Our beloved 2021 Honda Odyssey’s lease expires in January 2024. Due to the mostly peaceful inflation that the government says does not exist, leasing a replacement would cost nearly 2X what we’ve been paying on our lease whose built-in interest rate is close to 0%. I’m trying to decide whether to buy the car from Honda for about $25,000 or trade it in on a new one (where “new” means “identical to the 2021 version”). I requested a quote from the Costco Auto Program, figuring that the result would be a simple fraud-free number. Here’s what came back from the local dealer that is the Costco affiliate:
The dealer adds in about $4,000 in profit via some worthless accessories for $4,225 and then tacks on $999 as a straight-up “dealer fee” in addition to an “agency fee” of $99 (either of these could be $5,000, right?). On the third hand, there is a note about the accessories being discounted by 75 percent and a bizarre calculation that adds up to more than $73,000 (Cybertruck territory!).
What is the value of going through Costco if the result is having to sort through this multi-layered fraud and being delivered a car that has been disfigured by the dealer? It looks as though Costco negotiates a discount off MSRP and then the dealer is free to add back in as much profit as it wants to with accessories and fees. Costco could negotiate a price of $10 for the Odyssey and the dealer would still be able to charge $45,000 or $75,000 or whatever other price it felt like.
Don’t know why the partner can’t just buy her own car while the ‘spun spends all his time traveling by air. This business of leasing to always have a new car without depreciation always sounded like gambling.
I don’t think there is any way to circumvent the “dealer experience” and “dealer pricing” when buying a car in the US (unless the car is a Tesla). Not to mention that those who need to finance their purchases often have to get their loans at the dealer (is like getting your mortgage from the real estate agent).
https://economics.mit.edu/sites/default/files/2023-02/autoloans%20new%20version.pdf
I don’t get the math: how did they arrive at $74K ? Looks as if $41K+$4.2K accessories +$1.5K fees (roughly) should add up to about $46.7K.
There is something called a Trade Allowance worth $27,500 that is being added to the bill. Why they are adding it, and not adding the Trade Payoff of $25,061.50, is unclear.
I like to think of myself as being of above-average intelligence, and I have no idea what is going on here 🤷♂️. This is what Scott Adams refers to as a confusopoly.
Yeah, it’s early and my head is fuzzy, but that math is really strange. I would just straight up ask them why a 40k van costs 75 grand out the door.
Also: those dealer added accessories are bullshit. Nitrogen in the tires? Pin stripes? Can you just order one from the factory without all that crap and pay the “dealer fee” and call it a day?
I remember reading that car dealerships are very regular political donors, so there are all these weird laws protecting their interests.
If you read /r/askcarsales for a while you’ll learn that FL is infamous for dealer fees and addons. Depending who you ask, this is attributed to lack of regulation or local tradition… For example: https://www.reddit.com/r/askcarsales/comments/17kv3k5/why_are_vehicles_so_much_cheaper_in_florida/
You are best off financially doing a buyback on your current lease vehicle, especially since new and used cars have gone up so much in price, and the original buyback price could not have known and included this in the depreciation forecast.
If you love the car, do consider that it probably still has many years of value.
I agree with Dom, especially since this CostCo system is indecipherable. This is why I only buy new cars once every ten years or so, to minimize the aggravation.
Since you know you like it, and regular readers of this blog will not this doesn’t happen very often, buy a used 2021 and call it good. Or go nuts and buy a newer one. Either way, you’ll be happy.
The Costco program used to be very good. I don’t know if it went bad because Costco made the problem worse for everyone or if it is unique to Florida, but I wouldn’t use this at all. All of those fees are ripoffs. WTF is an Agency Fee?!? And a thousand dollars for your dealer? The dealer profit is supposed to come from the price of the car itself! Don’t get me started on the fees for keys and batteries; that’s just prima facie insulting.
I don’t know who you bank with, but Chase used to offer an excellent car-buying program.
For my daily 3-mile round trip commute, I’m still driving my ’01 Ford Taurus (136K mi) that I bought in like-new condition on ’02 for $12,000. I did put a new starter in it last month (myself, $50 off Amazon) and an AC compressor in Sep. ($450 done by a local shop).
For my daily 3-mile round trip commute, I’m still driving my ’01 Ford Taurus (136K mi) that I bought in like-new condition on ’02 for $12,000. I did put a new starter in it last month (myself, $50 off Amazon) and an AC compressor in Sep. ($450 done by a local shop).
Buy Tesla and skip aggravating non-nonsensical dealer experience.
I almost bought a Tesla this year precisely to avoid dealer related aggravation.
However, the following drawbacks that mattered to me dissuaded me from taking this pah:
1. Inadequate luggage room (model 3) in comparison to a BMW SUV which I use regularly to haul stuff from HD, e.g. ten bags of mulch.
2. Shoddy workmanship
3. Exorbitant insurance rates, almost double of what I am paying now.
3. Inadequate (for me) range and slow charging.
4. Scary roof rack mounted on top of the glass roof (as I recall).
I’m trying to decide whether to buy the car from Honda for about $25,000 or trade it in on a new one (where “new” means “identical to the 2021 version”) If it float, flies or fucks it’s usually better to rent. I am not as familiar with the Honda as you are. Does it do any of the above things?
“If it … fucks”
Dealers will oblige you under any scenario.
You can refuse every single thing added by the dealer. They cannot force you to take it, though they will evade/deny/deflect about it as much as they can. WeatherTech makes high quality floor mats and are much cheaper. Since the add-ons are high-margin, they have a lot of wiggle room on it, however, so you may be decided to negotiate it down instead.
Why do we want WeatherTech floor mats? Our existing minivan came with floor mats and they look perfect after three years. We’re not tracking mud/snow into our car from the Florida tundra. Separately, I wonder if factory floor mats are totally waterproof. If they were solid rubber, for example, wouldn’t they trap moisture underneath the mats and grow mold?
I only use Costco Auto for their brand-specific discount certificates if/when those line up with what I’m shopping for at the moment. I negotiate directly with the dealer on the cap cost, money factor etc. on the lease. More work for me but I it saves me money.
++ on the lease buyout. We’re off the peak on used vehicle prices but if your Honda has a clear Carfax report you probably have equity in your lease to play with.