I have a friend who is looking to buy a brand new 09 Escape. I went with him to the dealer, mentioned X-Plan and the dealer came back with a better price. He came down to 17k on the Escape which is not bad.
My friend has decent credit, a beacon score of 611 (he is only 31) and has had multiple loans through his credit union and has never missed a payment or been late. He has a vehicle right now that he still owes about 8k on and he is going to trade in. They didn't mention the trade-in value of his vehicle or what they were going to give him. Currently, his auto loan is 280-ish a month. He was hoping to not go over 400 a month, but it doesn't look like that is going to happen.
They come back with the final deal offer of 525 a month (60 months, wouldn't go 72 for him) for the Escape plus payoff on his current vehicle. If he takes this deal, he will be paying a total of 31,500 for his 8k payoff and the 17k Escape.
If he does this, is he being raped or should he pull the trigger? He wanted an F-150, but his wife put the nix on that because she says it's too big. I am not sure what's wrong with her, but hey, at least I got him talked into a Ford. What do you guys think, should he walk away and try to get lower payments or is it a decent deal?

 

$8K left on his current vehicle < $31.5K for a new vehicle plus the payoff.

I went into a similar deal on my F150, and I regret it to this day. Not the truck, but just the whole shebang about buying my truck and what I went in to. Technically speaking, my truck is paid for; I'm still paying for a Focus I don't own anymore. :o

My advice, he doesn't need to do it.

Paid for vehicles are the best vehicles. He's pretty close to getting his current vehicle paid off, are there any abnormal circumstances that dictate that he needs to ditch whatever he's driving now? Does he need room for the kids and their junk, is his current vehicle falling apart and not really worth fixing right now, does he just want a new ride?

Plus the value on that Escape is gonna go to crap the second he drives off the lot, so if he does this, he better really, really, really like that Escape and hope like hell it doesn't fall apart on him, because he's gonna be stuck in it for quite a while. Tags and insurance for a 2009-whatever will most certainly cost more than whatever he's driving now, don't forget to factor that in.

He's hoping not to go over $400/mo, but he's paying about $280/mo now, so IMO he should start paying $400/mo on his current ride and get it paid off quicker. Then drive it until the wheels fall off. Repairs are cheaper in most cases than a $31K/60 month car note.

After being really freaking stupid and taking the beating I did when I bought my truck, I'm just really cynical about buying new vehicles now. It's financially ignorant in most cases.

 

I'm in Quintin's situation... too... however...

I did the stupid thing of selling my perfectly fine paid off 1999 F150 for a 2003 Escape, which was junk, I owed like 8k on the Escape, and bought my 2007 F150. I've pretty much paid for the truck itself, but now I feel like I'm paying for my mistake, like big time.

Not saying the 2009 Escape is bad -- it shouldn't be... but the old 2001-2006 Escapes utilized the CD4E tranny.. which is a gunky piece of junk.

All I can say is be careful when signing up...

 

First rule of car buying- NEVER go into a deal and be up side down. If his trade doesn't cover the $8000.00 payoff, he needs to walk away from it and pay his whatever he's driving, down. It's pure lunacy to roll a balance into something that already will be losing value the moment he signs the paperwork. Take the advise from the above folks, it isn't worth the new car smell to pay off a car you no longer own.

 

I hear ya. When I bought my 06 half my total loan amount was from my trade in.

That is how I viewed it too, paying for a vehicle I don't even drive anymore

 

My wife has bought a brand new vehicle every two years since she was 20. I have bought and paid for every single one of my vehicles. Needless to say, when we traded in the Xterra for her 2005 Mustang GT Convertible, we were a bit upside down on it.

I bought my 2005 KR F150 in 2006 with 26k miles.

It infuriates her to no end when we go stand in the garage and I do this...

Point at her car. 50k for a 32k car.

Point at my truck. 29k for a 45k truck.

She doesn't spend much time in the garage with me anymore (not that she ever did in the first place).

Have your friend pay off his original ride, unless circumstances dictate a new one. Much better use of money.

 

That sounds like a horrible deal to me -- with 8k left to pay on his current vehicle, he could pay it off and own it free and clear in less that 18 months for the $525 per month he was willing to spend on the new Escape.

By the way, the price they are giving him on the Escape is actually pretty good -- he's just getting reamed on the trade-in and financing side of the equation.

Rule of thumb -- 9 times out of 10, if you go into car negotiations focused on what your monthly payment will be, YOU WILL GET SCREWED! Most folks in these situations are dealing with people who are WAY smarter than they are, and that usually results in a bad deal for Average Joe.

 

Dont do it