The Perfect Investment

Perfect? You be the judge. If you could make a guaranteed return of at least 2-3% higher than the rate at which you borrow money; If you could make an investment that required virtually no management; If your investment was guaranteed never to lose money (tell that to investors in the stock market); If you could make an investment that has the potential to return many hundreds of times your original investment: If you could make an investment that has no overhead; If you could get all of these for as little as a few hundred dollars, would you be interested? Well, please allow me to introduce you to property tax certificates.

If you ever stumble upon late-night infomercials on TV you have probably seen John Beck; He sells a program that helps people to acquire tax certificates. His program is around $50 and probably worth the price but his customer service rating is rather dubious. [Click here;^http://www.infomercialscams.com/scams/john_becks_tax_lien] to see what I mean. He calls his system “Free and Clear.” I am neither endorsing him nor criticizing him. I am merely pointing him out because he is fairly well known. My focus is on the process and the concept itself, not on Mr. Beck or his particular program. The bottom line is I know that buying certificates works because I have bought some myself.

Here is how it works. Some property owners (do not restrict your thinking to residential properties, because it apples to vacant land, shopping centers and all other property) do not pay their property taxes when they are due. This can be because they have no loan so there is no monthly tax payment; or they might have a loan but pay their taxes separately. Or the property might be abandoned.

Enter the County Assessor. This government official is charged with the duty of collecting property taxes for the benefit of the related government. So, if the taxes remain unpaid for a few months, the assessor sends out notices to the appropriate owners but sometimes they still fail to respond. Eventually, the assessor schedules a time to sell the tax debt to an investor. They publish the sale details in local newspapers and on their websites. These sales are frequently held in the fall. Sometimes hundreds of buyers show up and on other occasions there might only be a handful of interested parties.

The various assessors do not all handle the details the same way, but their objective is always the same: To collect unpaid taxes. Sometimes the sale itself is carried out by a different government agency such as the Public Trustee’s Office. Potential certificate buyers register and get a bidding number, then the program begins.

At one such sale I attended, we were assigned seats. There were about 400 certificates up for grabs and about 250 registered investors. The assessor produced a list of the properties then randomly picked one investor as a starting point. The person in that seat was offered the first property on the list for the exact amount the taxpayer owed, including all fees and penalties to date. The investor could either decline or accept. If he accepted, he would not get another one until everybody in the room had purchased one certificate. If the investor passed, the assessor offered the certificate to the person in the next seat until somebody accepted it, which was usually very quickly. Once everybody had a certificate, the people who declined were granted a second and final chance to accept one. Then some people got a second certificate. The only variation was when they came across a certificate for a small lot or a commercial property. In the case of the land, they randomly assigned a certificate to an investor, but nobody got more than one of those. When the certificates for commercial properties came up, there was actually a bidding process to see who would pay the largest premium for the certificate. They went for about 5% over the total amount due. Before we left, I got a nice certificate for a middle class home. It cost me about $900. I also got one of the certificates for a lot. It was about $120. They both paid me 10% when it cost me about 7% to borrow from my bank.

At another such sale I attended, there were nearly one thousand bidders and most of the certificates were sold via a bidding process. Once again, they went for 5% over the amount that was due. I did not buy any.

After the sale, the tax payer owes the investor the amount he paid for the certificate plus interest to date. The owner and investor never actually meet each other because the government agency attends the details. If the taxes remain unpaid the next year, the certificate holder automatically gets to pay that tax for the property owner again, although he is not obligated to do so. In some cases the investor pays the taxes for three consecutive years. About that time, it becomes apparent that the property owner has no intent to pay the taxes, so the next phase kicks in.

The investor notifies the same government agency that the tax payer has never paid back the investor his money. At that point, the government makes a final effort to reach the tax payer to inform them of the impending loss of their property. They make a very sincere effort to make sure that innocent people do not lose their homes. But, sometimes they simply cannot find the owner, his heirs or anybody who has a legal right to the property. If all of that fails, they execute a deed transfering the property to the investor. In that event the investor owns the property free and clear of all debt and fulfills Mr. Beck’s promises.

One knowledgeable official told me that approximately one certificate results in a deed being transferred to the investor. All of the rest of them get paid off by the tax payer; but even in those cases the investors who hold those certificates still make a nice return on their money.

In some of the out-of-the-way counties, where it is difficult for masses to attend the sales, there are more certificates than bidders. If you are willing to do some homework, you can contact the appropriate agencies and buy the certificates that remain unsold. Sometimes you can complete the entire transaction right from your own computer, even if you live in another state and never do visit the property.

I think this is an incredible investment vehicle for certain people. You must have the time to do research and then be able to buy enough certificates to justify your time. But the rate of return is always good and occasionally it is awesome. Any investor who has lost money in the stock market or watched their property values drop would love those odds.

COMMENTS?

SEE MY OTHER BLOG.

FINAL CAR BUYING TIPS

This is the final article in a series about buying automobiles. We have discussed how to buy new cars, how to buy used cars, trade ins and the finance office. This time we are going to clean up the loose ends. Here are a few other items for you to review.

• As the relationship develops, the salesperson will want to know how you expect to pay for the vehicle. Tell them you are prepared to pay cash by obtaining a loan from your own bank, but if they can get you a better rate you will consider it. Tell them your score but do not tell them your bank’s interest rate or they will know they only have to beat that number rather than give you their very best rate. If they do not offer you a rate that beats your bank’s rate, then get the financing from your own bank. If they offer you a better rate than your bank or credit union, tell them you want a loan approval “subject to your credit score being as stated”. This way there is no inquiry on your credit report unless you are certain you will be approved.

• When you find a car you like, be sure to compare the sales tax rate if you take delivery at the dealership or at home or work. If you can save a couple hundred dollars by having them deliver it to your door, I would suggest you do that.

• Try to avoid using finance companies because rates are very high.

• Do not believe a dealer when they tell you a vehicle has never been in an accident. They might be lying or simply unaware of a previous problem. The bad boys will put a sticker on the car that says something like, “All sales are final” or, “As is”. If you should later find out the vehicle has been in a wreck, you cannot do anything about it. Therefore do one of the following 1) demand a vehicle history report such as is available through Carfax 2) require a WRITTEN warranty of at least 30 days 3) or take your vehicle to a qualified mechanic for an inspection before you complete the deal.

• If you need to upgrade your car but you also want to buy a home in the near future, you should buy the home first, unless you have a very good credit rating and strong income history. It is much harder to get a home loan when you have car payments than it is the other way around.

• Consider using a line of credit loan that is secured by your home for your auto loans. They allow more payment-flexibility because you can pay interest only, or add principal anytime you wish. Another benefit is you don’t have a new inquiry on your credit report. Next, you might get a lower interest rate. And finally, the interest you pay is probably deductible. If you don’t have enough equity in your home, ask your banker if they would consider taking your property as primary collateral and the title to the vehicle itself as additional collateral. If so, you may still qualify for lower interest rates and the interest deduction.

• Miles per dollar – My nephew and I came up with the idea of measuring how many miles you get out of a dollars worth of purchase price. If you buy a new $24,000 vehicle and drive it 100,000 miles and then sell it for $4,000 you got 5 miles per dollar. That is fairly normal. But if you buy a good used car for slightly over wholesale at a dealer for $14,000 and then you put an additional 90,000 miles on it and sell it for $3,000 you get over 8 miles per dollar. That is very good. The best I know of was Matt who bought a van from the GSA auction for $2,000. It had only 24,000 miles on it. He drove it back and forth to work for six years and put an additional 105,000 miles on it, then he gave it to a charity. That is a whopping 50 miles per dollar. Way to go Matt!

• Regarding auto repair shops. This can be a hit and miss proposition. For routine matters like oil changes and brake jobs, I recommend you ask the people you know if they have had good luck with any particular shop or mechanic. For more serious repairs I prefer experts. For example take a vehicle with a transmission problem to a transmission repair shop. If you are uncertain about the ethics of these people, call the Better Business Bureau or a consumer protection agency to find out if there have been complaints filed. Be sure to ask what type of warranty they offer and get it in writing. Finally, if you find an honest shop stick with them.

Nearly everybody buys autos from time to time, so it is worth the effort to read these articles.. The most important thing to remember is that the dealer needs you, not the other way around. Don’t let them get you emotionally involved. As long as you remain on an intellectual level, you should do great. Remember, there are thousands of cars out there. Good luck.

Comments anyone?

Check out my other blog.

The Land Mines

In my recent discussions we have explored the practices of the auto industry. We have talked about buying new and used cars.

This article will reveal some of the sleazy practices of the less-ethical auto dealers. Do not assume that all dealers and salespeople resort to these tactics because they do not. I have known several very nice people in this field. However, some of the people in this industry have become masters at exploiting the ignorance of the masses, so now you will know what to watch for.

Eventually, you will settle on a vehicle you like. It would be nice if you could just take it to the cash register and get a good deal, but many dealers want to see how many extra dollars they can squeeze out of your pocket before they complete the transaction. Let’s take a look at some of the common “shifty” practices of the bad boys.

• Do not surrender your keys to the used car manager or anybody else in the dealership. Some dealerships will use this ploy to keep you from leaving. Once they have your car and the keys safely set aside, it is difficult for you to get out of there. If they want to test your vehicle go with them and get the keys back before you resume negotiating.

• One of their many sales techniques involves using a “manager” against you. The sales person first tries to get you to sell your vehicle for wholesale and buy his vehicle for full price, but when he meets any resistance from you, he starts talking about his manager. They want you to make a written offer, which “must be approved” by the manager. Naturally, the manager NEVER accepts your offer. They will always attempt to squeeze more out of you. They are willing to stretch the negotiations out for hours if necessary because they are obligated to be there all day. On the other hand, they expect you to grow impatient because you want to do something else. The dealer will try desperately to get you to pay more by telling you what a one-of-a-kind bargain this car is, or the other buyer who is just about ready to grab up the vehicle, but don’t fall for that. They don’t usually let real buyers get away and besides if you lose this particular auto, there are thousands of others just like it.

• When the first salesman suspects that he has exhausted your patience, he will call in a substitute. The “T.O. Man” (take-over man) is a master closer. This fellow is a little different than the mystery manager from the above example because you will actually meet him. He will ask you something like, “What do we have to do to put you in this car today?” Regardless of your response the answer is, “I can’t do that, but if I can get the boss (we are back to that practice) to agree to blank will you go along with him? What a loaded question!!! He has made no commitment at all, but has gotten you to establish your “starting point”. (see above). Tell him you want to know their best deal and you will decide to take it or leave it. Before you answer them be certain there are no additional fees (Like dealer preparation). We have already established what to pay.

• Once the price is hammered out, they will escort you to the office of the Financing Manager, where there are more sleazy tricks than anywhere else on the dealer’s lot; and, those with poor or substandard credit are more vulnerable than anybody else. Here is an interesting and common tactic that comes into play whenever the dealer helps customers to obtain loans from banks. The dealer offers to help you get your loan. He obtains up to five of your Credit Scores: these can include your FICO scores or standard scores or Enhanced Auto Scores from one or more major reporting agencies. Then he gets you approved based on your best score. But, when he presents the loan package to you, he pads the numbers any way he can. He writes up your loan based on whatever he can get you to pay above and beyond what the bank would have accepted. Since the bank cannot accept the overpayment, they kick-back the “juice” to the good ol’ dealer and you get screwed every month thereafter as you make your payments.

• Another tactic involves misleading you about your loan approval. They assure you they can get your loan approved and then they “help” you sign all of the paperwork. After those formalities are out of the way, they whisk you out the door with you new vehicle. About a week later they call you back, whether you got approved or not, and tell you your loan was denied because of poor credit. They advise you that your credit score falls into a high-risk category and lenders have to charge higher rates to off-set the risk. Naturally, they can save the deal for you if you pay more money down or make higher payments. When you squawk, they show you the “fine print” on their contract that says the deal is contingent upon getting financing. If you demand to undo the deal and get your trade-in back, they tell you they have already wholesaled it out and they do not have it any longer. If you get caught in this scam demand to see the rejection letter from the bank or tell them you will be giving the state attorney a call.

• They have a scam they pull involving cosigners. They tell you that you do not qualify and if you can get somebody else to sign for you, such as grandma, you can still get the car. Then they prey on grandma’s kindness and ignorance. She does not know what you have agreed to or about the fine print so she willingly signs anything they ask her to, and you can imagine where that leaves you. The bottom line is, if you need a cosigner you ought to ask yourself if you can really afford this particular vehicle.

• Beware when they tell you that your bank’s checks are not accepted. Sometimes they will say that your particular bank’s checks are no good or they take too long to clear, etc. Then they will try to help you get financing from their own bank. You know what happens from there. Once again tell them you would like to call the Attorney General’s office in your state to see if they know about any such practices.

• The finance manager is going to try to sell you an extended warranty, but I would NEVER ever get one because of my basic philosophies about insurance. However, if there is some reason you think your vehicle is more likely to experience severe maintenance problems than an average vehicle, then you can get good extended warranties on line, where there is real competition for your business. Never let the finance manager tell you that the lender requires an extended warranty, because lenders do not do that. If the bad boy persists, tell him to write down the fact that the lender requires it so that you can check with your state’s attorney.

• Many dealers like to sell service contracts. You pay an upfront fee and then you can bring your vehicle back for free oil changes, tire rotations and other routine jobs. If you do indeed use all of the coupons, you do actually enjoy a modest discount, but after the dealer has your money a lot can go wrong. You might forget to come back or sell the car or move away or it gets in a wreck. This program is designed to get you into the service department where you will be unlikely to get any great price breaks. I suggest you forgo this expense and look for bargains as you need them.

• Dealers are notorious for add-ons. This mostly applies to new vehicles but there are some of them in the used market as well. One example is they offer to upgrade your tires, then they charge you for the new tires and keep the other tires, whether they are new or not. Be sure to read your invoice well. Make sure they have not charged you for things like Dealer Preparation, under carriage rust protection, extra detailing or cleaning, service contracts, fabric guard, or paint sealant unless you already approved it, which I hope you did not.

This is just a partial list of the ways that naïve consumers get mistreated, but I am certain new tricks are popping up all the time. Fortunately, you can avoid falling into any of these traps just by knowing they exist.

Note: The above article and several of the ones that preceded it are part of one chapter in my upcoming book about family finances, entitled Stop Flushing Your Money Down the Drain.

Click "comments" below to contribute. You may need to set up a Google account but it is easy and nobody will bother you because of it.

Finally, check my other blog from time to time. It is mostly human interest stories.

Buying Used Vehicles

We have been discussing one of the chapters in my next book about various aspects of the car-buying business. The previous article was just about buying new cars; This time we will discuss purchasing used cars.

Once again, you should get your financing lined up before you go shopping. This will keep you in a position of strength and reduce the likelihood that you will fall victim to dealership financing scams.

Now, get this thought imbedded deep in you mind: Dealers do not pay more than wholesale price for any vehicle and sometimes they do not even have to pay that. If they have several similar cars, they probably bought them from a fleet of rental cars or some similar situation. They also buy blocks of cars from each other and at dealer auctions. In cases like that, they can usually buy for slightly below wholesale prices so they have plenty of bargaining room in those cars.

The dealers also get inventory from the public. Sometimes they will buy cars outright but it is more common for them to take cars in trade. If they take a private party’s car in trade, the dealer’s approach is to start at wholesale and deduct for needed repairs. In other words if they take in a car that has a wholesale value of $8,000 but it needs $400 worth of tires and $600 worth of body work, they will not pay more than $7,000 for it, but they will probably try to pay you less. Expect them to say something like, “We can get cars like yours at the auction for less than you want.” Whether it is true or not is debatable.

The only time a dealer will over-pay for a car is when they are taking a trade-in and they have excess profit built into the vehicle they are selling to that same customer. But, in a case like that they write off any amount they overpaid to buy one car against the profit they are making on the other one they are selling; therefore, they still consider themselves to be into the trade-in vehicle at the wholesale value.

The point of all of this is the dealer pays wholesale or less for every car on his lot. Therefore it is easy to compute how much to pay them, or more importantly, what NOT to pay them.
At some point they may take out a “book” of some type and try to imply that it is the Bible of pricing, but don’t fall for that. Those books are just “guidelines” and they do not all agree (Otherwise, why have more than one?). Furthermore, they are not as current as on-line information. Once you have a vehicle picked out, get to a computer and check out kbb.com (Kelly Blue Book). It will give you a great indicator of value. It even takes into consideration local matters like a convertible will have more demand in Florida and a 4-wheel drive will be common in Montana. Add $1,000 or 12%, whichever is higher, to the wholesale price and it is as simple as that. It will not work every single time but most dealers are going to have a hard time turning down a respectable profit like that.

If you are buying from a private party, you can employ the same basic procedure. First get your financing lined up and then use the kbb.com site to tell you a fair “private party price”. It is usually about halfway between wholesale and full retail.

Frequently, the private parties are more difficult to negotiate with than the dealers. Some private parties need to get retail pricing because they owe so much debt against the vehicle, but that is not your fault so do not overpay them. Others are just greedy and looking for a full retail buyer. Hopefully, you won’t be that person.

Furthermore, the dealers will ordinarily give you some sort of warranty, but private parties do not. In addition, the Better Business Bureau and the State Attorney offer some sort of leverage against a dealer, but they are of little value when dealing with Joe Blow.

Finally, when it comes to buying used vehicles, I have a strong preference for Federal Government auctions. If you are in a large metro area, there is a good possibility they are right in your area. A common one is GSA auctions. If there are very few private parties at the auction, you can usually get nice vehicles for wholesale prices. That is because your primary competition is car dealers and as we just noted, they do not pay over wholesale. So if you bid $100 higher than wholesale, there is a good chance you will be the high bidder.

You can generally assume that these vehicles are in good shape because the employees who drive them are supposed to be taking them in for regular maintenance. In our area, most of the vehicles have less than 65,000 miles on them or they have very few miles but they are 6-7 years old. My last purchase was a 7 year old pickup with 4-wheel drive, air conditioning, automatic transmission and only 28,000 miles (It would have still been on warranty if it was younger) for $4,700. I have been driving it for about 4 years now and can still get all of my money back if I want to sell it.

I have bought at least two-dozen cars and trucks this way. Many were for personal use, others were helping friends and family, still others were work-trucks, and we have even purchased a fair number of them strictly for resale.

Sometimes they have other interesting items at government auctions such as large trailers, buses, ambulances or wrecked cars.

Other government agencies, as well as businesses and private parties also use the auction process to unload inventory. The state of Colorado uses Ebay’s auction format to sell a lot of their vehicles.

The City and County of Denver sells all sorts of fascinating “vehicles” every year. In addition to many dozens of vans, pickups, and autos, they always have gobs of other items like excavators, bobcats, trash trucks, dump trucks, tractors, pavers and lots of heavy equipment. One year they sold three very large fire trucks for $2,700 – FOR ALL THREE! Two of them still ran. It is a hoot to go to auctions like that, even if I don’t buy anything.

One final point regarding auctions: The best bargains usually come at the very beginning and very end of the auction. In the beginning of the day, many customers arrive late and others hold back until they are familiar with the process. At the end of the day, the excitement wears off and most people already have what they came for so you may only have a couple people or dealers who will bid against you.

The bottom line is, I suggest you get on line and search for any auctions in your area. At the very least, you will have a good time and you just might find an incredible deal.

The next article will be about the challenges in the Finance Manager's Office. Come on back.

My other blog is currently discussing Illegal immigration. Come check it out

Buying Brand New Vehicles

This particular entry is about buying BRAND NEW CARS. If you have a few extra minutes scroll down to read my previous entries about the auto industry.

For starters, I am not a big fan of buying new vehicles because of the expensive depreciation, on-going payments, high cost of insurance and the interest rates that accompany these purchases, but if you are in the market for a BRAND NEW AUTO, and if you don't mind saving money, here are some good things to know:

• All dealers pay the same basic price for the vehicles. You can find out their price by checking on line. A few places to check are InvoiceDealers, Cars.com and MyRide.com.

• Depending upon your point of view, there are several different “prices” for any new car. You should be familiar with all of them. 1) The Manufacturers Suggested Retail Price (MSRP) is top retail as indicated on the sticker. Dealers love buyers who actually pay that amount. 2) There is the dealer’s “list” price. They may try to tell you this is what they paid for the car, but that is misleading, because there is some “fancy accounting” going on. More on that in a moment. 3) There is the dealer’s “actual cost”, which is lower than the list price.

• The dealers get to keep a hold-back fee of two to three percent of the list price on every vehicle they sell. On cheaper, entry-level cars that will be a few hundred dollars but on top-end luxury vehicles it can be a thousand dollars or more.

• The dealer also gets factory kickbacks in the form of incentives from the manufacturer. These might include year-end closeouts or other promotions, including highly profitable “loaded” cars. That is why so many of the cars on the lots have expensive extras.

• Therefore, when we take into consideration the hold-back fee and the manufacturer’s incentives, a dealer can actually sell a car at below the list price and still make a handsome profit. But they will try to get more, a lot more.

• Most dealers like to charge $300-600 for “dealer preparation” fees. This is strictly another profit-grab because part of the purchase price is supposed to cover this service. Ask your salesman what the philosophy is before you make any offers. Tell him if the dealer wants $500 for “preparing” a vehicle that he is supposed to prepare anyway, you will lower your offer accordingly. I would not pay more than the list price for any car that carries a dealer prep fee.

• There is a similar issue with “destination” charges. Some dealers will put their own sticker on the vehicle and add an entry for transportation or destination charges. This is just another way to increase profits because the transportation fees are already built into the list price. If you pay extra for destination you are paying twice for the same service. Therefore, beware of customized stickers.

• When we add the hold-back fee plus any manufacturer’s factory incentives and dealer preparation fees and destination charges the dealer can easily make $2,000 even if he sells the car at his list price. But that does not stop him from marking up the asking price even more, and that is where the MSRP comes in. As far as I am concerned $1,500 over the dealer’s actual cost is plenty of profit for entry level vehicles (below $20,000) and $2,000 is the maximum for any vehicle.

• Once you find a model you like, ask the salesperson if they have more of that model from which you can choose. You are going to do that for three reasons: First you want to see if you like any particular car more than another. Perhaps you like the gold one or the four-door model. Second, you are finding out how much inventory they have because their motivation will vary depending on the circumstances. If they have only one or two of that model, there may be good demand for it and they may be inclined to hold firm on their prices. But if they have plenty of inventory, or if they are closing out a model, you will know not to pay more than a couple hundred dollars over the list price.

• The third reason you want to look at a bunch of cars has to do with all of those extras they have on them. Dealers love to sell “loaded” cars because they often get factory incentive kickbacks, but you can actually use that against them. So, get a note pad and look on a bunch of the stickers to determine how much they charge for the individual extras like pin stripes or upgraded tires etc. Write down every item and its cost. Now ask yourself this question with each item, “If I already owned this vehicle and it did not have that item, would I be willing to go out and buy that item for the price on the sticker?” If you are looking at an air-conditioner and you live in Texas or Arizona the answer would most certainly be, “yes”, but would you pay extra for air-conditioning if you lived in Alaska? What about that fancy $400 stereo? If you already owned that car would you be willing to shell out an extra $400 for that system or would a simple CD player or Am/Fm radio do just fine? Fifteen minutes on this exercise will reveal a lot.

• Once you have a good wish-list, you can ask the dealer which vehicle is the closest to what you like. There is a good chance they won’t have your ideal car, but you can still get it or a very deep discount to take one of his loaded cars. Tell the salesperson their cars are too expensive because they are loaded with things you don’t want. Advise him that you intend to contact a Fleet Manager (These are very common, especially in larger dealerships) to special-order your vehicle. At this point, he knows he has one last chance to make a commission and will probably be inclined to remove nearly all of the profit from the extras if you will take one of his cars off the lot.

• If he does not satisfy you, go home and call a fleet manager in that dealership or a competitor, and special-order your new vehicle with the extras that you want and no others. There is no sales commission. I custom ordered an SUV this way and saved several thousand dollars on extras that meant nothing to me. It took six-weeks to get the vehicle, but there was some extra pleasure in the wait: sort of like looking forward to your vacation.

• Eventually you will have to enter the negotiation process, but how much should you offer? There are several approaches. You can do like most people and just wing it. I bet you can guess how well they do.

• Another approach is to gather all of the data you can from this book and other sources and then make your wisdom known and take your chances. At least the salesman will realize that you are not a complete dummy and you will probably do okay.

• If you don’t have the time or desire to do all of this homework you can use a simple formula to determine how much the dealer will accept. Here is how it works. Put the number “1” in front of the first digit in the MSRP, and that is the percentage you can deduct from the MSRP. As an example, suppose the vehicle has an MSRP price of $32,500. In that event, the first digit is a “3” so put the number “1” in front of “3” and you get “13”. Therefore you can reasonably expect the dealer to accept a 13% discount. In this case, that means your target price would be $28,275, provided there are no dealer prep or destination fees. If you have one of those stubborn dealers who will not sell without those fees, then you will lower your target price accordingly. Let’s do another one. If the MSRP for your new luxury SUV is $50,000, the first digit in the MSRP is a “5”. So put a “1” in front of the “5” and you get “15”. Therefore you can reasonably expect to get about 15% off, or an adjusted price of $42,500. Once again, subtract for any dealer prep or destination fees. Naturally, these numbers vary among manufacturers, models, dealers and other circumstances, but they are usually in the ball park.

• My suggestion is that you avoid all of the above and use a professional buyer service. Some of them sell the cars directly to you, but others negotiate for you, as your agent. In the latter case, there really isn’t much “negotiating” involved. They know the dealers actual cost. They add a modest profit for the dealer and a fair fee for their own services (finding the vehicle and knowing what to pay) and that is your price.

There are plenty of these companies so the competition forces them to be reasonable. Since there is no other overhead, such as commissions and dealer prep, it is very unlikely you will beat the deal that a professional buyer will get for you. My favorite company is CarsDirect.com. They have been around a long time. You can go to their site at any time and plug in what vehicle you like. They instantly show you the MSRP and your cost if you decide to use them. You do not have to provide any private information to see how it works. The only information they ask for is your zip code so that they can consider the shipping costs.

What do you think?

Check back in a few days and I will share with you information about buying USED CARS.

Be sure to check out my other blog, currently discussing Illegal Immigration.