first car buyer guideBuying a car for the first time, or even the second, third, or fourth time, can be a confusing and intimidating experience — unless you know what you’re doing. Knowledge means power and confidence when it comes to buying cars.

Decide on Your Car

You need to know what car will satisfy your needs and fit within your budget. Online research and shopping at local dealers will help narrow down your choices.  Internet car shopping sites such as EdmundseBayCraigslist, and Autotrader offer a large variety of choices and prices.

If shopping for a brand new car, visit car company web sites, which will provide you details and specs for all current vehicles, as well as special incentive offers for the month. Locate local dealers from those sites.

Sites such as ConsumerReports.org can tell you which cars are best in different categories — best small car, best SUV, best sports car, best luxury car, best minivan, and best family sedan. They also tell you which are the most reliable, which are recommended, and which used cars to avoid.

Most car magazines have web sites that publish the results of road tests on new cars. Services such as Kelley Blue Book and Edmunds provide valuable pricing information, including dealer invoice prices.

Read the rest of this entry »

checkmarkUsed Car Inspection Checklist

Use this handy 50-point checklist when buying and inspecting a used car. Print it and take it with you.

 

Wheels and Tires

chkboxAre tires worn to unsafe level (less than 2/32″ tread depth at lowest point)?

Tires with less than 2/32″ tread depth at lowest point are unsafe and should be replaced immediately. Less than 4/32″ is unsafe in rain. Less than 6/32″ is unsafe in snow. Hint: Buy a cheap ($5) tire tread-depth gauge at any auto parts store, Wal-Mart, or Sears

chkboxAre left/right tires worn unevenly on front? On rear?

Unevenly worn left and right tires are unsafe and cause handling and steering problems. It might indicate a bent or twisted frame as a result of an accident. Always replace tires in pairs

Read the rest of this entry »

best car dealsEveryone buying a new car wants to get a bargain and a great deal. So where can those deals be found?

Although we’ll be primarily discussing brand new cars here, we can make some comments on used cars, if that’s the direction you think you want to go.

Used Car Deals

Finding a great deal on a used car is a bit more tricky than finding a new-car deal. That’s because used cars are, well, used. No two are alike. Even used cars of the same year, same brand, same model, and same equipment can have different mileage, different problems, may have been driven and maintained differently, may have been wrecked (or not), and may have very different prices for these and other assorted reasons. When you find a used car at a bargain price, it might be for a good reason — or the buyer may simply be desperate — or it could be a common scam, especially if bought online. Therefore, it takes much more care when buying used.

Read the rest of this entry »

Is it possible to get a car loan and buy a car with no credit?

The answer? Yes, under some conditions. Let’s explain.

It is a common situation, especially with young people who have never had a loan, never had credit cards, or never borrowed money for a car. Without a history of prior loans and payments, there is no credit history and no credit score, which is the number that represents credit rating.

In fact it is not quite sufficient to simply have a good credit score to get a car loan — or any loan. You may also need to have an established steady income (a job) and no excessive debts. You should have no recent bankruptcies or auto repossessions, which you wouldn’t be likely to have anyway if you have no credit.

So how is it possible to buy a car with a loan when you have no credit record and no credit score? Read the rest of this entry »

Online car buyers exposed to common car scam by criminal sellers

car scamUsers of online car buying sites such as AutoTrader, Craigslist, online newspaper classified auto ads, and other non-dealer car sites often find unbelievable good deals, only to find it was no deal at all, but a common car seller scam.

We often hear the question, “Is this a scam?” from car buyers who have found a “great deal” online. Buyers become suspicious because the price is “too good” and the payment and pickup arrangements seem a little fishy.

Cheap cars advertised on Internet sites can be scams, and it is relatively easy to spot them after the seller has been contacted, but not before. A car-for-sale ad placed by a scammer looks like any other ad — except the price is much lower than normal. They even provide pictures and VIN numbers of real cars (snagged somewhere on the Internet) to make the ads seem more believable. In short, you can’t determine if a car ad is a scam by the information in the ad itself.

Read the rest of this entry »

first car guideMost automotive consumers only buy a car every few years, which is not enough time to be an expert at the task, or to keep up with new dealer sales  “tricks.”

This means that there are many ways in which mistakes can be made. Here are some of the most common mistakes.

Buying New

1. Not doing enough research before the purchase.

2. Not test-driving the vehicle before the decision to purchase

3. Not knowing what manufacturer incentives are available

4. Not knowing the right price to ask for, or not negotiating at all

5. Accepting offers of high-priced add-on products and services such as extended warranties and rust protection

6. Not having shopped for financing at local banks and credit unions

7. Accepting a dealer’s offer to drive the car home while he tries to get the loan approved

Read the rest of this entry »

There’s one kind of car buying customer that sales people just love. They are “payment buyers.”

A car salesperson’s job is to sell cars — and make maximum profit for his dealership. The way to make maximum profit is by selling at the highest possible prices and including as many “add-on” extra items or services as possible.

Some customers are an easy sale but are difficult to make a big profit from. Others are easy on both counts. The latter of these two types are the kind of customers that car salespeople love.

A salesperson’s dream customer is one who has done little or no research about cars they might be interested in, understands almost nothing about the car buying process, knows little about car pricing, has few negotiating skills, but most of all, wants to negotiate monthly payments, and only monthly payments. These customers are called “payment buyers.”

Read the rest of this entry »

It’s difficult to recommend cars since there are so many choices, and so many types of people and personalities who buy them. We all have different likes, dislikes, needs, and finances. If we were all the same, there would probably only be one car brand, in one model, and at one price.

There are many differences in cars. They are far from being the same. Although they all can get us from Point A to Point B well enough, that’s where the similarity ends. There are different types of vehicles to meet different needs: 4-door sedans, coupes, sports cars, SUVs, trucks, minivans, to name a few. There are differences in size, style, safety, riding comfort, reliability, performance, color, technology, and of course, price.

One of the most important things that automotive consumers can do now to make sure they select the best vehicle for their needs  is to do research online, on the Internet. It’s easy and free, so why not?

Buyers can find professional reviews and ratings, prices, specifications, and even discuss vehicle experiences with other owners. They can get expert advice on web sites such as this one, see pictures, explore colors, compare models, get fuel economy ratings, and find manufacturer incentives (see http://best-car-deals.buyerreports.org). They can actually request dealer price quotes without first stepping into a dealer’s showroom.

Read the rest of this entry »

According to questions I see posted on Yahoo Answers, there are a huge number of first car buyers out there who have somehow found exactly the WRONG way to buy a car. They then look for help AFTER they realize their mistake. It’s nearly always too late by that time.

Here’s how NOT to buy a car:

Leave a deposit with a seller or dealer for a car you are not absolutely sure you’re going to buy. The problem is that you may not be able to get your deposit back if you change your mind, unless there is a clear written document that states that you’ll get your deposit refunded and under what conditions. In the worst case scenario, the seller sells the car to someone else AND keeps your deposit. Don’t leave deposits unless you absolutely must.

Buy a used car without having it inspected by a professional mechanic before the purchase. Used cars are sold “as-is” which means you can’t get your money back if you find the car has problems later. There are no “right-of-return” or used-car lemon laws to protect you, even if you feel the seller or dealer committed fraud. You can’t rely on a seller’s statement that a car “runs fine” or “has no problems.” A mechanic’s inspection will cost $75-$125 but can prevent you from making a multi-thousand dollar mistake.

Read the rest of this entry »

better to lease or buyAlthough we’ve discussed this topic previously (see Lease vs Buy), there is one aspect that we haven’t discussed and continue to hear questions about.

The question is essentially this: “If a car dealer is offering a special promotional lease deal, a purchase rebate, and a low interest loan on the car I want, which one is the best deal?”

The short answer to this question is that the lease deal will nearly always be better — and it’s not simply because monthly payments are less. If the lease deal is one that is being offered by the car manufacturer, the company has usually applied a price discount, a low money factor (finance rate), and a high lease-end residual value. The combination of all these things makes for an attractive low monthly payment. Customers are not able to negotiate these kinds of deals for themselves  because a dealer only controls one of those three things — price.

Read the rest of this entry »

Do you need an extended car warranty — car repair insurance?

All new cars come with a new-car warranty from the car manufacturer. There is typcially a general “bumper-to-bumper” warranty that covers just about everything that is not a wear-and-tear item, and a powertrain warranty that covers the engine, transmission, and drivetrain components.

For most new cars, the general warranty is good for 36 month or 36,000 miles, and the powertrain warranty for 60 months or 60,000 miles. Some car brands have higher mileage warranties, as high as 10 years and 100,000 miles.

There are also separate warranties on tires, batteries, and a few other components.

That’s about warranties on brand new cars. What about used car warranties? Do used cars come with warranties? Read the rest of this entry »

What are the advantages and disadvantages of car leasing?

Car leasing has it’s advantages and disadvantages. Here is a summary:

Pros:
– Get new car every 2-4 years, with latest features and safety equipment
– Lower monthly payments
– Usually no down payment
– Car is always under warranty
– Lower sales tax (in most states)
– Avoids used car selling/trading hassles
– Automatic GAP insurance included (most leases)

Read the rest of this entry »

car scamThe most common car scam is one in which a nice car is listed for sale at a low price on Craigslist.com, Autotrader.com, or other web site.

There is no hint, other than the low price, that it is a scam. They show you a couple of good pictures of the car and even provide the VIN number.

So, what’s the problem.

The problem is that the picture of the car and the VIN were snagged somewhere on the Internet and it’s not the “seller’s” car. In fact, the “seller” is only trying to get your attention so that he can separate you from your money.

You won’t find out enough details to determine it’s a scam until you contact the “seller.” At that time you’ll get an email from him much like this one:

Read the rest of this entry »

car loan rateWhen you buy a car with a loan, you not only pay back the amount borrowed but you also pay finance charges (interest).  Each month’s loan payment consists partly of principle and partly of interest. Actually, the amount of principle and interest changes each month, although the total remains the same. In the beginning, you pay more interest and less principle. Near the end of the loan, you are paying nearly all principle.

The amount of finance charges you pay depends on the interest rate and the length (term) of your loan. Interest rates can vary between different lenders. The interest rate you pay also depends on your credit score. Someone with poor credit will pay a higher rate than someone with outstanding credit. More about credit later.

Interest rates are generally higher for used cars than for new cars. And longer loan terms have higher interest rates than shorter loans.

At the time of this writing the national average new-car interest rate is about 3.0% for a 4-year car loan and a bit higher for used car loans. Dealers sometimes add a percentage point or two for additional profit. This is called “reserve.”

Read the rest of this entry »

buy here pay here dealersBuy-here-pay-here car dealers provide auto loans to people with bad credit.

Most car dealers do not directly finance loans on cars they sell. They work with outside banks and finance companies to provide loans for their customers. It’s up to those banks and finance companies, not the dealer, to approve and provide customers car loans.

However, a different breed of used car dealer, called  “buy-here-pay-here” dealers,  do provide their own financing without an outside bank or loan company. They primarily function to sell used cars to people who have bad credit and cannot get approved for loans from conventional sources.

Buy-here-pay-here (BHPH) dealers can be recognized by their promotional ads or storefront signs. They use the terms “easy finance” or “no credit checks” or “we finance anybody” or “in-house financing” or “fast loan approval” or “we approve you regardless of your credit.”  They are sometimes called “tote the note” dealers. Read the rest of this entry »

used car valuesOne of the most frustrating things about buying a used car is knowing not how much it’s worth — its value — a fair price to pay.

Two cars of the same year, make, model, condition, and mileage can have two very different values, depending on who is making the valuation. Even the same car can have different values, again depending on who you ask.

Companies such as Kelley Blue Book (kbb.com) and Nadaguides (nadaguides.com) make it their business to publish used car value guides, where their values are based on a number of variables such as auction prices, mileage, condition, optional equipment, market supply and demand, regional differences, and past price history. With all their expertise and experience, the values they produce are nothing more than educated estimates. One company’s analysis of the data will nearly always produce a different result than another’s.

Read the rest of this entry »

zero down car leaseLeasing can provide an affordable option to anyone needing car financing at minimum monthly cost. Upfront cost can also be minimized by paying no money down — $0 down payment.

Lease payments are 60% – 110% lower than loan payments for the same car. And most leases can be obtained with zero money down— $0 down.

So what’s the catch?

First, leasing is a bit more complicated than buying a car with a loan. If you don’t understand how leasing works, or how to determine if it’s right for you, you should skip it until you take the time to learn about leasing — from LeaseGuide.com.

Second, in order to get a zero down car lease, you need a good credit score. In fact, you may need a better score than you would need if you were buying with a loan. You should always know your current credit score before going car shopping.  What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!
Read the rest of this entry »

buy used carUsed cars are for sale everywhere but many people find it difficult to find just the right car for the right price.  It can be frustrating and even overwhelming.

First-time buyers, in particular, often have difficulty with the various stages of the process: buying, pricing, negotiating, applying for loans, registering, and getting insurance.

What seems at first glance to be simple turns out to be series of not-so-simple steps.  Buying a car is not at all like buying a TV at Walmart.

The most common concerns when buying a used car are the following:

  • Where to find cars for sale
  • How to know if a car is reliable and in good condition
  • How many miles is too many
  • How to know what to pay
  • Should I pay cash
  • Where can I get a car loan
  • How to know what to look for and avoid mistakes

These are the questions we’ll answer here.

Where to find cars

Used cars can be found on the Internet, in used car lots, and for sale by individual sellers. There are small used car dealers, large used car dealers (such as Carmax), new-car dealers who also sell used cars, and barely legal buy-here-pay-here dealers than cater to people with credit problems.

On the Internet, look at Craigslist, Autotrader, eBay Motors, CarsDirect.com, and Carmax.com, among others. When looking at online sites that advertise cars being sold by private parties (not dealers), watch out for a common scam in which the car has a very low price, the “seller” is not in the same location as his car, only communicates via email, promises to ship the car to buyers, and says the buyer’s money is “protected” by eBay, Amazon, PayPal or some other service. It’s a good and safe idea to always buy cars that you can see, drive, and test before buying.

Read the rest of this entry »

stickshiftOne of the questions we see pop up often from young drivers is “How to drive a stick shift (manual transmission) car?”

The question arises for a number of reasons. Some people who are driving for the first time know they’ll be driving a “stick shift” car and are concerned that it might be difficult to learn. Others who have been driving automatic transmissions for years may be looking to buy a manual shift vehicle for the first time.

Manual transmissions (often called “standard transmissions”) were around a long time before automatics. It wasn’t that long ago that most cars had manual shifts although now it’s the other way around.  Manual shift is popular with car enthusiasts who enjoy the feeling of greater control over the operation of their cars. Some car owners feel that a manual is more fuel-efficient and provides better performance, although that’s not necessarily so with today’s much improved automatics.

Read the rest of this entry »

A Car Loan Story

David, 17, recently graduated from high school, landed a good paying job, and wanted to buy a new car.

His thought was that he would go to his neighborhood Ford dealer where he had been admiring a bright red Focus model that he felt he could afford, and arrange for a convenient loan to pay for it. He could easily get approved for the loan because his father knows the owner of the dealership.

The car cost $12,000 with discounts and rebates. He thought a 5 year (60 months) loan would be about right because he figured payments to be $200 a month ($12,000 divided by 60 months), which he could easily afford.

David was wrong — in many ways. Let’s see why. Read the rest of this entry »