer.  I even know of manufacturer leases that will charge you for excess miles if you buy the vehicle out and most people are not aware of this scheme, so it’s always buyer beware when you purchase or lease a vehicle.  The automobile industry is fluid and what was the situation three years ago, may not be the same today.

________________________________________________________________________

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy