Tips on Buying Cars: Purchasing a used car, hyundai sante fe, saturn sc2

Question
QUESTION: Hi! I am planning to purchase a 2007 Hyundai Sante Fe - price listed is $17,988.00 (17602 for miles) - I am trading in a 98 Saturn SC2 with 114000 miles. It is in good condition, a few repairs are needed, but it is clean. What should I plan to get for trade in? And what would be a fair price to purchase the vehicle for? I am nervous about being taken advantage of and am not sure what a fair price is for this vehicle. I have heard they can mark cars up $3000 to $5000!

ANSWER: Adria,

Thanks for your question.  Let's talk!  First your trade in.  You have gotten all the good out of that vehicle.  It is 10 years old and has over 100,000 miles.  I am sure it is in very good condition, but the best you can hope to get out of the vehicle is somewhere in the neighborhood of $500.  It just isn't worth much to a dealership.  They can't sell that vehicle, and can't get it financed, so it becomes of no value to the dealership.  You will be lucky if you get $500.

Secondly, the vehicle that you are purchasing.  It really depends on the trim level of the Santa Fe.  On used vehicles, there can be that much mark up in the vehicle, but remember the dealership is there to make a profit too.  That doesn't mean that they should make all of their profit on you, but expect them to want to make a profit.  If I was a guessing man, I would say that they have somewhere in the neighborhood of $12000 to $13000 in that vehicle.  This is the amount that they probably own the vehicle for.  The vehicle is worth no more than $15,000 to you.  I wouldn't pay much over that.  They are going to try and get you to focus on the payments, rather than the price.  Make sure that they understand, and you understand that you need to discuss the price of the vehicle along with the payments.  They will keep hitting you with payments, and you need to keep telling them that you want to know what they price of the vehicle is that you will handle the payments with the finance manager.  Speaking of that, know what your credit is before you go.  You need to be educated.  Know what type of interest rate you qualify for.  Do not let them finance that vehicle for more than 60 months, if you can afford the payments.  Only go over 60 months if you want the vehicle bad enough, and you can't afford the payments at 60 months.  This will help you pay less interest, and it will also help you pay the vehicle off in a quicker pace, putting you in an equity position faster in case you ever want to trade that vehicle in.

I hope that this information helps.  Hopefully you will be able to work something out and get your new vehicle.

If you have any other questions, please feel free to contact me again.

Thanks -

Jeremy

---------- FOLLOW-UP ----------

QUESTION: Thanks so much for answering my questions. Well I have excellent credit and already am approved by a bank for a loan with 3.99% APR, would most dealers bother to offer the same even if you do not want any add'l after market products? I have also checked the vehicle out that I want on car fax (the Santa FE is an SE ) and it does state this was returned to the manufactor due to "Engine rough running/stalling" - how would I know this has been fixed, should I not purchase it if this is what I see on carfax? I don't want to get stuck with expensive repairs...I am planning on seeing the car tomorrow and appreciate any help at all!! Thanks

Answer
Adria,

Wow, you are the type of buyer I like to see.  An Educated buyer.  Most dealerships will not be able to beat your interest rate, so I would just plan on going thru your lender.  That is an excellent rate and I would stick with that.  

As for checking the car out.  I honestly would stray away from this vehicle if that is what the carfax says.  That is not a good thing at all.  What this means is that the vehicle was returned using the lemon law more than likely.  The manufacture probably has fixed it, or at least spend several months trying to figure out what caused the problem.  I doubt that the dealership even knows, but they may very well know that it has had this problem.  You can never be sure that the vehicle has been fixed.  I would like to tell you that you can, but there isn't any surefire way to know that whatever the issue was that was causing this problem, has been fixed.  The manufacture sold this vehicle at the auction, and this dealership has bought it later on down the line.  It obviously is your decision, but I would not purchase this vehicle.  You can find a similar vehicle with similar miles for the same price that doesn't have these issues.

I hope this helps.  Let me know what happens.

Thanks -

Jeremy