The ONLY WAY To Buy a Car
Apr 25 '07
The Bottom Line Here are some ways to get the most bang for your buck, and some tips on how to avoid problem cars.
Cars today are incredibly sophisticated and include lots of technology, safety, and luxury features that didn't even exist twenty years ago.
But, they are very expensive.
In fact, many of us are shocked when we find that buying a new car today can cost MORE then you spent buying your first home! If you aren't rich, then you must decide if you really want to spend so much money on a depreciating asset.
But, there are ways you can make the whole process more affordable. And here are my tips for getting the most bang for your buck:
NEVER, NEVER, NEVER BUY A NEW CAR
Cars depreciate a lot, and if you can find a late model used car in good condition, you will save a ton of money. Plus, since body styles don't change as often as they used to, no one will know that your car is a few years old. New car buying only makes sense if you are rich. But if money matters to you, read on...
KNOW YOUR STUFF
Never shop for a car without doing some research first. Find out exactly what the car you want is worth. Be practical and be fair. Be prepared to offer the seller a reasonable profit, without getting hosed yourself! Be as objective as you an be. It is just a commodity, not an emotional relationship. It has a fair market price. Don't pay more than that even if you have fallen deeply in love with it. Once you have convinced the salesman that you do indeed know the value of the vehicle, and are willing to pay a fair price for it, they will suddenly take you seriously and stop pandering to you. Just remember, up until the moment you hand them a check, you are still in charge.
LEASING USUALLY DOESN'T MAKE SENSE
Leasing a car is the most expensive way to own a car. Typically, it will cost you at least half of the new car purchase price to lease a car for three years. But, there are some advantages to leasing. Like getting a new car every three years, with the latest safety features, and having the ability to bring it back with no strings attached when the lease is up to get a different type of car. But you pay a lot for that convenience.
BUT, CONSIDER LEASE RETURNS
Unless you personally know the owner of a used car, you really have no idea of why the car is for sale, or whether it has some serious problem. This is why I highly recommend purchasing lease returns. These cars are for sale simply because the lease was up, and the leasee turned it back in after using it from 2 to 4 years. These cars had only one driver, and were typically well maintained, since maintenance is sometimes included in the lease price or in the new car warranty. Leasing is not a cheap way to own a vehicle, so the folks who lease them are typically not bargain hunters. They usually order LOTS of options, which means you get those options cheap. Plus, since leasors pay a stiff penalty for going over mileage limits, these generally have lower mileage. You will pay a little more for these, but they are safer purchases. These cars can typically be found at new car dealerships or high end used car lots.
CONSIDER FLEET RENTAL CARS
Purchasing a car from a rental company is almost as good a deal as buying a lease return. The only real difference is that the lease return had one driver, and the rental had several. But both were well maintained, and are NOT being sold because of any damage or problem. These cars are sold for one reason only: their year is up! Rental companies replace their cars every year, to keep their maintenance costs low and get the maximum selling price. The downside of these is that since they are rented a lot, they generally have higher mileage. It isn't unusual to find rental cars with 20,000 miles on them that aren't even a year old. This is an important point, since manufacturer warranties are always something like "36,000 miles, or 3 years, whichever comes first," and you might reach that mileage first. But, these are still a good deal, although not as good as lease returns. Sometimes you can find these cars being sold directly by Hertz or Avis, or on some of the better used car lots.
DON'T BUY FROM A SMALL USED CAR LOT
In general, those lots have cars they bought at auction that have higher mileage, some serious repair work done, or a questionable history. These are the cars that new car dealers took in trade, but decided not to keep on their lots. While it is possible to find a good buy on those small used car lots, it is also possible you could end up with a Hurricane Katrina flood victim too. Or, a car that has been salvaged, or repaired after a major wreck. In general, you will save money, but buy a problem if you shop these lots.
CONSIDER LUXURY CARS
Luxury cars are the best deals in the used car market. And here is why:
1. Their owners trade cars for no good reason. They are rich people who simply want a new car every few years.
2. These cars DEPRECIATE A LOT. You can save a ton of money.
3. The owners have multiple cars. They don't use their Lincoln to haul mulch. They don't drive their convertible in the winter. They don't try to tow a bass boat with a Porsche. They don't even think about it.
4. These cars are ALWAYS well maintained, since maintenance is often included with the new car purchase price for the first three years. Plus, the owners bring them back to the dealership for $90 oil changes, rather than going to the Express Lube to save money.
5. A two year old Lexus ES330 will probably cost you LESS than a brand new Toyota Camry, and will come with options you probably never heard of before. And they are pretty much the same car. But you will have a nicer version with the Lexus, plus you will have some status!
GET A CARFAX REPORT
Always get a car history from Carfax. You can join for one month for $20, and find out exactly where that car was, and what happened to it. It's well worth it when you spend so much money on buying a car.
NEVER BUY A CAR A TEENAGER WOULD WANT
If you are considering a used car with triple chromed spinner hubcaps, blue neon accent lights, or a 4000 watt stereo, then look elsewhere. Teenagers put way too much effort into how their cars "look and sound" than in how well they are maintained mechanically. They shop for cheap gas, cheap oil changes, and they tend to drive their cars pretty hard. They spend money on the bling, which is something you may not need. Or want.
THE ABSOLUTE BEST DEAL IS THE "MIDLIFE CRISIS" CAR
It is always a good idea to buy a car that someone else bought by mistake. Sometimes, when men reach their middle years, they crave a sports car, so they run out a buy a roadster, only to discover they end up not using it very much and it costs a fortune for insurance. So, they sell their four year old Porsche for half the price of a new one, and it only has 12,000 miles on it! If you want this type of car, then you must get one used. Because they are "hardly used" and they depreciate a lot. Often, these cars come on the market due to divorce or financial problems. Sometimes people get in too deep. So, they get sold for no good reason, other than the amount of use just doesn't justify the ownership expense. Why would ANYONE want a brand new Mazda Miata, when they could have a used BMW Z4 for LESS MONEY? Think about it.... which one would impress the babes more?
DECLINE THOSE EXTENDED WARRANTIES
There is a good reason that salesmen push these aftermarket warranties so hard. They are a complete waste of money. About half of what you pay goes directly to the sales commission, and when you try to use your warranty, you will be stunned to find out about all the small print on the back of the contract that you forgot to read. On many lots a salesman will be FIRED if he fails to try to push one of these on you. This is because they are pure profit.
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