Join Date: Nov 2010
Location: Chicago area
| | Re: how to buy cars
You are going to get different advice from every person you ask on this subject. There really are no "rules" to this or any definite "rights" or "wrongs". Probably the best you can get are generalizations.
1. Private party will be cheaper than dealer
2. Lower miles is better. Average is 10-12K/year. Use this to determine if the vehicle has low miles or high miles for its year.
3. Highway miles are better than city miles. After looking at a couple cars, you should probably be able to tell the difference if there are enough miles on them!
4. If you think you need an extended warranty, you don't want that particular car! I NEVER EVER EVER buy a car because of the extended warranty. They are typically full of loopholes, and if the car is in marginal shape to where I expect things to start breaking, it's best to walk away.
5. Figure out what matters to YOU. Some people drive junkers into the ground because they don't want to spend the money on something that will depreciate. Others, like me, want comfort and all the gadgets and will spend the money on luxury cars (used though, bought one new car and won't buy another). Others are in between. Figure out what you can afford and what matters to you and do it without feeling guilty. THERE IS NO RIGHT OR WRONG!
6. New cars will lose around half their value around 3 years old. If that matters to you or you can't afford it, buy a late model used car. A 3 year old car has already lost close to half it's value and usually only has around 30K miles. That is still like new if the car was maintained decent. (example, I once bought a Grand Cherokee Limited that was over $40K new 3 years old with 28K miles on it for $18K)
7. You can expect most vehicles to easily reach 100,000 miles with routine maintenance before any major maintenance, repairs, or break downs happen.
8. German vehicles tend to cost more to maintain as they are engineered slightly different, require specialized tools, or specialized training to work on, so stay away if you want lower maintenance costs. (Example, Audi A6 you are supposed to change the brake rotors every time you change the brake pads!)
9. Foreign cars (Honda, Toyota especially) tend to have a better reputation for reliability than domestics (this is a generalized statement, there are certainly foreign brands that have a worse reputation).
10. You will pay more up front for a foreign car vs. a domestic because of the real or perceived better reliability of the foreign cars.
11. Narrow your search based on your needs. Vehicles tend to get divided up into:
-Compact Car (think Neon, Focus, Corolla)
-Mid Size Car (Camry, Taurus, Malibu, Accord)
-Full Size Car (mostly luxury brands?)
-Minivan (Odyssey, Town & Country)
-Full Size SUV (Sequoia, Suburban, Expedition)
-Mid Size SUV (Explorer, Grand Cherokee, Blazer, 4Runner)
-Small SUV (RAV4, Escape, CRV)
-Crossover SUV (any SUV built around a car platform)
-Truck (Ram, F150, Silverado)
Once you have narrowed in on 1 or 2 types of vehicle that would fit your needs, narrow in on a brand and/or specific model and shop until you find the lowest price with lowest miles, and as many options as you can find.
12. Stay away from anything with a salvage title. The car was destroyed in an accident and declared a total loss by the insurance company. Somebody else bought the vehicle cheap, repaired it, and put it back on the road. These will be very cheap to buy, but who knows what problems you will encounter later?
13. Stay away from anything that was in a flood.
14. Vehicles with surface blemishes (hail damage for example) will generally be mechanically fine but will sell at a discount because of the surface flaws and can be a great steal if you don't mind a couple dings. Rust is the exception to this, if you see rust, it will get worse pretty quickly. Same for major scratches that reach the metal. You are asking for rust.
15. Haggle, haggle, haggle, haggle. Anything you can use about the car to reduce the price, do it.
16. Ahead of time set a price you want to pay for the car and haggle towards it and try to get the vehicle for that price "out the door". "Out the door" means including taxes, title, fees, etc.
17. If shopping at a dealer find out what the trade in and wholesale price of the car is. Trade in is what the dealer would pay for the car if it was traded in. Retail is what they try to sell it for. The difference between the two is the profit the dealer tries to make and also covers their cost of preparing the vehicle for sale (carrying costs, repairs, commission, etc). Use kbb.com to find out what these values are and try to strike a balance between trade in and retail.
18. If shopping from a private party find out with the trade in and private party values are and again try to strike a balance between the two. Always remember to add tax and title fees to the price when shopping privately. Again, kbb.com has these values.
19. Shop around for the best interest rates on a loan. Credit unions will generally have better rates than banks, and sometimes dealers can get you better financing than you will find by yourself.
20. Try not to let a dealer have you name a monthly payment. They can work the numbers a multitude of ways to fit that monthly payment and it rarely works out in your favor! For example, they can extend the number of months you pay on the loan of the car to lower the payment but does nothing to reduce the amount you pay for the car and you'll pay more in interest in the long run.
21. If at any point you aren't comfortable, walk away. There will be another vehicle down the street.
Anyway, I'll stop here. There's probably more I could say but I think I've done enough to muddy the waters already!