The Truth Behind conventional car buying methods and why it is dangerous to your finances (part 2)

Before we begin, I want to take a moment to properly introduce myself.

In this day and age, there are far too many wannabes and gurus who pose in front of a Lambo and pretend it is theirs.

It's important that you know who you're learning from is someone trustworthy and credible...

Someone with real-world first hand experience; not some online 'expert' who has an opinion just from watching YouTube.

So allow me to introduce my self...

My name is Pejman Ghadimi. 

Most people call me "PJ".

I am a serial entrepreneur and avid exotic car enthusiast and collector.

I'm pretty active on Instagram and YouTube so there's a good chance you've might've seen me before.

In 2019, I was featured on NetFlix’s Fastest Car TV series for Season 2 in the highly controversial first episode.

Just like you, I'm a car enthusiast.

I love the thrill of driving them. 

I love the engineering behind them.

I consider them works of art.

I simply just love cars.

I've had every car imaginable...

From Japanese sports cars like the Honda S2000 and Mitsubishi EVO, to American muscle like the Ford Mustang Cobra and Pontiac TransAm, to European cars like the BMW M6, and now more  exotic cars than I can remember.

In total, I've owned over 250 cars (mostly luxury and exotics these days).

I typically have at least 4 exotics in rotation at a time.

As of this writing, I own a Lamborghini Aventador SVJ, Ford GT, McLaren P1, McLaren Senna, Lamborghini Huracan STO, and many more.

If you want to see my current garage, the best way is to follow me on Instagram.

So it's safe to say...

I don't just 'talk the talk', but I 'walk the walk' and gladly put my money where my mouth is.

What I'm about to share with you today is something I wished I had been told when I bought my first car.

So listen closely.

Every person who buys a car can be broken down into one of three groups:

• The first group of people prefer the 'latest and greatest' so they always buy brand new for personal reasons. Maybe they have too much money to care, or simply don't know any better.

• The second group of people fall for the biggest scam in the auto industry: leasing. They only pay attention to the monthly payment, and don't want to deal with the headache of selling it later with the ease of just trading it in.

• The third group of people are slightly wiser and buy pre-owned. They know they can save a few bucks by allowing the first owner to take the hit. While this is considered better, it's actually still not the best option.

You don't want to fall into any of those groups and I'll explain why below.

Disclaimer: Since sales tax varies in each state, we will not be factoring that into our equations... but you will see soon how taxes can minimal.

Buying New Cars

Yes, buying new can have its allure, but it’s one of the worst things you can do financially.

Have you ever heard the saying… “You lose 20% of your car value the moment you drive off the lot.”?

It’s true.

There's a reason why financial experts Kevin O'Leary, Dave Ramsey, and Suze Orman say buying a new car is a mistake.

Most of the time, the moment you sign the papers, you can expect to lose a MINIMUM of 20% of your cars value instantly.

For context, a brand new 2020 Mercedes-Benz C63 AMG has a MSRP of up to $90,000 (crazy money for a C-Class).

Let's say you take it home and then an emergency comes up and you can no longer keep the car.

You then bring it back to the same dealer you bought it from and ask a buyback quote.

Can you guess how much they'll offer to take back the car you just paid $90,000 for?

Roughly $72,000.

That's an immediate loss of $18,000 (20% of $90,000).

Think about it this way....

That's literally the same thing as if you took a stack of cash and just lit it on fire.

You will NEVER be able to get it back.

It only gets worse the longer you keep the car!

The ‘good’ news is that you can sleep in peace knowing that you are the very first owner.

But is it really worth losing $18,000 to be the first owner?

Leasing Cars

Don't get me started on leasing cars.

I, too, once fell for that trap.

On the surface I can see why you think you’re saving:

• Tax write-offs

• Warranty

• Low payments

• Guaranteed exit

While these things may seem attractive, when you do the math, the problems become clear.

When you lease a car, you don’t own it. It's actually more like a long term rental.

What the manufacturer does is decide what a car will be worth at the end of the lease term. 

Using arbitrary numbers, let’s say a car is $100,000 new, and in three years the trade-in value with 30,000 miles will be $60,000.

A lease is simply a purchase contract on the $40,000 ($100,000 - $60,000) depreciation, scheduled out into a down payment of say, $10,000, and monthly payments of about $900 on the remaining $30,000 with interest factored in.

In contrast, financing the car outright ($100,000) would cost in the neighborhood of $1,800 per month on a 60-month term (3% interest rate).

In the era of Netflix, consumers are getting used to the “subscription” model and only looking at the monthly payment.

Car dealers LOVE this because they can sell you on that simple factor.

Who would want an $1,800 payment when you can have a $900 payment?

Financially savvy people, for one.

Let's compare apples-to-apples using a similar Mercedes-Benz C63 AMG from above.

Right on the Mercedes website, you can see their current lease specials.

Here's what they're offering on a 2020 Mercedes-Benz C63 AMG...

Oh boy... there is so much to digest here once you read the fine print.

Let's run the numbers shall we?

It says MSRP of $74,076 ($76,695 original MSRP - $2,619 dealer contribution).


That means this is an entry level C63, not a fully loaded one like the $90,000 one in our example above.

The terms state $7,123 due at signing plus $979 per month over 36 months.

When you add it all up, it will cost $42,367 to lease this car for three years. 

Here's the math:

$7,123 (down payment of $5,349 + $795 acquisition fee + first month lease payment of $979) + $35,244 ($979/mo * 36 mo) = $42,367

But it gets even worse.

The fine print mentions an “end of lease purchase option” for $39,881 plus tax. 

Meaning after your lease term you get “first dibs” to buy the car for that number.

Sounds like a nice offer, until you do the math.

$42,367 in lease costs + $39,881 purchase option = $82,248 total cost for a car with a MSRP of $74,076.

The dealership makes an additional $8,172 above the actual MSRP from you if you do this (lots of people do).

So if you decide to sell the car later on, you've already dug yourself in a hole with all the negative equity that you'll never get back.

Which brings me to other six major cons of leasing:

• Annual mileage limits: You have mileage allowance that is usually not very high. If you go over then you incur penalties.

• Requires down payment: Savvy investors know how to leverage their cash better.

• No actual ownership: All you have is a contract on the depreciation, it’s not your car.

• Stuck with car for up to 3+ years: You cannot easily exit lease contract without penalties.

• You pay a premium to buy the car out of the lease: It's a lose-lose situation all the way around.

• You cannot modify car: No one should be able to tell you what you can or can't do.

In the end...

If you go with this lease, you wouldn't have built any equity so you come out empty handed with a loss of $42,367 and the possibility of losing an additional $8,172.

If that's not robbery I don't know what is!

Buying Pre-Owned Cars

Anyone who has an ounce of common sense will know that buying used is always BETTER than buying new.

It doesn't take a rocket science to realize why...

• You aren't on the hook for the initial depreciation where the majority of the loss in value occurs.

• You're still buying a current generation car roughly 2-4 years old that is essentially the same exact car being sold new today.

• Warranty is still valid and intact, meaning you have nothing to worry about as any issue can be fixed for FREE under warranty.

You can save up to 40% off original MSRP by going the pre-owned route while taking home a like-new car.

Take a look at this 2017 Mercedes-Benz C63 AMG that's being offered for sale at a dealer.

A car that once sold for about $85,000 is now being offered for sale for just $52,495 after three years.

That's about 40% off the original MSRP.

That's insane!!

Talking prices is one thing, but what about cost of ownership?

Let's say you are able to negotiate that car down to an even $50,000.

You put down $10,000 and qualify for a 60 month loan with a 3% interest rate.

This makes your payment about $719 per month.

I'm not even going to compare it to buying new because you and I both know that's not even an argument.

But when compared to the lease... it's a no brainer to buy used.

• You're actually paying LESS per month.

• Still considered new with very low miles.

• You're building equity so you can pull out money when you sell.

• No limitations of any sort. Do whatever you want.

• You're driving a fully loaded car versus a base model lease.

• Same exact car, same warranty.

Let's say you keep this car for three years too.

Your total out of pocket expense would be $35,884 ($10,000 down payment + $719/mo * 36 months).

Obviously you're not losing that much money because when you sell the car you will recapture some of your money back.

Let's assume three years later you sell that Mercedes-Benz C63 AMG for $40,000 based on current market value.

With the sale of the car, you pay off the $40,000 loan in the process.

So your only out of pocket expenses are the $10,000 down (which is essentially the cost of depreciation over the three year period) and the total amount of interest you paid which is about $2,600.

When compared to the $42,367 cost of the lease, buying pre-owned is about 1/4th the cost.

If you divide $12,600 over 36 months your TRUE cost of ownership is only $350 per month.

Doesn't that make so much more sense to buy pre-owned?

But here is the crazy part that I haven't even talked about yet...

• What if there was a way to buy this same exact car below market value?

• What if you didn't have to put down any cash at all?

• What if your payments were actually even cheaper?

• What if you beat the depreciation schedule so that you can trade-in or sell the car any given time and withdraw all your money?

• What if you could actually upgrade to a luxury or exotic car without being a millionaire?

There's actually a fourth group of car buyers, or should I say "car hackers", who have been using this little known strategy.

On the next page I'm going to break down step-by-step how you can replicate the same car hacking process I've been using for the last 10 years.

Copyright © 2022 Exotic Car Hacks.  Legal Disclaimer

DISCLAIMER: The results stated above are my personal results. Please understand my results are not typical, I’m not implying you’ll duplicate them (or do anything for that matter). I have the benefit of practicing car buying for over 10 years, and have an established following as a result. The average person who buys any "how to" information gets little to no results. I’m using these references for example purposes only. Your results will vary and depend on many factors …including but not limited to your background, experience, and work ethic. All business entails risk as well as massive and consistent effort and action. If you're not willing to accept that, please do not continue.