Car Price
Vs. Car Cost
So,
by now, after reading the little bit of information you are now all
pumped up, got your game face on, brimming with confidence and
decided that you will negotiate the best possible car
price and
deal the next time out!.
Bravo!
Does this mean finding a nice
reliable car for a reasonable price?
To
many people this may be the ultimate goal as they trek through one
car dealership after another in search of their best automobile deal.
Think
for moment.
Does getting a good price on a car mean getting a good
value for your hard earned bucks? Is the price you pay for the new
car what the car is going to actually cost you? Yes?.... No? .....
Maybe.....
I bring this
up at this point just so we can take a brief respite from the hard
work of car price negotiating. And to make sure that during all the
research and self education that you actually take into account what
the vehicle cost is going to actually cost you.
The price you
pay to purchase your automobile is not the cost of the car.
Although price
and cost are certainly blood relatives (no pun intended), there is a
distinct difference between the two.
The price you pay for your car
is merely the exchange of cash for the title. The title which either
goes to you or the lien holder. There is no expense involved at this
point in the car purchasing cycle, just consideration exchanged for
a product.
In other words, say... you have just exchanged with the
dealer $20,000. The dealer has $20,000 and you now have a vehicle
valued at $20,000..... well.... almost.
Of
course, part of that $20k you just shelled out or signed
loan papers for included the profit the dealer made on the deal,
taxes, and fees.
In reality, the actual vehicle market value of
your new car never was $20,000. Every car is marked up above the
market value. Essentially, this is know as profit.
With the dealer
profit attached to the car, the car itself isn't really valued at
$20,000. On a tangible basis your car itself really is not valued at
$20,000. Even if you walk straight out of the finance department,
don't even touch your car, and try to sell it, you'll not see your
$20,000 again (at least not from any dealer).
And once you drop
yourself behind the wheel and head off to make all your friends and
neighbors jealous, you begin to run up the tab.
We all know
the typical costs of owning a car, but for you parents out
there looking at this with your son or daughter, a quick reminder:
- Your car is already
depreciating (ouch!)
- Fuel costs (large and
growing)
- Ongoing finance charges
and insurance costs
- Routine maintenance and
repair
So, back to
the question..... is the price you pay for your car, what the car
costs you?
Not really.
As you can see it is much more financially
prudent to consider all of the costs involved in vehicle ownership
rather than just the price of the car as you begin doing your
homework on car buying. Consider this. By the time most cars are
five year old the cost of ownership will exceed the original
purchase price.
Also, while
we're on the subject, and even more critical to think about, is that
similar cars with similar or even the same purchase prices can have
very different cost of ownership.
This is why it is very important
to understand the difference between car price and car
cost and how the two relate to each other as you begin your
search for the car that will afford you the best value. Don't limit
your thinking to price alone as you begin your quest for finding
your best car deal.
Very good!
You are still hanging in there with me. I am surprised and humbled
by your presence (really!).... Now let's start putting some
automobile pricing
and car costing together with ... some
automobile ownership costs
......
next
- Get Free price quotes and vehicle information.
- Get multiple local dealer
selling prices!
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