Table of Contents

• • •

What is not covered in this manual…………………………………………………….3
Forward – What you will get in this manual………………………………………….3
Questions that will be answered here…………………………………………………..3
Who this manual is meant for…………………………………………………………….4
The three simple steps to getting your dream car………………………………….5
Introducing the process……………………………………………………………………5
Something most car owners are unaware of – the true cost of ownership….5
The upside and downside of buying a used car……………………………………..6
Four reasons to buy a pre-owned prestige car………………………………………6
Four things to watch out for when buying a used car……………………………..8
Step 1 – How to establish the value of your dream car……………………………9
Book value……………………………………………………………………………………..9
Identifying maintenance issues………………………………………………………….9
Working out maintenance costs…………………………………………………………11
Insurance………………………………………………………………………………………13
Total ongoing costs…………………………………………………………………………13
Warning! What not to do…………………………………………………………………..15
Step 2 – How to finding your dream car at the right price……………………….16
Should you buy from a dealer or a private seller?………………………………….16
Step 3 – Checking the car out and making the purchase fun…………………….20
Checking the car out – checklists to manage the risks……………………………20
Should I be concerned if the dealer doesn’t offer a warranty…………………..24
Should I trade in my car?………………………………………………………………….25
Getting down to business – negotiating & having fun……………………………..25
How to approach the vendor…………………………………………………………….26
Terms of an Agreement – two things you must include………………………….30
After you buy the car – don’t forget……………………………………………………31
Specialist mechanic…………………………………………………………………………31
Appendix – Check Lists…………………………………………………………………….32

What is not covered in this manual
• • •
You will not find guidance on what car to buy in this manual. There are plenty of reviews and sources of information on the web to help you decide what car to buy. That is an individual choice and there are too many cars and models to help you with that decision.

This manual does not contain much guidance on how to sell your existing car. Again there are plenty of resources on the web to help you get rid of a car you own, or you can trade it in with a dealer. This manual is all about the buying process.

This manual is aimed at the individual who has an idea of the car(s) they want to buy and is looking for good guidance on how to maximise the gain and minimise the pain.

Forward – What you will get in this manual

• • •
Imagine learning that a pre-owned version of the car you’ve always dreamt about is available at a price you can afford. The car has been hardly used by the previous owner. You do some homework and learn that the yearly ongoing costs are within budget as well.

You walk into the dealer with a few checklists in hand. You check the car out. It passes your checks. You take it for a test drive. You negotiate a discount with the dealer. He agrees to sell it to you at a price that dealers pay for a car of this quality.

You get him to agree to fix up a few niggles you found during your thorough check of the car. You tell the dealer that the deal is subject to a clean bill of health from your mechanic, which you are happy to pay for. All the dealer has to do is get the car to the mechanic.

Your mechanic calls you a day later and gives you a clean bill of health. You inform the dealer that the deal is on and you organise the finances. A few days later you are in your dream car – something you didn’t think would happen for years or ever. And you got it at a great price.

There’s a simple three step process that will help you achieve that dream.

Questions that will be answered here

If you’re like most normal people who have admired nice cars and dreamt about one day owning one, you’re not alone. Most people are concerned about a few things that have kept them from making the plunge. The most common concerns include:

  • How do I avoid getting ripped off?
  • How do I get a good deal?
  • Is the car in good shape?
  • How do I protect myself?
  • Will maintenance be costly?

This manual was written to help with those questions and help you make an informed decision. You will learn how to buy a car at a little more or even below what the dealer paid for it. You will also learn how to reduce the risks involved.

Who this manual is meant for

• • •
Here’s a thought that is not uncommon. ‘Wow, check that car out. Wonder what it’s like to drive? Must be nice to be rich. When will I get to buy one?’ This is usually followed with thoughts of buying a lottery ticket before even that dream is starved of oxygen and all that remains is smoke.

This manual is meant for the car enthusiast who would like to experience owning a nice car and is tired of waiting for the winning lottery ticket. It’s possible to buy a fancy car for a price that the dealer paid for it when the ex-owner traded it in. It’s also possible to get great insurance deals and pay half of what it would cost to service the car by knowing where to go and what to do.

Truth is, prestige cars are actually a lot more affordable to own than you might think. It’s just a matter of the car’s age. If you’re open to buying pre-owned cars, the value you can get can be unbelievable. With used cars you get a lot more value when purchasing a prestige car than you do from an average car. Winning the lottery helps, but you don’t need to. You do, however, need to do a bit of homework.

If you aren’t in the car business, you might consider the buying experience to be far from an adventure and probably not something to look forward to. However, if you know what you are doing, it can actually be fun or in the very least not daunting and frustrating.

After all, for most people, buying a car (especially a prestige car) is probably the second biggest purchase (next to their house) they will make. If you’re going to make such a big purchase, shouldn’t it be fun? Why should only multimillionaire’s have fun spending money?

The three simple steps to getting your dream car

• • •
Introducing the process

• • •
For this manual to be useful, you first need to have a pretty good idea of the type of car (make and model) you want. You may actually have your eye on a few cars, which is fine, but you really need to narrow the choice down to a handful to be able to work through the process of identifying the right car to buy.

It’s a simple three step process. The process involves:

  1. First establishing what the trade in value of the car you have in mind is.
  2. Tracking a few leading used car sales web sites over time to identify your dream car(s) that have prices close to the trade-in value.
  3. When you find a car that is close to your budget, then you are probably ready to embark on the adventure of buying your dream car.

Before we start looking at all of that, here’s something to familiarize yourself with – this is something most car owners are unaware of.
Something most car owners are unaware of – the true cost of ownership

Are you aware that buying a $30,000 new car actually costs you about $28 a day?
Here’s the math:

Category Cost per year
Interest on finance (@7.5% per year)

$2250

Insurance

$1000

Maintenance

$1000

Petrol / Diesel

$2500

Registration / 3rd party insurance

$500

Depreciation (@10% per year)

$3000

TOTAL

$10,250

Please note all above figures are only estimates. Each line item will vary depending on your country, the driver’s age and a variety of other factors. The figures are only for illustrative purposes.

The total of $10,250 divided by 365 days gives you a $28 per day cost.

Most people forget to factor in the costs of depreciation and running costs. Mind you, depreciation on a new car is usually higher in the first year. The table above has a depreciation of only 10% for simplicity’s sake, but in reality it’s probably more like 15-20% in the first year and probably 12-15% in the year after. This means a new car will have a higher daily cost in the first couple of years.

So if you are talking about a $72,000 luxury car, the daily cost is more like $70 in the first year. That same $72,000 luxury car, if purchased at around $30,000 as a used car (a few years old) would cost you less than $30 a day.

Actual figures of a Jaguar worth $72K new that was purchased for $27K used and sold five years later, reveal the car costing only $27 per day. That figure included all costs – running costs, maintenance, depreciation, insurance, etc. In summary, a car that would have cost over $70 per day if purchased new, only ended up costing $27 per day because it was purchased second-hand. And it is actually possible to get a pre-owned car that is a few years old but has been hardly used.

Now imagine what it actually costs to buy a $210,000 car. Only about $180 per day. That’s $7.50 per hour. So when it’s sitting still in your garage or a parking lot, it’s costing you $15 every two hours. That’s why these new cars have always been considered the domain of millionaires. Yet, the truth is you can actually get one of those cars for around $40 per day if you are willing to buy a pre-owned car that has a few years on it. Comparing apples with apples, that’s only $12 a day more than what you would be paying for a $30K new car.

Obviously these figures will vary quite a bit by car and market. Figures will also vary by how well the car is looked after, etc. What’s important to note is that looking at the costs in this manner give a good idea of the true cost of car ownership and what you really should be budgeting for. It also helps to compare apples with apples when purchasing a used car. Most importantly, it shows that getting a dream car doesn’t require winning the lottery or selling the house!

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