Category Archives: purchase

How to Buy a New Car

New Car, First Car

If you’ve decided that your first car will be a brand new car, there are things you need to know about the buying and financing process that makes it different from buying a used car.

New cars – only from dealers
All new cars must  be purchased from state-licensed and manufacturer-authorized new-car dealers. It’s the law. It’s the only way you can buy a new car.

If a car has never been titled or registered, it’s considered to be a new car. Even if you initiate your purchase through an Internet car buying service, or through a buying service at warehouse stores such as Sam’s Club, the car actually comes from a local new-car dealer. Continue reading How to Buy a New Car

Car Buying Checklist – 50-Point Self-Inspection Guide

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

Continue reading Car Buying Checklist – 50-Point Self-Inspection Guide

How to Buy a Car from an Individual Seller

How do I buy a car from an individual private seller — not a dealer?

When you buy a car from an individual, you pay with cash, a money order, or a bank cashiers check. The money can come from savings, a checking account, a family loan, or a loan from a bank or financial company. Most sellers do not like personal checks.

Buyers sometimes expect a private seller to “take payments” but any smart seller will not agree to such a plan. It is too risky. As a buyer, it’s better to get your own loan.

Requirements for a car loan

Loans from banks or finance companies require that you have a not-so-bad credit score, have an income sufficient to repay the loan, and have no excessive debts that might interfer with your ability to repay the loan. Loan companies do not want to give money to people who are unable to repay a loan.

Buying a car with bad credit – or no credit

People who have a bad credit history — a history of not making payments on time or of missing payments on other loans – will have problems getting a car loan. The lender will assume that if you have had problems in the past, there is a good chance that you’ll have problems again.

Continue reading How to Buy a Car from an Individual Seller

Lease vs Buy Calculator

How to use a Lease vs Buy Calculator

When you use a Lease vs Buy Calculator such as the one at LeaseGuide.com, you should understand how it works and how to get the results you want.

Car leasing is a little different than buying a car with a loan. The language is different, the process is different, and the way that payments are calculated is different. Let’s take a look at how you would use an online lease vs buy calculator to better understand the differences. Continue reading Lease vs Buy Calculator

Negotiating Used Car Prices

How do I know what price to pay for a car?

Let’s say you see a nice used car that you like on a dealer’s lot that is priced at $14,000. Is it a good price? Can I talk the dealer down to, say, $12,000? How much discount can I expect to get?

These are all common questions when shopping for used cars, especially if it’s your first car.

Let’s look at the answers.

Used car prices can vary greatly – even for the same make, model, year, and condition. Prices tend to follow the laws of supply and demand. Large gas-guzzling SUVs are cheaper in times of high gas prices. Convertibles are more expensive in sunny Florida than in cold North Dakota. Used car prices are cheaper when dealers have too many on their lots.

Dealers are experts at knowing local car-buying customers, what they want, and what they are willing to pay. They set their used car prices accordingly. However, dealers make more profit on used cars than on brand new cars. This means there is a lot of “wiggle room” in used car prices – a relatively large difference between what the dealer has invested in his cars and the prices he sets for those cars. Unfortunately, there is no way for us as consumers to know what a dealer has paid for his used cars.

Check prices to know what is fair

The first step to getting a fair price on a used car is to find out how much the car is worth. Is the dealer’s asking price fair or not? If not, then it is time for some negotiation.

Some newcomers to car buying assume that there is some kind of “standard” price for used cars. It is not true. However, there are used-car pricing guides, such as Kelley Blue Book and NADA Guides, that compile data from a variety of sources to publish their version of suggested prices, based on make, model, year, equipment, mileage, condition, and region of the country.

These guides often differ significantly in prices for the same vehicle, same mileage, same everything. Confused car buyers often ask, “Which is right?” or “Which is more accurate?”  Neither is more right or more accurate. However, the guides serve as a good benchmark for determining a fair price for a car you may be considering to buy. For example, if a dealer is asking $14,000 for a car that the guides show as only being worth $10,000, he’s asking too much and it’s time to negotiate a fairer price.

If you don’t check prices

We’ve seen questions from car buyers who ask something like, “How much can I talk a dealer down on this $14,000 car?”  The answer to the question is really another question. It is not so much how much you can talk him down, as it is how much is the car worth?

For example, a dealer may put a $14,000 price on a car that is worth only $10,000. He hopes that he’ll get a customer who hasn’t done her price research and who will “talk him down” to $12,000. The customer is happy because she thinks she got a $2000 price discount, and the dealer is happy because he sold the car for $2000 more than it was worth.

Asking prices are not selling prices

Nearly all used cars are sold for a price that is less than the original “asking” price. Dealers post asking prices on used car window stickers. Individuals selling used cars advertise them with asking prices. Dealer asking prices may be 20% or more higher than selling prices. Individuals usually price their cars about 10% higher than the price they are willing to accept.

Negotiate based on car’s condition

If you find a car you like and the price seems fair for a car in good to excellent condition, make sure you get a mechanic’s inspection and have the mechanic document any problems he finds. Assuming the problems are not serious enough to stop you from buying the car, use the mechanic’s report to negotiate for a lower price.

Also get a Carfax vehicle history report and do the same thing. If the car has been in an accident, even if the repairs have been done expertly, use the information to try to get a better price.

Where to buy

Used-car dealers are an obvious source of  used cars but it takes time to visit and find out which ones have cars you might be interested in. One way to save time is use an online site such as UsedCars.com that lets you search for discounted cars from dealers in your area.

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Used Car Values

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.

Continue reading Used Car Values

What is the Best Car?

best car Honda CivicWe see this question being asked frequently: “What is the best car to buy?”

Of course, the real answer as to what is the best car can vary, depending on your own personal needs, preferences, and finances. Some people place a great deal of importance on reliability. Others might think safety or cost is more important. And others might feel that the best car should have great looks and high performance.

Many people believe that to get the best car, you must spend a lot of money — that the best cars are the most expensive one. Strangely, this is just not true. Actually, some of the best cars are the least expensive — and some of the most expensive cars are the least reliable and the least efficient.

One of the best automobiles, overall, is the Honda Civic. Why? Because it has the most perfect combination of all the factors that most car buyers look for — cost, fuel efficiency, reliability, cost of operation, cost of insurance, style, performance, resale value, riding comfort, luxury features, and handling.

Continue reading What is the Best Car?

Certified Used Cars – What is the Catch?

Are certified used cars good deals or not for first car buyers?

Many car dealers sell “certified” pre-owned cars. How are these cars different from other used cars? Are they more expensive? Are they worth considering as a first car?

Most major automobile manufacturer’s dealers now offer “certified” used cars. A certified car has been inspected and repaired according to detailed manufacturer specifications before being placed on a dealer’s used car lot. Although manufacturer’s programs vary in details, all are fundamentally the same in concept.

Why is it important? Certified cars can significantly reduce one of the largest worries of used car buyers: that used cars can have hidden problems that cause problems and expensive repairs after the sale.  Continue reading Certified Used Cars – What is the Catch?

Can I Afford This Car?

How do I know how much car I can afford?

Assuming you’ll buy with a loan, you will want to have a monthly car payment that will fit within your current income, after considering all your other expenses. Don’t make the mistake of buying based on future expectations — a forthcoming raise, a new job, or other potential improvements in your finances. Your expectations might not come to reality and you’ll be stuck with a car you can’t afford. Base your purchase only on current, stable finances. Continue reading Can I Afford This Car?

Should I Buy From a Buy-Here-Pay-Here Dealer?

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. Continue reading Should I Buy From a Buy-Here-Pay-Here Dealer?

Cheap First Cars – Find Secret Rebates

factory-to-dealer cash for first carsEven many experienced car buyers don’t know about the “secret” factory-to-dealer rebates given to dealers by car manufacturers.

Car companies often select certain models and styles for these rebates, and the selection can change from month to month.

Dealers can use factory-to-dealer cash (sometimes called “marketing support”) in almost any way they choose but most pass it along to customers in the form of price discounts. Some dealers might advertise the low prices (not the rebates themselves) or simply offer a discount to customers during the buying process. He may choose to give all or just some of the total rebate.

Most customers are not aware of which vehicles have factory-to-dealer rebates, or the amounts. Therefore, it is difficult to factor in those discounts in the negotiating process. However, our sister web site, Best Car Deals, provides such information.  Some of these rebates are very large and represent a significant discount off of sticker price. This is particularly true for last year’s leftover models that dealers must sell in order to make room for this year’s incoming models.

If a dealer gets a factory rebate on a particular model and gives it to customers as a price discount, he still makes his usual profit on that car, even though customers may be getting a great deal. Smart customers will expect the dealer to contribute some of his usual profit as an additional discount — which makes an even better deal. In many cases, customers can buy a car for less than dealer invoice price, which is only possible if the car manufacturer is helping with the deal.

In summary, factory-to-dealer rebates can be a large factor in making new cars — especially first cars — more affordable. Look for vehicles with the largest factory-to-dealer rebates.

You can get free price quotes for any vehicle at Edmunds.com. The prices you get will contain any current price discounts and manufacturer incentives that are available.

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Where to Find 0% APR Car Deals

zero percent 0% car loan financingCar manufacturers offer special sales incentives every month on particular vehicle makes, models, and styles. Incentives vary from month to month.

Incentives come in the form of direct-to-customer rebates, special lease deals, and low-interest loans, including 0% APR loan deals. See Best Car Deals for current new-car incentives, including 0% loans.

Zero percent financing, when offered, means that the customer pays no interest or finance charges on his car loan. This saves money. Monthly payments are smaller and total costs are reduced.

Calculating payments for a zero percent loan is easy. Simply divide the cost of the car by the number of months in the loan. Non-zero-percent loans are much more difficult to calculate and require a car loan calculator.

Are 0% loans good deals?

Maybe.

Continue reading Where to Find 0% APR Car Deals

Good Time to Buy Car for Best Deals

best car dealsAs this is being written, this year, 2011, has become the best time to buy a new car in years. And 2012 looks to be even better.

In normal years, we would tell you that the best time to buy a car is when sales are slow at the end of the month, end or the year, or during vacation season. We would tell you that you might still have to negotiate your prices because dealers aren’t just going to give you a good deal because they like you.

BUT……..things are much different now. Sales have been slow for over a year and are still slow right now. As a result, we are now seeing some of the biggest and best car incentives on new cars that we’ve seen in years. Nearly every car manufacturer is now offering a combination of large factory-to-customer rebates, low-interest loan deals, 0% APR loans (even on long 72 month loans), special lease deals, free maintenance, and “secret” factory-to-dealer rebates that dealers usually give to customers.

Why has 2011 become such a good time to buy a car? Continue reading Good Time to Buy Car for Best Deals

Car Loan Basics for First Time Car Buyers

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. Continue reading Car Loan Basics for First Time Car Buyers

Rebates for Cheap New Cars

new car rebatesCar manufacturers use incentives to make their new cars more affordable during limited-time promotions.

The most common incentive is a direct to customer rebate, although there can also be other incentives such as low-interest loans, 0% APR loans, special car lease deals, and “hidden” factory-to-dealer cash.

Incentive programs vary from month to month depending on which models and styles manufacturers feel need sales “help”. Slow selling models or last-year’s leftover vehicles typically get the best rebates and incentives. However, it not ususual for a brand new model to get good rebates or other incentives.

A rebate is a credit that you receive when you buy a new car during the promotional period. It shows up on your paperwork the same as a down payment, although the money comes from the manufacturer’s pocket, not the dealer’s, and is like a gift to you that reduces the amount you pay for your car.

However, a rebate is not a price discount. It doesn’t change the selling price of the car (although it changes what you pay).  Rebates and discounts are NOT the same, although both reduce the amount you pay for a car. Let’s explain. Continue reading Rebates for Cheap New Cars

Do I Need a Car Warranty?

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? Continue reading Do I Need a Car Warranty?

Are You a Car Salesman’s Dream Customer?

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.”

Continue reading Are You a Car Salesman’s Dream Customer?

Common Car Scam

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:

Continue reading Common Car Scam

What Car to Buy?

best cars 2013Many people know they need/want a new car but struggle with what car to buy. There are so many choices.

How does a person go about deciding what car is best for them?

There are actually a number of different approaches that be taken in making a decision.

One way is to simply do detailed research. This can take a lot of time and work depending how much you can narrow down your possible choice before you start. For example if you already know you want a Nissan, it’s just a matter of researching the various Nissan models, styles, options, specifications, and prices to find the one that best fits your needs. One of the best ways to do it is to visit the car company website. In this example, it would be www.nissanusa.com.

Another way is to start with a popular make and model as a first consideration — such as a Honda Accord or Toyota Camry — and decide what you don’t like or what you want different about those vehicles. Then research other makes and models for those characteristics. This is the approach we suggest in our article, What Car Should I Buy?

Continue reading What Car to Buy?

Negotiate Car Price

negotiate car priceWhen buying a car, everyone knows you don’t pay the asking price or sticker price. Right?

Right.

The process of buying a car in the United States is unusual in that it’s one of the very few times when we actually negotiate or “haggle” over prices. We don’t do it when buying a refrigerator at Sears, or a TV at BestBuy, or a watermelon at the supermarket. With cars, it’s more like haggling over an old lamp at a garage sale or, if we lived in the Middle East, getting a price on a donkey.

Although buyer-seller negotiating is common in many other countries, most people in the U.S. find it uncomfortable and awkward. Since we don’t do it very often, we’re not very skilled at it. Many people hate it.

Negotiating New-Car Prices

All new cars have standard manufacturer-suggested-retail-prices (MSRP) — retail prices — “sticker” prices that are exactly the same for the same car, same model, same equipment everywhere in the U.S.. Including the word “suggested” suggests that the prices are not necessarily the prices we have to pay. And dealers encourage us to expect less-than-sticker prices by their ads and TV commercials — “We beat anyone’s prices,” or “Less than invoice prices,” or “Lowest prices in town.”

Continue reading Negotiate Car Price