Every day, I have a phone call that goes something like this, "Do you have any cheap cars for sale?" Of course, everyone has a different definition of cheap, so I ask all my usual questions and find out that they are looking for something for about 200 dollars a month. Right away, this clues me in that they don't have a spare 10 thousand hanging out in their piggy bank.
A good rule of thumb, when you are trying to decide how much car you can afford, is this: for every 10 thousand financed, expect your payment to be around 200.00 a month. Each extra 1000.00 adds about 20 dollars a month in payment.
Here is where it can get interesting though. If you are one of the fine folks with a pretty good to stellar credit rating, the finance rate on a new car will usually be MUCH less than an older one, so in effect, your monthly payment on a 2009 Civic with 40 thousand miles can be the same as on a brand new one.
Car manufacturers have a vested interest in moving as many of their units as they can each month so they offer special rates to approved customers. Used cars are generally financed with other companies (although some manufacturers offer financing for their certified, used vehicles, it generally isn't as good of a rate as new.)
Back to the 10 thousand dollar car. There aren't a lot of them out there at big dealerships. One of the reasons is the used car market has gotten tighter in recent years. Things like the cash for clunkers got rid of a lot of them and the fact that the average car on the road is getting older is another reason. In my experience, the 10k car is generally not one of the top three Japanese brands and tends to be a statistically less reliable brand. (Or perceived as less reliable which affects the value too.)
So what should most people do?
Decide on a budget. If you are financing like most of us, a range of what you can pay each month is helpful. Your salesperson should be able to present you with a list of cars in that range with the features you want.
If it is new, consider an extended warranty to cover you for the financing term.
If it is used, REALLY consider an aftermarket warranty. Read the fine print and make sure it covers all the things that a standard 3 year/36k warranty covers. Those things are air conditioners, window motors, navigation systems...basically the stuff that the 5 year/60k warranty (the one for the powertrain) does not cover.
(Of course, if you have plenty of savings and a 2000.00 shop bill is no biggy, then skip this part.) In other words, the stuff that tends to break in a car after the general 3 year and 36k mile warranty is EXPENSIVE. Plan for it somehow. I have seen far too many cases of customers that didn't buy a warranty on a well-used car and have the thing stop running on them and they still have to make the payment. It is a bad situation to be in and I wouldn't wish it on my worst enemy.
Friday, March 2, 2012
Thursday, March 1, 2012
How to do your research and get the best deal before buying a used car-or not.
There are so many books and websites out there to help today's customer with buying a car. We often tell our customers that it is the 2nd biggest purchase after a home. It is the biggest purchase ever for some. So, of course, everyone wants the best deal out there.
I will never forget one customer of mine. I "knew" her semi-professionally. She was a reporter when she came in the dealership and we had written for the same local magazine a few times. I was happy to help another woman, especially another writer.
She was a used car buyer. She said this with an air of incredulity that anyone would actually buy a new car, when all they do is depreciate. That is fine.
One must understand however, that the value for a used car is determined by a number of different factors. Age, mileage and condition being first and foremost.
Anyone, including you, dear buyer, can look on websites such as kbb.com, or edmunds.com. Just plug in all the details of the car you are interested in. Retail from a dealer, usually in a certain area (zip codes are important here!) is what you are looking for.
Now, back to the reporter. She wanted a particular Japanese brand, a few years old at the most with less than 60 thousand miles. It had to be the hatchback. Lets call it a Toyama Mesh.
Now, these Meshes are not the highest production vehicle that Toyama makes. And they are made to last. And a lot of the people that buy these Meshes in the first place keep them for many, many years and many hundreds of thousands of miles.
That is all to say that there is no "used car factory" for us to find this car from. (This is also important to keep in mind if you are looking for a used car. Certain cars, such as Civics and Corollas are very high production and your chances are better to find a very specific car.)
I searched all through our company's inventory (and we have a very.large.company) and found one. I spent the better part of 2 hours looking then calling and texting back and forth with reporter girl and arranging to have the car driven to our location so she could conveniently view it and hopefully purchase it.
She and her boyfriend showed up at the end of a Saturday. (Please, please, PLEASE do yourself a favor and do your preshopping on the internet and on the phone with the internet sales department and schedule either an early Saturday appointment or sneak over on your lunch hour to look at a car. Don't wear yourself out going from one dealership to the next with no research done about what is out there.)
While the boyfriend was pleasant, reporter girl was throwing off bad vibes almost immediately. She was on the defensive. She expected us to lie to her and do all of the things some people seem to assume car sales people do. (I am not saying that there aren't some out there that do lie and cheat, but in every job I have ever had, there were dishonest people.)
Immediately, she begins to sneer at the Mesh as if it is the most poorly maintained and ragged car she has ever seen. It was a few years old. The paint finish was not glossy and pristine. There were some scratches on the interior, especially around the back seats. All of this is taken into consideration when the car is priced.
Our car was priced at book value. Reporter girl had a very different figure in mind. She actually said, "you all will probably laugh at what I think the car is worth." She was throwing a number out there that had no basis in reality. She had not done her research. Buying a car from a large dealership vs. a private owner will cost more. (However, considering her number was a few thousand below book value, I am pretty sure she just made it up.)
She eventually found a suitable Toyama, although not the Mesh she said she had to have, at another dealership.
How could she have had a better car buying experience to start with?
Over the past two years I have noticed some commonalities with the happiest customers.
The happiest customers I have ever seen are educated customers. They have done their research. They aren't making up numbers for what their trade is worth or what our vehicle is worth. They have been to several different sites such as edmunds.com and kbb.com. They know basically what the pricing is like for their area of the country. (It is different in different parts of the country.)
Another VERY important factor to consider in whether or not you are getting a good deal is quite simple. You generally get what you give. If your attitude is pretty awful from the get-go and you are rude and condescending, there isn't much inspiration on the part of the sales person or their managers to do much to help you. I have seen my managers move mountains for really nice customers that needed some help to get to a certain payment, etc. Be kind and expect it in return. (Of course, if the dealership personnel that you are dealing with are not kind in turn, leave. There are plenty more out there to choose from!)
I will never forget one customer of mine. I "knew" her semi-professionally. She was a reporter when she came in the dealership and we had written for the same local magazine a few times. I was happy to help another woman, especially another writer.
She was a used car buyer. She said this with an air of incredulity that anyone would actually buy a new car, when all they do is depreciate. That is fine.
One must understand however, that the value for a used car is determined by a number of different factors. Age, mileage and condition being first and foremost.
Anyone, including you, dear buyer, can look on websites such as kbb.com, or edmunds.com. Just plug in all the details of the car you are interested in. Retail from a dealer, usually in a certain area (zip codes are important here!) is what you are looking for.
Now, back to the reporter. She wanted a particular Japanese brand, a few years old at the most with less than 60 thousand miles. It had to be the hatchback. Lets call it a Toyama Mesh.
Now, these Meshes are not the highest production vehicle that Toyama makes. And they are made to last. And a lot of the people that buy these Meshes in the first place keep them for many, many years and many hundreds of thousands of miles.
That is all to say that there is no "used car factory" for us to find this car from. (This is also important to keep in mind if you are looking for a used car. Certain cars, such as Civics and Corollas are very high production and your chances are better to find a very specific car.)
I searched all through our company's inventory (and we have a very.large.company) and found one. I spent the better part of 2 hours looking then calling and texting back and forth with reporter girl and arranging to have the car driven to our location so she could conveniently view it and hopefully purchase it.
She and her boyfriend showed up at the end of a Saturday. (Please, please, PLEASE do yourself a favor and do your preshopping on the internet and on the phone with the internet sales department and schedule either an early Saturday appointment or sneak over on your lunch hour to look at a car. Don't wear yourself out going from one dealership to the next with no research done about what is out there.)
While the boyfriend was pleasant, reporter girl was throwing off bad vibes almost immediately. She was on the defensive. She expected us to lie to her and do all of the things some people seem to assume car sales people do. (I am not saying that there aren't some out there that do lie and cheat, but in every job I have ever had, there were dishonest people.)
Immediately, she begins to sneer at the Mesh as if it is the most poorly maintained and ragged car she has ever seen. It was a few years old. The paint finish was not glossy and pristine. There were some scratches on the interior, especially around the back seats. All of this is taken into consideration when the car is priced.
Our car was priced at book value. Reporter girl had a very different figure in mind. She actually said, "you all will probably laugh at what I think the car is worth." She was throwing a number out there that had no basis in reality. She had not done her research. Buying a car from a large dealership vs. a private owner will cost more. (However, considering her number was a few thousand below book value, I am pretty sure she just made it up.)
She eventually found a suitable Toyama, although not the Mesh she said she had to have, at another dealership.
How could she have had a better car buying experience to start with?
Over the past two years I have noticed some commonalities with the happiest customers.
The happiest customers I have ever seen are educated customers. They have done their research. They aren't making up numbers for what their trade is worth or what our vehicle is worth. They have been to several different sites such as edmunds.com and kbb.com. They know basically what the pricing is like for their area of the country. (It is different in different parts of the country.)
Another VERY important factor to consider in whether or not you are getting a good deal is quite simple. You generally get what you give. If your attitude is pretty awful from the get-go and you are rude and condescending, there isn't much inspiration on the part of the sales person or their managers to do much to help you. I have seen my managers move mountains for really nice customers that needed some help to get to a certain payment, etc. Be kind and expect it in return. (Of course, if the dealership personnel that you are dealing with are not kind in turn, leave. There are plenty more out there to choose from!)
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