FC KERBECK “HALF PRICE” DEALS
Tuesday, November 25th, 2008Half Price….. My Ass!
I am sure you’ve seen the TV and newspaper advertisements about 50% off vehicles from FC KERBECK. Well don’t go rushing over to FC KERBECK to get your next car at half price. What you need to do first is read the FINE PRINT.
First, the cars that FC KERBECK advertise are USED - typically they are previously leased cars. So first of all, a USED car is always worth LESS than the Original MSRP. If you look at the ad, it shows the 50% reduction against the ORIGINAL MSRP cost. Remember, these cars are used so the actual value of that car is way less then the Original MSRP.
“The ‘law’ of depreciation says that once you purchase your car it will lose 10% of its value when you drive it off the lot. After a year it will lower in value due to reports of how long the parts will last, how well the body holds together, and how much maintenance it needs. It will then lessen in value by almost half in 5 years, and again in 10 years.”
Now, let’s look at an example of the 2008 Cadillac DTS in the ad:
The ad shows that the ORIGINAL MSRP is $46,990. However, since the car is used, the actual value of the car is way less. Let’s just use 15% as the reduced value of the car since the car is more than 1 year old:
ORIGINAL MSRP = $46,990
REDUCED VALUE = - 7,048 (=46,990 x 15%)
ESTIMATED RETAIL PRICE $39,942
If you took the 50% off of this ESTIMATED RETAIL PRICE, the cost of the car would be $19,971. However, FC KERBECK is saying that it’s $22,900. So they are OVERSTATING the price by $2,929.
Next, you see that ( * ) next to the price? Well this relates to the fine print that most people don’t bother reading. But you should definitely read it! In FC KERBECK’s ad, it states that in order to buy the 2008 Cadillac DTS at “HALF PRICE”, you will have to finance it over 84 months with an 7.25% APR Financing Rate. Not only that, you will need a credit score of 725 or better. Do you know what your credit score is? Well according to Experian (one of the three major credit bureaus) the average credit score for Americans is 692. So if you fall in that average, it looks like you’re not getting the car.
Back to the 7.25% APR. In order to get that Cadillac DTS for “HALF PRICE” you will have to finance the car over 84 months at a rate of 7.25%. What does this mean? In a nut shell, that advertised 50% price of $22,900 is actually going to cost you $29,258 once you factor in interest.
So to recap…. based on our calculation, we calculated that the ESTIMATED RETAIL COST of the car after the 50% reduction should be $19,971. FC KERBECK says that it will cost you $29,258. That certainly doesn’t sound like a deal to me.
