Category Archives: purchase

Check Your Used Car Before You Buy

buy used carThere’s nothing worse than spending your hard-earned money for the perfect used car and finding out after the sale that it has serious problems that are going to cost a fortune to repair.

It’s even more disappointing when you discover that used cars are sold “as-is”, which means that you have no legal grounds to return the car to the seller and get your money back, even if the seller lied to you about the car’s condition. Even if you suspect the seller of outright fraud, you have to prove it in court, which is often impossible to do. Sellers can easily claim they knew nothing about the problems, which in many cases might be true.

Used car dealers rarely inspect the cars they sell. Even though the salesman might tell you a car “has no problems”, he may have no idea. The only exception is in the case of “certified” used cars that have been inspected and come with a short warranty.

The lesson to be learned here is that when buying any used car, especially those with high mileage, you should always have the vehicle inspected by a professional mechanic before you buy. An inspection might cost you $75-$125 but if it detects serious problems, it could easily save you from suffering a multi-thousand dollar mistake. It’s a good and wise investment.

Continue reading Check Your Used Car Before You Buy

Craigslist Car Scam

Car buyers are being cheated every day by a common scam that is usually associated with Craigslist, as well as other online car-for-sale web sites.

Craigslist even posts warnings on their site about it but many buyers are so focused on the “deal of a lifetime” they’ve found that they don’t read the warnings.

It all starts with a car-for-sale ad that seems almost too good to be true (you know what they say about these kinds of deals). There is a beautiful picture and an alluring description of the car, even a VIN number, and a price is that seems unusually low. Except for maybe the low price, there is nothing about the ad that suggests a scam. The ad looks like any other ad, even the legitimate ones.

You won’t find anything to indicate a scam until you contact the “seller” via email. That’s when suspicious details come out.

Continue reading Craigslist Car Scam

How to Buy a Used Car

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, UsedCars.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.

Continue reading How to Buy a Used Car

Best Prices on New Cars – The Best Way

best car pricesOne of the best ways to get the best prices on new cars is to take advantage of monthly sales incentives such as rebates, bonus discounts, and special leases sponsored by car manufacturers through dealers (see Best Car Deals for details).

These special deals are almost always good deals, much better than customers could negotiate for themselves.

However, the catch is that those incentives are only good on selected vehicle models and styles, and only for a limited time.  If the particular brand, model, and style that you want is not one of those with incentives offers this month, you are back to square one — negotiating for deals the old fashion way.

A new company has come along that changes all that, and may change how we buy cars in the future.

TrueCar answers the question, “What should I pay for my car?” Even if you are a shrewd negotiator, you have to know your target price — a reasonable offer based on real information. You also would benefit by knowing what other people are paying for the same car, same model, same style that you want. With that knowledge, you will know the price you should be aiming at.

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How Does a Car Trade-In Work?

What is the car trade-in process? Do I lose money by trading?

Here is how a car trade works.

Car dealers buy your old car from you and give you credit toward the price of a new car. The trade-in credit is like a down payment and reduces the price of your new car, making your monthly payments smaller.

The dealer then puts your old car on his used-car lot to sell, or he sends it to a dealer car auction where another dealer will buy it to put on his own used-car lot.

Contrary to some belief, dealers don’t simply “trade” or swap one car for another. It’s two separate transactions rolled into one contract.

Dealers make a lot of profit on selling used cars they’ve taken as trade-in. They pay the trading customer a low wholesale price, and sell the car for a higher retail price. That’s how they make their money and stay in business. Continue reading How Does a Car Trade-In Work?

Do I Need A Co-Signer?

Who needs a co-signer for a car loan? How does it work?

need a co-signer for car loanNew or first-time car buyers are often surprised at being turned down for a car loan because they have no credit history, which unfortunately has about the same effect as having bad credit. Getting a co-signer might be the answer.

Lenders want to see that a borrower has a good record with previous loans and credit cards. Without a history of credit, a borrower represents a risk to lenders. If they don’t know a borrower’s history, they take the low road and assume the worst.

It’s a familiar “catch-22″ situation in that you can’t get a loan to establish credit without already having credit. So what is the answer?

What is the answer?

The most common solution is to have someone “co-sign” your loan contract. Typically, it’s family member who has a good credit score. A co-signer plays no part in the loan unless the primary borrower fails to make payments. In that case, the loan company would have the right to seek payment from the co-signer.

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Do I Need a Down Payment on a Car?

How much down payment do I need for my car loan?

how much down payment on car loanUntil recent times, it was standard for car dealers and finance companies to require at least 20% down payment on the purchase of a car. It was for a good reason.

Because cars depreciate in value from the moment they are driven off a dealer’s lot, a down payment helps offset that rapid decrease in value, which may keep the loan from becoming “upside down.”  It also protects the loan company or bank because, if they have to repossess the vehicle, they have a smaller risk of losing money. It also protects the car buyer from financial loss if the car is stolen or totaled and the insurance money isn’t sufficient to cover the loan.

Things are different now
Auto manufacturers and dealers are now very competitive and business must be fought for. They are willing to take risks that were unheard of just a few years ago. In many cases, down payment requirements have been reduced or eliminated altogether, primarily for customers with good credit. Continue reading Do I Need a Down Payment on a Car?

How Much Should I Pay for a Car?

What to Pay for a Car — What’s a Good Price?

what should I pay for my new carHere’s how to determine a fair price for brand new cars (see below for used-car pricing).

What to Pay For a New Car

All new cars have a window sticker that displays the manufacturer’s suggested retail price (MSRP). It may also include destination charges, dealer-installed option prices, and other miscellaneous charges. The total of these charges is the price you would pay for that vehicle, less sales tax, without any discounts or rebates.

All these charges but destination charge can be negotiated. Manaufacturers charge dealers this fee for vehicle delivery, and dealers simply pass it along to customers without markup. It cannot be eliminated from the cost of a car.

Price can be negotiated for most vehicles. Unless the vehicle is a hot seller and in short demand, it’s usually possible to get dealers to discount the MSRP. But, how much? What’s the best price I can expect?

Here’s your strategy for negotiating price. Continue reading How Much Should I Pay for a Car?

Cheap Cars – Where to Find Cheap Cars

Cheap cars can be found in many places — if you know where to look. Following are just some of the places you might find cheap cars:

Independent Used-Car Dealers – Independent used-car lots are a potential source of affordable cheap second hand cars. Many lots have older vehicles that can be real bargains, but might require a little work. You should take care to determine if the price is fair and that the vehicle has no hidden problems. Most used cars are sold “as-is” and come without any kind of warranty or return policy. Check out local used-car lots in your area but also consider large national or regional used-car dealers such as CarMax.

New-Car Dealer Used Car Lots – Many new-car dealers also sell pre-owned cars. Most new-car dealers only offer relatively late model used vehicles that have been taken in trade or are off-lease, and are in good condition — and are relatively expensive. But bargains can be found. Therefore, it doesn’t hurt to check out local new-car dealers but also look at other sources listed below. Some new-car dealers sell “certified” used cars — at a higher price. These cars have been inspected thoroughly and come with a short guarantee.

Buy-Here-Pay-Here (BHPH) Dealers – BHPH dealers are a different kind of used-car dealer that provides in-house financing, usually with no credit check, to people who are unable to get a conventional car loan. Most BHPH dealers are local and can be recognized by their “we finance anyone” or “no credit check” banners. Be aware that interest rates are usually very high and payment terms are strict. See “Should I Buy From a Buy-Here-Pay-Dealer Car Dealer” for more details.

Continue reading Cheap Cars – Where to Find Cheap Cars

Deciding on Your First Car

Your First Car – Making Your Decision

first carMost of us get our first car as teenagers. It’s the car we’ll always remember.

Let’s take a look at some of the important questions you’ll want to consider when deciding about what you’ll buy as your first car, how you’ll pay for it, and how to go about the purchase.

How much can you spend?

If cost is not important and you can choose practically any car you want, we’ll get to you later. However, most teens have restrictions on how much they can spend. It might be that your parents are buying and have set a price limit, or that you have your own budget and a limited income.

Since most teens start driving before they become of legal age to sign a car loan contract, it’s typical to pay cash for their first car. The cash can come from savings, gifts from relatives, or a loan from parents — or a combination. Usually, it’s not enough money for a brand new car, but possibly sufficient for a good used car.

The amount of money you have to spend on your first car will directly affect your choices. Lots of money, lots of choices. Little money, fewer choices. In general, the more money you spend, the better the car — better condition, better mileage, better performance, better safety, and better reliability.

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I Only Have $3000. What Car Should I Buy?

This is the kind of question we see posted on question-and-answer web sites every day. The details might vary but the basic question is always the same.

The askers of the question seem to understand that $3000 (or $1000, or $2500) is not a lot of money for a car and they are asking how to best spend it.

For a car to be priced in the $3000 range, there are a number of potential issues that buyers should be aware of:

1) The car would ordinarily be a $5000 car, but it has problems that will require at least $2000 to fix.

2) The car is fairly priced at $3000 because it is old and has high mileage, which doesn’t mean it’s a bad car, but it has a high potential for having problems.

3) The car is only worth $2000 because it definitely has problems, but the seller is hoping potential buyers won’t notice until after the sale when it’s too late.

Continue reading I Only Have $3000. What Car Should I Buy?

Car Seller Scam – Is This a Car Scam?

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.

Continue reading Car Seller Scam – Is This a Car Scam?

Fix My Old Car or Buy A New Car?

fix old car or buy newShould I keep my old car and fix it up, or buy a new car?

Expressed another way, the question is this: Is it smarter, more practical, and more economical for me to keep and fix my old car than to buy another car, new or used?

This is always a tough one to answer. Generally, it’s going to be better to fix up an old car than buy a new car every five years or so.

However, the real answer depends on your particular circumstances. Here are some tips that will help you make a decision

How old is your vehicle?

Older, high-mileage vehicles are more likely than newer vehicles to have problems. There are exceptions, of course. Older vehicles also tend to have more serious problems, such as engine and transmission failures, that are expensive to repair.

Continue reading Fix My Old Car or Buy A New Car?

What Car Should I Buy?

What Are the Best Cars to Buy?

which car should I buy?There are literally thousands of combinations of different automobile types, makes, models, styles, and prices, which can make it difficult to choose which to buy. However, we will help you determine the perfect car for your needs.

What is a good first car?  Which car is the best buy? Which is more reliable?

Which gets the best gas mileage? Should I buy a SUV or pickup? Which car is safer? Which is more economical?

Which is cheaper to insure?

What car should I buy as my first car?

If you were to ask this question and you gave no other information about yourself or what you wanted, we would suggest you buy either a Honda Accord or Toyota Camry, two of the most popular and most purchased cars in America. Both cars come in either a sporty 2-door coupe version or a 4-door sedan, and with a variety of engines, luxury features, and safety options. Both also offer gas-saving hybrid versions.

Continue reading What Car Should I Buy?

How to Buy a Car with Bad Credit

buy car with bad creditBuying a car with a low credit score?

Having bad credit means that sometime in your past, possibly as far back as seven or ten years, you have had missed or late loan payments, repossessed property or cars, or have declared bankruptcy. You may also have an excessive number of credit cards with high balances. These factors are included in your credit history reports that come from three credit reporting agencies: Transunion, Experian, and Equifax.

Your entire credit history is summarized in a single number, called your credit score.

Your credit score determines if you’ll get approved for a car loan, how much you’ll in interest, how much down payment you’ll pay, and even how much you’ll pay for auto insurance.

Continue reading How to Buy a Car with Bad Credit

How Car Loan Payments Work

how car loans workAbout principal and interest

If you purchase a new or used car with a loan, you agree to pay off the loan amount (principal) over a specified number of months. But you also agree to pay a finance charge, or interest, for the privilege of using the bank’s (or finance company’s) money for your purchase.

The amount of finance charge that you pay is the interest rate, which is set by the bank or finance company based generally on national lending rates and more specifically on your credit score. Interest rate is expressed as a annual percentage rate (APR), such as 5.5%.

Interest rates can be different for the same loan amount

Wholesale lending rates are lower now than in recent years but banks and finance companies, as well as dealers, can boost these rates (called reserve) for their customers. You can check current national average auto loan rates at Bankrate.com. At the time of this writing, the average 36 month new-car loan rate was 3.93% — very low. But automotive consumers may pay higher rates depending on the lender, dealer reserve, and the customer’s credit score.

Auto buyers should always know their most recent credit score before going car shopping. Otherwise, dealers know more about you than you know about yourself, which could lead to some unpleasant surprises. Getting your credit score is easy enough online. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!

Continue reading How Car Loan Payments Work

Can I Buy a Car if I Am Upside Down on Another Loan?

If you still owe more on your loan than your car is worth, you are upside down.

You may still be able to buy another car if you are upside down on your previous loan.

There are two ways to go about it.

One way to buy with an upside down loan
You could sell your old car but you will have to add extra cash to fully pay off your old loan. You’ll need to pay off your loan so that you can give a clear title to your buyer. However, coming up with extra cash might be a problem, especially if you are upside down by a large amount. For many people, this solution is not possible.

Let’s look at some other ways. Continue reading Can I Buy a Car if I Am Upside Down on Another Loan?

Lease or Buy – Which is Better?

Lease vs Buy? What’s the Difference?

One of the best ways to decide between car leasing and buying with a loan is to directly compare the attributes of each, which we will show you in this article. We’ll tell you about how payments compare, about how fees are different, about advantages, and disadvantages.

Another way to help make a decision between leasing and buying is to compare the cost of each for a specific lease vs. buy situation. For this, you’ll need a special Lease vs. Buy Calculator.

Now, let’s take a look at how car leasing compares with buying with a loan. Continue reading Lease or Buy – Which is Better?

Quick Guide to Buying a Car

guide for first car buyersFirst-time car buyers are often unaware of everything that’s involved in the process. It’s not surprising because it’s not simple and not like buying anything else that we normally buy, even a house.

We’ll explain it all in this quick guide to buying a car. Further details can be found in the various articles posted on this web site.

1. Decide on a Car

Choosing a car for the first time can be a bewildering experience because there so many choices — old cars with lots of miles on them, newer cars with better safety and tech equipment, small cars, compact cars, sedans, coupes, large cars and SUVs, sports cars , fast cars, fuel-efficient cars — not to mention all the different makes, models, and styles that are available.

Decide what kind of car you want or need and what’s important to you. Do you want good looks, safety, good gas mileage or high performance, automatic or manual transmission, 2-wheel drive or 4-wheel (for winter weather), sporty 2-door coupe or 4-door sedan or convertible, passenger car or roomy SUV or minivan? Do you want good reliability and dependability, and low insurance cost? What is is your budget and how much can you afford, either as a cash purchase or as monthly loan payments?

Continue reading Quick Guide to Buying a Car

First Car Questions

We answer questions from first-car buyers almost every day when we participate on the Yahoo! Answers web site in the Car Buying and Selling section. The majority of those questions come from teens and young adults who have little or no experience in buying, trading, or selling cars.

In the few years that we’ve been doing it, we have seen certain common questions come up over and over again. Some come up numerous times in a single day.

We thought we would post some of the most frequent questions here, and answer them just as we do on Yahoo! Answers.

Here goes.

Q.  How many miles are too much for a used car?  How many miles will I get from this used car?

A. All used cars are different. It’s not possible to say that a certain car of a certain age and of a certain brand that has 150,000 miles is a good car. It depends on how it has been driven and cared for. Some cars with only 50,000 miles are ready for the junk yard, while others with 150,000 miles are good for another 150,000.  Even brands such as Honda and Toyota, that are known to be very reliable, can have serious high-mileage problems. Therefore, don’t make a purchase decision based on mileage alone. Get a professional mechanic to inspect your car before you buy. It’s the actual condition of the car, not mileage, that is important.

Continue reading First Car Questions