New or Used: Executive Express or Wannabe Hotbed?

Thomas writes:

Hi Steve and Sajeev,

Currently I own a 1999 Accord -2Dr V6 with about 76,000 miles. The interior looks good- the leather is in good shape I’m still quite happy with the stereo system I installed in it years ago. However, the exterior is a different story. 9 years of Arizona (un-garaged) sun has not been kind to it. The paint is looking *rough*. Peeling clear coat on almost all the horizontal surfaces. I won’t mention the hack paint job I did on the trunk lid with my Harbor Freight air compressor and E-bay spray gun in my shed. It’s also sporting a tweaked front bumper/light/hood from a tiny fender bender 11 years of parking lot door dings. So it’s UGLY. The Accord has its 75k mile service is coming up, $200 SRS light is on, $800 timing belts have yet to be replaced, and the rubber bits are falling apart (latest is a cracked $300 Shock boot).

In the other corner, the object of my desire: 2003 Infiniti M45 88k miles 4.5l V8 $10k

Family future-proof with 4 doors, fast and classy. I’ve always loved that body style. I figure the difference in premium gas and my commute would hit me for about $400-500 a year (not a deal-breaker) According to the VIN the dealer picked this up for about 7k, I’m guessing I could nab it for 8000-8500 and grab 4k on the trade-in. Thoughts??

Steve answers:

You’re dreaming. Seven to ten-year old Japanese luxury cars are a hotbed for ‘wanna-be’s’.

What is a wanna-be? It’s the fellow who wants to have an awesome luxury car… in their own mind. But they can’t really afford one. So they end up financing a car with a fancy name that has anywhere between 80k and 120k.

There are a LOT of wanna-be’s who will finance their ride these days. Not too surprisingly there are a LOT of parties that make money off the wanna-be.

The dealer will sell the vehicle to a finance company for anywhere from 65 to 75 cents on the dollar. What that means is that if the dealer hooks this up as a $9k finance deal, the deal will likely net another $6k to $7k in interest, fees, and other bogus related charges. Let’s say that about $15,000 would need to be paid on the Infiniti over the course of the note.

About 70% of that amount will go back to the dealer once the finance company picks up the note. $10,500 is the dealer’s revenue. Throw in a $350 auction fee and $800 in additional expenses, and the Infiniti would yield them around $2,000.

However if you pay them 8k cash, guess what? They have no profit. Everyone assumes that the auction price is how much a dealer has in a vehicle. In most cases, it’s not true. Auction fees, repairs, detail work, floorplan fees, advertising costs, it all adds up to a lot of expenses beyond the initial auction purchase.price.

So should you buy the Infiniti? No. Not unless you’re willing to pay a bit more for it. I would spend $3,000 on your current ride and get everything right on it. Paint, body, maintenance…bring it all back to day one. Drive it for 5 years. Then get a new car for cash or get a real nice late model car that comes with a CPO warranty.

Good luck!

Sajeev answers:

Well, as the LeMons people always like to say, “what could possibly go wrong?”

If you want an executive express on the cheap, the Infiniti M isn’t a bad choice. Especially if you like the body style. The only problem is that it is an orphan car with a very unique collection of trim bits, so if you break something, happy hunting in the junkyards! Of course, given the condition of your Accord, it sounds like I’m preaching to the choir.

I’m having a hard time discouraging you from this fairly stupid plan of yours, and not because I have a soft spot for the original M: I’d rather spend a couple grand more for a Lexus GS400.

Or a punch in the throat. Either way, good luck with that.