Many car dealerships in Houston push the price of a car as the selling point of a particular car. They strategically put stickers of the Manufacture Suggested Retail Price (MSRP) on the car so it can appear to be estimated more than what they will sell it for. Right off the bat the price of the car can be dropped by a few hundred dollars because it’s just a suggested price that the manufacturer tells the dealership in order for them to make a significant amount of profit.
Many car dealerships in Houston will then use the “cushion” they have on the price to make you think you are privileged when they drop it by a few thousand dollars.
The right way to shop for a vehicle is to breakdown the value of what it’s worth over its’ lifetime. This is done simply by calculating the your cost for the car today, then adding all of the maintenance fees you’ll pay over the next few years. For example, let’s say you buy a 2002 Honda Civic ES with 80,000 miles for $6,500
You have to factor in the cost of repairs. We can estimate this based on the health of the car. Categories that measure a vehicle’s health are: engine components (such as the motor, radiator, alternator, air filter, battery, etc); tires, exterior components like windshield wipers, headlights, taillights, suspension, brakes.
If the car is in “okay” condition, then it’s very likely you would spend about $3000 in fixes over a 4 year period with out any unreasonable factors increasing the chance of breakdown. That means the value of the car is only $3,500 over a four year period. To simplify, if you bought a car for $9,000 and it had little to no repairs in a 4 year period, you would be getting a better investment for you money.
Car shopping on price alone is the single biggest problem with unsatisfied car customers. When you shop with value in mind, you will have a better perception of what you will really be spending and it will help you determine whether you are getting your money’s worth!
Charlie Hernandez has been in the car business for 20 plus years and has worked at various car dealerships in Houston.