When most people shop for a new car loan or lease, their goal is to get the lowest possible payment. But if your focus is on scoring what is truly the best deal, sometimes the less expensive car doesn’t give you the most value for your money.
This may seem like obvious car advice to the informed, but isn’t as well-known as you may think among many shoppers. I recently represented two sets of clients shopping at very different price points and very different cars. What made them similar was the fact that in both cases, the more expensive car with the higher payment ended up being the better deal.
The first case was a woman who was looking for a nice crossover around $35,000. She had narrowed it down to the 2016 Mazda CX-5 Grand Touring (MSRP $33,425) and the 2017 Subaru Outback Limited (MSRP $35,967). While she liked the sportiness of the Mazda she was also enticed by the safety reputation of the Subaru, so it was all going to come down to the numbers.
I came into the process with the hunch that the Mazda would be the better buy since the new 2017 CX-5 models were just now hitting the lots and dealers would be hot to move 2016 inventory. That, and the fact that she was not near a large metro area and Subaru stores tend not to be as competitive if they don’t have to fight with other dealers.
Turns out I was wrong. The best discount that the local Mazda stores were offering was a $500 rebate, plus a $2,500 dealer discount and this was on technically a “leftover” 2016 model. The quote on the $33,425 Mazda came in at $30,425 before tax and fees.
As for the Subaru, it was a totally different story. There are no factory rebates on Outbacks because there is no need to offer them because of the insane demand around those cars. In spite of that, a local Subaru dealer offered almost $4,000 off the MSRP. The customer could also combine this awesome discount with the zero percent financing for the 48-month offer that was running that month.
Even though the final sale price on the Outback was $1,567 higher than the Mazda, the Subaru was the deal to grab. In this case she was getting what was originally a more expensive car with a better deal on it. It may not have been the cheapest option, but it was clearly the way to go.
The other case involved a lease on a 2017 BMW M3 and it illustrates why it is important to open your net up beyond your local dealer when shopping for a specialty car like this. The customer wanted to lease this car for 36 months at 12,000 miles a year and put $4,500 down.
A local dealer had an M3 in stock with an MSRP of $75,115 and a lease payment of $1,020 a month including all tax and fees. An out-of-state dealer had a car with an MSRP of $83,185 and a lease payment of $1,066 a month, again including all tax and fees.
Of course, the more expensive car meant a higher payment, but when you work the math out it is the much better deal. At $44 a month more, that works out to a total lease cost of an additional $1,584 over the cheaper car, but the price difference between the two cars is over $8,000.
While either of those payments might seem pretty bonkers to your average buyer especially since you don’t even own the car, relatively speaking once you are spending that kind of money an extra $44 a month doesn’t seem like a big deal. In this instance, that little bit extra gets you $8,000 more car.
Whether you are shopping for a reasonably priced crossover, a high-end sports car or something in between, it pays to keep your options open to similar vehicles from other brands and not get exclusively fixated on the bottom dollar price but take a big picture look at what car will give you the best value for your dollar.