7 Rules To Keep You From Getting Ripped Off On Your Next Exotic Car
In the last 5 years, I have bought over 80 different exotic and rare luxury cars.
I’ve had everything from a $500,000 Lamborghini Aventador SV down to an $8,000 Jaguar XJR – and while I am passionate about incredible cars as I am sure many of you are, I also understand that each and every time I buy a car I am either buying an asset or a liability.
90% of the cars I’ve owned have provided an incredible driving experience and have even helped me make money rather than lose it which has made this hobby of mine even more fun.
Part of the reason that happens for me is because after buying and selling so many cars I now have a very clear system I use to do so and have learned quite a few tricks along the way.
If you have previously purchased and exotic, or you’re in the market for one, follow these 7 guidelines and I promise you that you will save yourself 99% of the headaches commonly associated with owning an exotic car.
- Use the 30/60/90 Rule
This important rule is one you cannot ignore, or you will lose quite a bit of money.
When most people go to buy a car, they have a clear view of the exact car and options they want, which, as a result, leads them to losing the absolute most on depreciation.
Those who understand sales understand that it’s not about buying what you want, but rather buying a car that the dealer no longer wants and that you are still relatively happy with.
Dealers are obviously in business to sell cars as fast as possible.
If a car sits too long, it keeps them from being able to bring in new, exciting inventory. So they discount their inventory cars based on 3 specific dates: the 30, 60 and 90 day marks.
On the 90th day, they get very aggressive and are willing to discount the price to move certain cars.
Those cars are the same as they were 90 days ago, just much cheaper.
I’m not advising you to get a car color you hate, but rather to pick from a pool of cars that specifically have been there over 90 days.
In many cases, a car similar to the one you seek is in that pile.
- Do not Skip the PPI:
PPI stands for private purchase inspection (or pre-purchase inspection depending who you ask) and you should do one each and ever time you are buying a used car, even if its sitting right in front of you and looks as good as new.
A PPI is a perfect way to have someone with experience look over the car without bias of caring whether or not you buy it.
The idea is to take out any potential surprises after you pay for your car and often allows you even more bargaining power to ensure you are indeed paying exactly for what you think you are getting.
In my 80+ exotics, I skipped this process only 1 time and that time lost $9000 in repairs afterwards. A small process that costs in most cases under $700 could not only save you money, but also lots of headaches.
- You buy the dealer as much as the car.
Most people look for the right car, but often ignore where they find the car.
The dealership from which you purchase a car is equally important as the car itself. Make sure to pay attention to the reputation of the dealership and its past satisfied or displeased customers.
Most dealers operate with a consistent quality of service (good or bad), so if their past indicates poor judgment and poor customer service or poor condition cars, it is likely that so will their future cars.
Use not only good judgment, but do your research and only buy from reputable dealers.
- KBB/NADA values only matter if the dealer wins.
You may have been told years ago that the best way to know what something is worth is to look it up on Kelly Blue Book or NADA values, and while these tools are still somewhat relevant to basic cars, they’re highly inaccurate as it pertains to exotic cars.
Even auction data can often be deceiving — especially on vehicles where very low volumes has been taken in account.
A car is ultimately worth what someone is willing to pay for it, but reality is that yesterday’s tools as it pertains to today’s car values are obsolete… unless, of course, they work in favor of the dealer.
If a car traded hands very cheap at the auction or is listed as very cheap on NADA, then the dealer always makes the argument to use the tool.
However, if the cars show strong numbers at auction or NADA, then the dealer will go out of their way to seek any data they can find to justify lower values.
In other words, keep in mind that these tools are used as safety nets for dealers to protect themselves against any future losses. They are not tools to help you understand what your car is worth, despite being marketed as such.
- Do not ask the dealer his thoughts on your car’s future resale
Every dealer I have ever done business with (even those I consider friends) always told me that every car I was ever looking to buy was a “HOT” market with lots of demand and very little supply.
They also told me that every car I was ever selling was “COLD” and that no one really wanted those cars.
It got me thinking that its quite convenient that each and every time I was looking for a car, prices were high, but overtime as I was selling a car, prices had come down.
Salespeople run dealerships, and good salespeople know how to position their pitch.
By manipulating your expectations early, you are more likely to take the plunge and buy (even if it’s not at the cheapest price out there) or dump your car cheaper to sell because you are afraid the market will keep tanking.
- Condition says a lot about a car.
Not all exotics are the same.
Many cars on the market appear to be the same on the surface as equal miles, similar colors and model years may establish a baseline, but the reality is that exotic cars are a bit like art in that each and everyone of them is unique as it pertains to its past owner, its history of repair and maintenance, and of course, its current condition.
Most exotics have sensitive control buttons and delicate leather that show wear significantly faster than the average automobile.
Such condition greatly impacts not only the value of an exotic but also how quickly it will sell.
Previous accidents and paintwork drastically reduce the price of an exotic as well. No one wants, after all, a beautiful painting that has been altered from its original condition – even if reconditioning seems to have been done at the highest standards.
- Finance is your friend. Cash… not so much.
Most of us are taught to think that if you can’t afford to buy an exotic cash, you shouldn’t be buying one. The reality is that finance is actually your friend for a multitude of reasons.
Dealers make money from finance and will not only want you to finance, but will be more likely to lower the car price to get paid more from the bank instead. Most dealers get 1-2% of the loan size you book through them.
In addition to that, in a good economy you will find that banks will not only lend you money, but will do so on favorable terms and rates.
Being able to leverage finance to acquire your vehicle is not only smart, but also a great way to leverage your cash on better investments.
The right exotic cars can also be assets, but far from money producing investments, which is why I have always found it better to invest my cash (like in watches) while leveraging my cars.
Hopefully these 7 tips can not only help you make better decision regarding your next exotic, but also help you navigate the entire car buying process.
If you are one of my readers who is in the market for an exotic in the next 3-6 months, I have put together the complete strategy on how to not only buy the right car, but make sure you buy the right car at the right price.
The secretive world of exotic dealers no longer has to be a secret – to ensure you pay the right amount so your exotic can be an asset rather than a liability or money pit, register for my free 1 hour training.
60-minutes of your time could save you as much as $35,000 on your next exotic and provide peace of mind that your dream car won’t turn into a nightmare.