The Right Way to Buy a Used Car?

Is Buying a Used Car Better Than Buying a New Car?

Deciding whether to buy a new car or a used car is not always an easy decision. A new car is new for a very short time. The minute you cross the dealership’s lot with one, it depreciates a quick twenty percent and is now a used car, whether you like it or not. For the next four years it depreciates another 50% so after five years you have something worth 30% what you originally paid if lucky. The worst investment in the world. Buying the RIGHT used car is usually a better alternative than buying a new one. It’s cheaper, someone else absorbed those years of depreciation. You usually avoid the new car lemons as any used car purchase can be thoroughly inspected by checking maintenance records and having a mechanic do the once over. No one knows that you bought the Mercedes Benz used, only you.

Benefits to buying a pre-owned car?

• Insurance is generally cheaper on a used car.
• Dealers now sell certified used cars that go thru a comprehensive vehicle checklist and come with their own warranty sometimes eclipsing the new car on the lot.
• More places to find a used car: private seller, manufacturer dealer, auction, rental car agency, and independent used car dealer.
• Certified Used cars generally have subvented finance programs through the manufacturer.
• Generally more room to haggle a deal than a new car.
• Get more car for less money

Certified Pre-Owned Vehicles

About 10 years ago, responding to consumer demand as new cars were becoming almost too expensive for most people, the manufacturer dealers started offering Certified used cars as an alternative. A Certified Pre-Owned(CPO) vehicle is normally a used car of that particular dealership. If they sell Honda, the used car lot should be stocked with an ocean of late model, two to three year old, low mileage used Hondas. The CPOs are vehicles that all go thru a 100+ point comprehensive check-up, from the body integrity, to the mechanical systems, both major and minor, to a printing of a CARFAX. The car is then given a bumper to bumper warranty on top of what is left from the original manufacturers new car warranty. Some of these warranties can go all the way to the 100k mile mark. Manufacturers sometimes offer subvented CPO finance rates. They are still for people with better than average credit but it isn’t unusual to see 2.9% APRs or even 0% at times.

Steps To Buying The Right Used Car

• Check reliability reports on that particular vehicle using reliable sources like Consumer Reports, Edmunds, and Kelley Blue Book.

• Find out what market value is on the car you want. Look at what people are selling similar cars for on Autotrader, Craigslist, and other pricing sites.

• Run a Vehicle Identification Number(V.I.N.) check at Carfax or Autocheck. The V.I.N. Check Vehicle History Report(VHR) will tell you if an accident was reported on the vehicle, manufacturer recalls, whether the vehicle was service vehicle; like rental, police or taxi. The VHR will confirm the mileage and sometimes will list the maintenance visits at a dealership and will tell you if the title has been endorsed with a salvage, rain damage or total loss from an insurance company. Both CARFAX and Autocheck certify their reports and offer buyer protection with the cost of the report.

• Do a Test Drive from a cold start. The drive you take should include varied terrain, hills and valleys if possible, different roadways and at varied speeds. No, around the corner and back victory lap. If you haven’t driven the car for 30 minutes at all different speeds, you haven’t “test driven” the car. Even an uneducated ear can pick up the telltale signs of a problem. If the salesperson objects, walk away, there is something he is hiding or just plain lazy and if this is the attitude now, imagine what it will be after you bought it and ran into an issue.

• Do a visual inspection. Walk around the vehicle and look for signs of body repair. Look under the hood for new parts and repairs to inside fenders. Pop the trunk and see if you can see any signs of leaking. Use your nose. Smell the trunk; smell the interior; do you smell water? Look at signs of wear and tear that differ from what you are being told. A heavily worn driver seat and brake pedal signify a high mileage car so if the odometer reads 30k, it really could be 130k.

• Maintenance records on vehicle should be with the vehicle and reviewed. If they aren’t ten assume the car has been neglected as far as maintenance and beware. It is important that a car is well maintained to protect it’s durability. Buying a vehicle with 29k on the odometer means that the $600, 30k mile major service is around the corner. Make sure you deduct that cost from the asking price or make it contingent on the deal.

• Ask for a CARFAX. All dealers have an account with CARFAX and AUTOCHECK. If they refuse or ask why you need one, Run, don’t walk away. They are hiding something.

• Basic Warranties are standard on any dealer used car sale unless it falls into the rare “As Is” category. Don’t buy an “As Is” car unless you are okay with it breaking down the following day. A bumper to bumper warranty of a minimum of 1 year is recommended.

• Can the vehicle be Certified? There is a charge to the dealer by the manufacturer for that and it isn’t cheap, usually $595 to $1995 depending on the car, obviously a Chevy is a lower cost and a Mercedes is the higher price certification. It is usually worth the cost since the value normally exceeds the price. And since you will most likely finance the car, it should only add between $10 to $30 a month for the Certification. And that can save you thousands of dollars over the next few years and give you peace of mind on long trips since every dealer of that manufacturer is now your local repair shop. Isn’t a dollar a day worth the peace of mind?
• Hire a Mechanic to do an inspection of the vehicle. It is worth while to spend $100 to get a certified ASE mechanic to go over the car and give you a report on the vehicle. You can use your own mechanic or hire a professional vehicle inspector. They can be found online or on craigslist.

Caveat Emptor

Every buyer must follow these famous Latin words, “Caveat Emptor; Let The Buyer Beware.” No, truer words have been spoken. It is up to you to choose right. It will be your fault if you buy the “pig on the lot.” Don’t fall in love. Remember this love isn’t a simple divorce if all goes wrong. A bad purchase will drive you crazy and will make a huge dent in your wallet. It will make you not trust your car and limit the enjoyment and freedom you get from your car. Follow my steps. If you don’t, you may wind up being a trophy on a dubious salesperson’s wall next to the deer head.

You Should Lease Your Next New Car

Find Out Why Leasing is the Best Method for Paying for that New Vehicle.

 

Leasing is a much better way than financing when buying a new car. As a lessee, you aren’t driving the vehicle that could expose you to high repair costs. You will never need to buy tires for a vehicle. You can always be on the cutting edge of new car technology. Elevated status of driving a new car. Financial savings operating a car during it’s best part of it’s life when fuel costs are at it’s lowest consumption levels. Only paying for the monthly depreciation on half the car, not the full price upfront. Paying the sales tax on the monthly payment times the term and not the entire vehicle upfront. Lower down payment required which gives you the option to invest that money in an appreciable asset, not a depreciating liability. No hassle of trading in a vehicle or negotiating the treacherous waters of selling a car in the private market.

Final reasons why you should lease a new car

It is a two or three year “test drive” with three options at the end of the lease term. This flexibility guards you against buying a lemon. Protects you from an unseen downturn in the estimated resale value of your car. Allows you to purchase the residual value of the car thus taking advantage of a sudden unexpected higher market value or just buying it cause you love it.

Financing is a ball and chain

Financing a car is a total gamble and almost guarantees you will always owe more than what a vehicle is worth considering the vehicle loses 25% of it’s value the moment you drive it out of the dealership’s parking lot. It is now a used car and 1 year old, even if you owned it one day in real time. The expected maintenance and repair bills in the 4^th and 5^th year of your finance term will usually add an additional $50 to $60 a month to your payment when you need to replace tires, O2 sensors and other expensive repairs not to mention the dreaded high cost timing belts and major interval maintenance milestones. After the initial manufacturers warranty expires, you will legally own and be responsible for any repair, even if the car was to unexpectedly break into two pieces. You would own both halves.

Summary

You will hear the old school cavemen say that financing is better because you own something rather than renting it. Don’t believe them, they are as dumb as they look. Owning a depreciating liability is a mistake almost every time. Let someone else be locked into a car that by every mile is headed towards it’s demise. Own the flexible options that leasing affords and stop doing what others have wrongfully done for years. Because, at the end of 5 years, you own a car with an odometer range of 80k to 100k miles and a value that most likely reflects 20%-30% of it’s original value. It’s a bad investment. And once that odometer clicks 100k, I dare you to find someone willing to pay you a premium for the car. Lease a car every two years and enjoy life, we owe it to ourselves.

The Golden Rule: Buy anything that appreciates and lease everything that depreciates.

 

 

 

Best Ways to Save Money Financing a New or Used Car

4 Tips to Save You Thousands of Dollars on Your Next Auto Loan.

 

There are a lot of ways to finance a vehicle, whether it be a pre-owned car or a new truck. Whether you buy it from a dealer or in a private party sale. Finding the right finance source for you can save you thousands over the years that you finance it. The right loan paid on time and in full can also raise your credit score. Not all banks report your good behavior, some only report bad payers.

Ways to finance a new or pre-owned car

Conventional financing

Financing that is initiated by the dealer. Normally the dealer will take a generic credit application and then have an assistant fax it over to a few different lender’s to “shop” for the lowest rate. Let me clear they are shopping for the lowest rate they can buy financing for you. Don’t confuse that meaning they are shopping to get you that rate. They aren’t. Most banks allow a dealership to “mark-up” the finance rate anywhere ranging from 3-5% over the “buy” rate. That’s some serious money if you take out a $20k loan for 5 years. They will make thousands in commission and you will spend thousands extra. Best part is the dealership and the bank normally split the profit 60/40 or 70/30 so that friendly bank isn’t so friendly. Beware of conventional financing and Finance and Insurance guys at a dealership. They are the sharpest employees in the dealership and it is their sole function to extract more profit from you.

Credit Union

Normal procedure is for you to go to your credit union, tell them the car you want to buy. They will work out terms of a loan on an approximate amount borrowed and then you go to the dealership, find the car you want and the dealership faxes over a buyer’s order to the Credit Union. The Credit Union cuts a check to the dealer, adds in a lien fee for the dealer if they are doing the title work and it is a wrap. Very clean deal with no shenanigans. Some Credit Unions don’t report to Credit agencies so you may not get credit and raise your credit score. Make sure to check to see if they do or don’t report.

Subvented Financing at the dealership

If Honda or any auto manufacturer is running a special interest rate on a car, that rate is available only through the dealer so you will go through them to get that financing. It is a pretty straightforward procedure but these programs are normally for only the best credit worthy people. Make sure you have plan B if you are rejected. Lots of dealerships convert these rejections to conventional financing and make a ton of money selling them the interest rate as I described earlier.

Your Own Bank

Check to see what your own bank is offering for terms on a car loan. Talk to the loan officer and see if they can pre-approve you for a particular amount. Lock that offer in and then see what the dealer can do for you. Just like they make money on finance, it is also a tool for them to move a car off the lot. They submit a lot of applications and can sometimes get a lower rate than you can at your own bank. With all the terms presented, you can choose the best one for you.

 

Tips to Get You the Most Money for Your Trade-In Vehicle

Get the most money for your trade-in vehicle by follow these easy steps. Let a 25 year veteran of the automotive industry guide you to ways to save money and time. Don’t get robbed the next time you trade-in a vehicle.

 

It’s time to go to the car dealership and replace old reliable. Instead of the last adventure selling your car to a private buyer, you find yourself too busy for the hassle. Well, too busy can cost you money if you don’t prepare properly. I spent 25 years in the car business and I will teach you quick and simple ways to get the most value for your trade-in. Otherwise I guarantee you, a few days later you will feel like you got robbed by a guy with a pen and a smile.

 

Game ON!!

Can’t tell you how many times I appraised a vehicle that was filthy both inside and out. It was a distinct sign that the person was not a prepared buyer and I immediately alerted the sales podium that “the game was on.” Now, before you start getting all holier than thou, try to understand, we didn’t solicit them, they came to us, if they came unprepared, is that out fault? Certainly isn’t.

 

Clean the vehicle before going to the dealership

Clean the vehicle inside and out. Not only do you not show your cards as unprepared, but you immediately increase the curb appeal of the car. Ask any used car buyer why they bought the car they did, they will most generally say, “it was really clean and looked well maintained.” Sending the car to a professional detailer that charges you $80 for a full wash and wax will be the best money you can spend and more than likely to increase the trade-in value by at least $500. The appraiser will have one less thing to do and spend internal money on if they have to try and sell your trade-in down the road.

 

Get a ballpark figure on what your car is worth

There are plenty of free resources on the internet that offer virtual appraisals online. Some of them are: Kelley Blue Book, Edmunds and Autotrader. Dealerships don’t use these sources for their appraisals but you can get a ballpark idea if you answer the questions about your car honestly. The biggest error most people make is describing the condition. Condition is subjective and people love their cars so they tend to look at that with a less than objective eye. Remember, these above sources are on the high side because they are click generated businesses that rely on people to visit and revisit. If they offer bad news, you will likely not return. They deliver the good news, not reality based.

 

Quick reminder on condition

• Excellent: 5% of vehicles. Looks brand new and no mechanical issues.
• Very Good : 25% of vehicles. Minor cosmetic issues but no mechanical problems.
• Good: 50% of all vehicles. Has minor cosmetic issues and no major mechanical problems.
• Fair : 15% of all vehicles. Requires both mechanical and cosmetic repair.
• Poor : 5% of all cars. It’s a wreck, don’t expect much more than 25% of the Good condition.

**Seasons Change–A convertible loses value in the winter. A 4×4 doesn’t do well in flat states and terrible when the summer arrives. Also dramatically loses all value when a spike in the national gas price.

 

How a dealership figures out a trade-in value

Dealerships as I said, don’t use the above sources for a car’s value. They use two sources generally, sometimes a third. Every used car manager carries two small books with them. They are called “Galves Used Vehicle Car Values.” They are dealer subscription based and published according to region and updated every 20 days or so. There is an edition for trucks and cars. They also publish them for motorcycles and anything else where as Dale Earnhardt once said, “Where rubber meets the road.”

 

Auction Market report

The second place a dealership will get their value is a car auction market report. This report is all the vehicles sold at a particular auction in a month’s time frame. Takes in for softer seasonal markets. This is the best value source for them if they have deemed your car an auction piece and they have no thought of retailing it in their used car lot. If they are going to bring the car to auction, they best be real close to the value of the car, or they will lose money at the auction easily. They are dealing with other car people there who know as much or more than they do about the secondary market.

 

The Wholesaler

The third source is a local wholesaler. Let’s face it, if your car has 150k miles, is 12 years old and has some issues, the dealer won’t bring it to auction and they won’t retail it on their lot, they will sell it top a local wholesaler. The dealer and the wholesaler work closely together and they expect each other to describe cars accurately and they are willing to offer a solid price to the dealer even before you have accepted the deal. The dealer has per-sold your car to them before you have even signed on the bottom line. That’s why in some cases, the appraisal process seems lengthy. As you can now see there is a lot going on behind the scenes.

 

Last few things that will give you more dollars in your pocket

 

Have title and lien release in possession–Dealership needs these things to expedite recouping their money on the trade-in value. No paperwork, it delays them getting whole which will cost you money cause they will make the necessary deductions approximating what the delay in time costs in dollars and you will be paying not them.

 

Separate negotiations

Avoid combining the buying of the new car and the trade-in into one negotiation, Negotiate both separately. Avoid and deny a trade-in until you have firmly established the bottom line on your purchase before introducing the trade-in. A nice way to do this is after you finish the deal. Just say politely with a smile, “You know, you guys were easy to deal with and I was going to sell the car privately, but if you can meet the price I found on Kelley Blue book I would gladly sell it to you.” The negotiations are open!

 

Sandbagged

The salesman knows he just got sandbagged but they will not blow up the deal for the trade. They generally will offer you a fair price and chalk it up to a smart consumer. Don’t worry the dealer has a ton of morons to make up any margin they lost.

 

Finally, check for a tax advantage for your trade-in in your state

In New York, a trade-in value is subtracted from the price of the car so, the net difference is taxable. That is a huge benefit to buyers and can be hundreds of dollars. A quick example: New Car is $25,000, trade-in is $10,000 that leaves a taxable difference of $15,000. That’s what is taxed, not the $25k. So in this case, you would save at 8% tax, $800 or 8 Benjamin Franklins. This is a good reason why a trade-in can sometimes trump the money made selling it privately since you don’t have the tax benefit of the trade-in.

 

 

How to Get the Best Price on a New Vehicle

Let a former car professional who has retailed thousands of cars and ran some of the largest car dealerships in the United States help you avoid the pitfalls and traps when you purchase a new car.

 

Tips on how to get your best trade-in allowance

The old car just died, you knew this day was coming and put it off for as long as you could. It’s time to go and buy a shiny new car. Thrilled? Yeah right, about as much fun as going to the dentist. I would agree if you are unprepared, it will feel like torture and probably hurt your wallet as much as a trip to old painless Paul. But with some proper planning, research and due diligence, it can be a great trip, especially when you win. Nothing better than the new car smell and knowing you won the battle at the dealership.

 

“A battle is won before it is ever fought”

No truer words were ever spoken and this was said by Sun Tzu, a great warrior in 500 B.C. And he didn’t even drive a car. Proper homework for the battle at the car dealership starts on line with research. After you have narrowed down which car you are interested in purchasing. You can now do the research required to get the best deal.

Researching Incentives

First thing you need to find out are what incentives are on the car. They can be in form of rebate, owner loyalty programs, matching down payments because of miles or points accrued on credit cards. There are sometimes special lease price or subvened finance charges that can give you a 0% interest rate. There are military rebates, sometimes some fortune 500 companies, like General Electric, offer employee rebates for buying American cars. Hybrid and Electric cars have federal rebates and some states offer rebates as well on Eco-friendly cars. All of these rebates are programs with definite expiration dates so be aware of them as well.

Researching invoice price

Websites like Kelley Blue Book, Edmunds, and Autotrader all offer manufacturer invoice pricing. These are legitimate prices that dealerships pay for their cars. Now before you get all huffy that the invoices are bogus and don’t reflect every dime a dealer pays. You are right there is some hidden money. They don’t include holdback, special stair step volume discounts dealers get for hitting volume plateaus, advertising money, and floor-plan costs, which is the amount of money it costs for the dealership to keep the car on the lot in inventory. But the invoice truly reflects what the dealership sales manager perceives as rock bottom. The General Manager and owner operate the business using different numbers but what should concern you is the sales manager as he or she will set the lowest price the dealer will accept.

Best Price strategies–There are a few strategies to use when negotiating.

• Work from invoice up, not M.S.R.P. Down.
• Work on a particular model in stock.
• Be flexible to a point of options and color.
• Understand that the dealer has a time frame for when this car needs to be off the lot, be flexible.
• Some cars are just plain high demand/high price vehicles and are hardly discounted if at all.
• Be friendly, Be fair and most of all don’t get personal, it’s business.
• Shop a few dealers before settling on the best price and most convenient location for you.
• Check your own bank or credit union for bank rates.
• Be aware that the dealer Finance and Insurance manager’s job is to sell you a warranty and other high margin vehicle options and mark-up the finance rate. Be wary of them.
• Take a friend with you. Dealerships can be intimidating so it is nice to have someone on your side
• Hold your cards close to your vest and don’t say, “Wow, I love that car.” That’s a bad move.

A new car should be a great time in anyone’s life. That new car feel and smell. The new gadgets to play with and the look on the neighbor’s face all make for the fun. Overpaying for a car is no one else’s fault but your own, so do your due diligence, do the research and hit the open roads with that brand new car and know you got a great deal.

 

How to Get the Best Price on a New Vehicle

Let a former car professional who has retailed thousands of cars and ran some of the largest car dealerships in the United States help you avoid the pitfalls and traps when you purchase a new car.

 

Tips on how to get your best trade-in allowance

 

The old car just died, you knew this day was coming and put it off for as long as you could. It’s time to go and buy a shiny new car. Thrilled? Yeah right, about as much fun as going to the dentist. I would agree if you are unprepared, it will feel like torture and probably hurt your wallet as much as a trip to old painless Paul. But with some proper planning, research and due diligence, it can be a great trip, especially when you win. Nothing better than the new car smell and knowing you won the battle at the dealership.
“A battle is won before it is ever fought”

No truer words were ever spoken and this was said by Sun Tzu, a great warrior in 500 B.C. And he didn’t even drive a car. Proper homework for the battle at the car dealership starts on line with research. After you have narrowed down which car you are interested in purchasing. You can now do the research required to get the best deal.

Researching Incentives

First thing you need to find out are what incentives are on the car. They can be in form of rebate, owner loyalty programs, matching down payments because of miles or points accrued on credit cards. There are sometimes special lease price or subvened finance charges that can give you a 0% interest rate. There are military rebates, sometimes some fortune 500 companies, like General Electric, offer employee rebates for buying American cars. Hybrid and Electric cars have federal rebates and some states offer rebates as well on Eco-friendly cars. All of these rebates are programs with definite expiration dates so be aware of them as well.

Researching invoice price

Websites like Kelley Blue Book, Edmunds, and Autotrader all offer manufacturer invoice pricing. These are legitimate prices that dealerships pay for their cars. Now before you get all huffy that the invoices are bogus and don’t reflect every dime a dealer pays. You are right there is some hidden money. They don’t include holdback, special stair step volume discounts dealers get for hitting volume plateaus, advertising money, and floor-plan costs, which is the amount of money it costs for the dealership to keep the car on the lot in inventory. But the invoice truly reflects what the dealership sales manager perceives as rock bottom. The General Manager and owner operate the business using different numbers but what should concern you is the sales manager as he or she will set the lowest price the dealer will accept.

Best Price strategies–There are a few strategies to use when negotiating.

• Work from invoice up, not M.S.R.P. Down.
• Work on a particular model in stock.
• Be flexible to a point of options and color.
• Understand that the dealer has a time frame for when this car needs to be off the lot, be flexible.
• Some cars are just plain high demand/high price vehicles and are hardly discounted if at all.
• Be friendly, Be fair and most of all don’t get personal, it’s business.
• Shop a few dealers before settling on the best price and most convenient location for you.
• Check your own bank or credit union for bank rates.
• Be aware that the dealer Finance and Insurance manager’s job is to sell you a warranty and other high margin vehicle options and mark-up the finance rate. Be wary of them.
• Take a friend with you. Dealerships can be intimidating so it is nice to have someone on your side
• Hold your cards close to your vest and don’t say, “wow, I love that car.” That;s a bad move.

A new car should be a great time in anyone’s life. That new car feel and smell. The new gadgets to play with and the look on the neighbor’s face all make for the fun. Overpaying for a car is no one else’s fault but your own, so do your due diligence, do the research and hit the open roads with that brand new car and know you got a great deal.