I'm currently driving an AWD 05 with leather and safety package. I just turned 6k miles. Dealer is offering me an AWD 06 will premium pkg, safety pkg, sunroof for invoice (31,900). Dealer is offering 23k on trade, low but I don't feel like selling it myself. I took the 2k deduction in 05. Am I correct in assuming that I can still take the credit this year if I buy the 06? With tax, etc I'd be spending 11k (9k when you figure the credit). I'd really like all the bells and whistles, but am I nuts to spend 9k to get them? Opinions?

 

I got the 2006 last month but my previous car was a 1998 Mustang. The premium package is nice, you'd love the Nav system even if you know where you're going all the time and the other on screen features are cool too. You also get the moonroof, which only comes on the premium. But $9,000 to upgrade one year doesn't pencil for me. That's $750/month for your 2005! Is the upgrade worth that much?

I will say this, dealers are willing to make some pretty sweet deals to move inventory off their lots. Once you factor in the normal trade-in, I got my FEH for about $400 to $500 over invoice.

 

That's ridiculous, $31900 is at least still $1500 above their "real" invoice price. The trade in value they give you is at least $5000 lower than what your car really worth.

 

Considering the low miles you have on your '05, the dealer is probably going to try to sell it for $25k+ so that trade-in does seem kinda low. Also, if you took the $2000 deduction last year, there is a certain amount of time you have to keep the car without having to give some of the tax saving back.

I have both an '05 and an '06 and for all intents and purposes, they are the same car. You would be paying all that money for the premium package. I'd have to advise against it from a practical point of view.

On the other hand, if you are planning on keeping it for a long time, and you like the '05, you'll love the '06 and the difference spread out over say 10 years would be offset by your increased pleasure in the vehicle.

I traded in an '04 Escape XLT when I bought the '06. It only had 10k or so on it at the time and yeah, I took a beating on it if you figure the one-year cost of ownership. But getting 33-35 mpg average sure beats the 16 mpg I was getting in the '04.

New cars are horrible investments no matter how you look at it. Buy it because you want it, not because it makes sense. JMO of course.

 

Before you decide, you need to understand the IRS rules for recapturing the deduction. There is some confusion on if you need to give back the 2K deduction. However, it does state there is a 100% return if you sell the car within 1 year. Check out the publication here:

http://www.irs.gov/publications/p535/ch12.html#d0e10610

 

That is about right on the trade figure. I handle Internet sales at a local car dealer:

www.auctiondirect.com

I recently bought an 05 FEH that I took in as a trade-in. It is in great shape & has 21,000 miles on it. I paid $20,000 for it.

I've wanted a hybrid SUV ever since I heard they where available, but never wanted to spend over 30K on one. I jumped at the chance to buy this one & I absolutely love the thing. I am getting over 30 mpg which amazes me(I had an 05 Chrysler T&C minivan that got around 15 mpg)

I have added an overhead console, a Gentek compass/temp/reading light mirror, my Garmin 2610 GPS, rear backup sensors, a 400 watt dc/ac inverter with duplex outlet in the console, in channel vent shades, a seven speaker sound system W/subwoofer etc etc..

~John

 

I wish I could break my new car buying habit. My problem is that I always like the features of the new model and think the old model is outdated. That's not always true but it's just how I feel.

 

Thanks for all of the great advice, esp about recapturing the deduction if I sell the vehicle. I'll think I sit tight and just enjoy my 05 and if a really good deal should come along....who knows

 

Unless you have money to burn, you are making the right decision. I have both the '05 and '06 and although I love both of them, I'm glad I didn't trade in the '05 to get the '06 - there just isn't that much difference. I have absolutely no regrets on trading the '04 Escape XLT though.

 

nightracerx - what do you mean by "real dealer invoice"? Is it lower than invoice listed at places like Edmund's? thanks