7 Ways to Save Faster for your Next Cadillac

1) Don’t buy something new to replace anything that is not broken or worn out.  For example, I would like to get a new big-screen television set for the den.  However, my current television set in the den works just great.  Solution?  Don’t replace the tv; save money.

2)  Once your current Cadillac is paid off, save up for your next Cadillac while you enjoy the current one. Don’t stop your car payments just because the Cadillac is paid off.  Keep making your car payments, but into a savings account.  Then you can use these funds to buy the next Cadillac.

3) Let someone else buy the depreciation, and you keep the Cadillac.

I purchased a new Cadillac CTS in 2004.  16 months later, in 2005, I traded my 2004 model for a new 2005 model.  I loved having the new cars, but that was a financial disaster.  I not only lost the steep depreciation on the first year and a half of the 04, I turned around and repeated it for the first year and a half of the 2005.  Cars depreciate.   They depreciate in a steep curve that gradually shallows.

In other words, the first year of depreciation might be $12K, the second year $5K, then following years $4K, $3K, $3K, $3K, etc.  So if you MISS the first year or two of depreciation, the Cadillac costs YOU less money.

At 50K miles on it right now, my CTS still has a new car smell.  That is thanks to Cadillac’s extensive work in new car smell technology (no kidding).  The leather is designed to smell new for a long time.  So the big thing you miss out on by not buying your Cadillac new is the first year’s depreciation.

Leasing is a terrible way to buy a car and guarantees that you will ALWAYS pay the huge initial depreciation.  Leasing is the most expensive way to rent a car.

4) Shop from a private seller for a vehicle with 1-2 years (past the early steep depreciation) and under 12K (1 year) or 24K (2 years) miles.  Note that at this point the Cadillac is still under the 4 year, 50K mile bumper to bumper warranty.  Used cars at the dealer come from private sellers.  The dealer buys the used Cadillacs, or takes them in trade, and then marks them up to what the market will bear.  By dealing directly with a private seller, you can avoid the dealer markup.  This can mean a significant savings.

5) Cadillac Certified Pre-owned vehicles can be a terrific value.  They come with a bumper to bumper warranty out to 6 years and 100K miles.  The Dealer is the best ever negotiator with owners and often gets Cadillacs for shocking prices in trade-in (one reason to sell your Cadillac privately when you are ready for a new one).   You may be able to in turn negotiate a very good price for a great Certified Pre-owned Cadillac.  Definitely however test the water and compare the market pricing from 4) Private sellers before you write a check for a certified pre-owned Cadillac.

6) Keep your Cadillac under Warranty Mr Goodwrench is a terrific mechanic.  He/she have access to all the latest tools, the latest technical bulletins and advice from the factory, and are trained in the latest repair techniques.  You WANT the dealer service department to repair your vehicle.  But hey, Mr. Goodwrench also costs $90/hour and charges full book hours for customer pay.  So how can I afford that?  Keep the Cadillac under warranty.  Problem with the car?  Drop it off, get a rental, and get on to the beach or work or the mall or whatever.  No worries, pick it up when they fix it.  Cadillac are terrifically reliable these days, but the warranty is there for when you DO run into mechanical issues.  So you can enjoy your Cadillac for up to 100K miles knowing Mr. Goodwrench is on call.

7) Pay cash for your next Cadillac. How much does a 0% interest, 6 year car loan cost?  You might think 0% means $0.  However, if you pay cash for the Cadillac, the Dealer as an alternate to 0% interest often offers $3K or $5K of additional savings off the sticker price.  So how much did the 0% interest loan cost you?  $3-$5K by my book.

Hey! How can I afford to pay cash for my next Cadillac?  A)  Drive your current Cadillac; after you get it paid off, keep driving it and keep making the payments.  B) Buy a nice used model to replace it — this can save you $12K-20K off the price of a new Cadillac.

Congress approves $25B in loans to US Automakers

The Congress today passed a Budget Continuing Resolution to keep the US Government running through the end of the Government Fiscal year.

Contained in that resolution, which is now headed to the President for signature, is funding for $25B in loans for US Automakers to help them build more fuel efficient vehicles using new technologies.

Here are the details; sorry for the formatting, this is how the document reads:

Bill:  H.R.2638
Title: Making appropriations for the Department of Homeland Security for the fiscal year ending September 30, 2008, and for other purposes.
Sponsor: Rep Price, David E. [NC-4] (introduced 6/8/2007) Cosponsors (None)
Related Bills: H.RES.473, H.RES.1488

Text relevant to Automakers:

3 SEC. 129. (a) Notwithstanding any other provision
4 of this joint resolution, there IS appropriated
5 $7,510,000,000 for fiscal year 2009 for “Department of
6 Energy-Energy Programs-Advanced Technology Vehi
7 cles IVlanufacturing Loan Program Account” for the cost
8 of direct loans as authorized by section 136(d) of the En
9 ergy Independence and Security Act of 2007 (Public Law
10 110-140; 42 U.S.C. 17013(d)), to remain available until
11 eArpended. Of such amount, $10,000,000 shall be used for
12 administrative expenses in carrying -out the direct loan
13 program. Commitments for direct loans using such
14 amount shall not exceed $25,000;000,000 in total loan
15 principal. The cost of such direct loans, including the cost
16 of modifying such loans, shall be as defined in section 502
17 of the Congressional Budget Act of 1974.

Here is the text of Section 136d of the Energy and Independence Security Act to which the above paragraph refers to section d:


(a) Definitions- In this section:

(1) ADVANCED TECHNOLOGY VEHICLE- The term `advanced technology vehicle’ means a light duty vehicle that meets–

(A) the Bin 5 Tier II emission standard established in regulations issued by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act (42 U.S.C. 7521(i)), or a lower-numbered Bin emission standard;

(B) any new emission standard in effect for fine particulate matter prescribed by the Administrator under that Act (42 U.S.C. 7401 et seq.); and

(C) at least 125 percent of the average base year combined fuel economy for vehicles with substantially similar attributes.

(2) COMBINED FUEL ECONOMY- The term `combined fuel economy’ means–

(A) the combined city/highway miles per gallon values, as reported in accordance with section 32904 of title 49, United States Code; and

(B) in the case of an electric drive vehicle with the ability to recharge from an off-board source, the reported mileage, as determined in a manner consistent with the Society of Automotive Engineers recommended practice for that configuration or a similar practice recommended by the Secretary.

(3) ENGINEERING INTEGRATION COSTS- The term `engineering integration costs’ includes the cost of engineering tasks relating to–

(A) incorporating qualifying components into the design of advanced technology vehicles; and

(B) designing tooling and equipment and developing manufacturing processes and material suppliers for production facilities that produce qualifying components or advanced technology vehicles.

(4) QUALIFYING COMPONENTS- The term `qualifying components’ means components that the Secretary determines to be–

(A) designed for advanced technology vehicles; and

(B) installed for the purpose of meeting the performance requirements of advanced technology vehicles.

(b) Advanced Vehicles Manufacturing Facility- The Secretary shall provide facility funding awards under this section to automobile manufacturers and component suppliers to pay not more than 30 percent of the cost of–

(1) reequipping, expanding, or establishing a manufacturing facility in the United States to produce–

(A) qualifying advanced technology vehicles; or

(B) qualifying components; and

(2) engineering integration performed in the United States of qualifying vehicles and qualifying components.

(c) Period of Availability- An award under subsection (b) shall apply to–

(1) facilities and equipment placed in service before December 30, 2020; and

(2) engineering integration costs incurred during the period beginning on the date of enactment of this Act and ending on December 30, 2020.

(d) Direct Loan Program-

(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, and subject to the availability of appropriated funds, the Secretary shall carry out a program to provide a total of not more than $25,000,000,000 in loans to eligible individuals and entities (as determined by the Secretary) for the costs of activities described in subsection (b).

(2) APPLICATION- An applicant for a loan under this subsection shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including a written assurance that–

(A) all laborers and mechanics employed by contractors or subcontractors during construction, alteration, or repair that is financed, in whole or in part, by a loan under this section shall be paid wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with sections 3141-3144, 3146, and 3147 of title 40, United States Code; and

(B) the Secretary of Labor shall, with respect to the labor standards described in this paragraph, have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (5 U.S.C. App.) and section 3145 of title 40, United States Code.

(3) SELECTION OF ELIGIBLE PROJECTS- The Secretary shall select eligible projects to receive loans under this subsection in cases in which, as determined by the Secretary, the award recipient–

(A) is financially viable without the receipt of additional Federal funding associated with the proposed project;

(B) will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively; and

(C) has met such other criteria as may be established and published by the Secretary.

(4) RATES, TERMS, AND REPAYMENT OF LOANS- A loan provided under this subsection–

(A) shall have an interest rate that, as of the date on which the loan is made, is equal to the cost of funds to the Department of the Treasury for obligations of comparable maturity;

(B) shall have a term equal to the lesser of–

(i) the projected life, in years, of the eligible project to be carried out using funds from the loan, as determined by the Secretary; and

(ii) 25 years;

(C) may be subject to a deferral in repayment for not more than 5 years after the date on which the eligible project carried out using funds from the loan first begins operations, as determined by the Secretary; and

(D) shall be made by the Federal Financing Bank.

(e) Improvement- The Secretary shall issue regulations that require that, in order for an automobile manufacturer to be eligible for an award or loan under this section during a particular year, the adjusted average fuel economy of the manufacturer for light duty vehicles produced by the manufacturer during the most recent year for which data are available shall be not less than the average fuel economy for all light duty vehicles of the manufacturer for model year 2005. In order to determine fuel economy baselines for eligibility of a new manufacturer or a manufacturer that has not produced previously produced equivalent vehicles, the Secretary may substitute industry averages.

(f) Fees- Administrative costs shall be no more than $100,000 or 10 basis point of the loan.

(g) Priority- The Secretary shall, in making awards or loans to those manufacturers that have existing facilities, give priority to those facilities that are oldest or have been in existence for at least 20 years. Such facilities can currently be sitting idle.

(h) Set Aside for Small Automobile Manufacturers and Component Suppliers-

(1) DEFINITION OF COVERED FIRM- In this subsection, the term `covered firm’ means a firm that–

(A) employs less than 500 individuals; and

(B) manufactures automobiles or components of automobiles.

(2) SET ASIDE- Of the amount of funds that are used to provide awards for each fiscal year under subsection (b), the Secretary shall use not less than 10 percent to provide awards to covered firms or consortia led by a covered firm.

(i) Authorization of Appropriations- There are authorized to be appropriated such sums as are necessary to carry out this section for each of fiscal years 2008 through 2012.