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Buying a Car
Caspian
Registered User regular
Registered User regular
The title pretty much sums it up. My last car was a gift from my family, but now that I'm (ostensibly) an adult and out on my own, I've passed the vehicle on and need to get my own. It's an incredibly daunting task when you don't have a clue what you're doing!
I've hit up family and friends for advice but I figure I can't go far wrong asking here, too. What are the most effective ways to go about this process of financing, purchasing, and insuring a vehicle?
I've hit up family and friends for advice but I figure I can't go far wrong asking here, too. What are the most effective ways to go about this process of financing, purchasing, and insuring a vehicle?
Caspian on
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The process for buying from a dealer generally involves:
1. Find the car you want
2. Talk to your bank or credit union about financing (You can finance through the dealer's bank, but you probably won't get as good of a deal)
3. Once you have acquired the car, you will receive a temporary registration. Take that information to your insurance company and have them add your car to your policy and get proof of insurance as soon as possible.
From a private seller:
1. Have the vehicle owner acquire the title
2. Have the title signed over to you officially through your state's DMV
3. Take your new vehicle's information to your insurance company and add your new car to your policy and get proof of insurance.
Athenor
At the 6k range the car is going to be used. From there check the local dealership pages and classified sections and see what things are pricing at. I generally prefer a dealership that is going to warranty the car unless the person selling it is going to be about 1k cheaper than the dealer, because that 1k is going to be useful in fixing things that were failed to be mentioned, remember that you need to go into it with the idea that if a person is selling it, there is something wrong with it, no matter what they tell you. Either the dealership they bought their new car from thought there was something wrong with it and didn't offer them much, or they are trying to get rid of it. Either way be sure to keep an extra grand in the mix to fix issues.
So I'll pull up cars on craigslist in my area and show you a way to do it. I set the min at 4000 and max at 6100.
For my results, let's say I am getting a chevy, The relevent results I pulled up are these
dealer chevy aveo 2004, 91k miles 3 month 5k warranty $4,390
dealer chevy malibu 2005, 108k miles no listed warranty $5,495
owner chevy aveo 2007, 76k miles, no warranty $5,299
owner chevy mailbu 2005, 42k miles, no warranty, $5,500
So in this mix the best value is going to be the Chevy Aveo from the dealership. However I'm 6ft 3, and I want a slightly larger car. The malibu from the dealership is going to have been inspected, but if the carfax on the 2005 owner malibu doesn't show any extra miles than that will be a better buy because of the low milliage. Get the car inspected before purchase. Go to a mechanic during the test drive have them put it on a rack and tell you what is wrong with it and how much it will cost to fix. Avoid cars with electrical issues.
For new cars the process is much easier, because you can compare apples to apples.
Research online what car you want. Look up the actually price of the car on edmunds, consumer reports or some other site.
Get your financing in advance from a credit union or your bank.
Test drive car and make minimal small talk with sales person.
If test drive is good. Have them make you an offer and counteroffer with invoice price, if they try to counter, walk away and go to next dealership.
Never pay more than invoice price on a new car, New cars have something called hold back, which is money the manufacturer holds for the dealer. You can look it up online but it is generally between 3 and 5 percent. That is the profit on the car. Also see if the holdback is over 5. If it is then establish cost and go cost plus 5 percent and tell them to stop being rediculous.
Do you want a new or used car?
What's your price range? Do you have the money or are you planning on financing?
What features tend to have a higher priority in what you're looking for? Fuel efficiency, size, comfort, gadgets, etc?
Any particular type of car you are wanting? SUV, truck, sedan, doesn't matter?
Once you've answered those, you will have a better idea of what to look for. Then do some research about those cars/traits
Before you set foot on a dealership lot, you have things you need to have completely locked away. Don't contemplate that awesome car you want just yet, because....
1)...unless you have a ton of money in reserve, you'll have to get a loan. That means knowing your credit report, and your credit score, before you go to a bank.
https://www.annualcreditreport.com/cra/index.jsp
That link is a site sponsored by all three credit unions. It's completely free, not a gimmick site to make you think it's free, and then you pay. I think it's like, 7 bucks if you want a FICO #, but you don't need it - just make sure there aren't any blemishes on your credit report. If there are, contest them, and maybe wait for them to clear (90 days) before seeking a loan. A cleaner credit record gets you better loan terms - and that saves you money.
2) Credit report in hand, talk to your bank you keep a checking account/savings account with. Ask them what their loan rates are with regards to new and used cars. I'd then ask maybe 1, or 2 other banks. Go easy here - too many credit requests can ding your credit rating a wee bit. 2-3 at most - no more - so shop around - ask friends and family who gave them good deals, and see.
3) After a bank guarantees you a loan and a maximum $$$ amount, then start shopping for cars. You'll know what you can get a loan for. You'll know what you'll be paying per month. And when you start talking to car dealerships, don't tell them what your bank cleared you for loan amount wise. That tells a salesman how much he can sell you, and mark up prices on you. Play it smart, keep that close to the vest. If they ask you, simply tell them "My bank is securing my loan - I'm just shopping". Do not secure financing through the dealership. Unless you have impeccable credit, and it's a high score, you won't really get the 0.5% sweet financing deal that tout. If you do qualify, jump on it. If you don't, stay away. Dealerships have deals with banks for financing - but their rates are neither competitive, nor friendly. Dealerships also get kick backs from banks for every loan they send them. Stay away from those loans.
4) Find a car. Get a price - call your bank, and they'll handle all of the details of getting the dealership paid. This is usually painless, and happens fast. You drive away with your new ride!
If you have a Carmax dealership near you, go there. It's no pressure sales. They just sell cars, with set prices. They don't haggle, or pressure. I bought my last car there, and will continue to do so I think. A very pleasurable buying experience, and not much stress.
Cannot emphasize that enough. If you know a mechanic, ask them if they'd mind doing a test drive or giving the car a once over.
I actually bought my first new car (as in not a used car, its my third car over all) this year. Here's my advice:
1) If you are buying a new, or relatively new (as in only 2 or 3 years old) Buy the car you WANT. Do NOT settle for a lesser car. My rule of thumb is that you want to own a car for at least ten years. You don't want to spend 10 years regretting your car purchase.
2) Begin by figuring out how much you can afford to spend on the payments each month. If you don't have one yet, open a savings account, and each month put in X amount of dollars to represent your car payment. If you can continue to maintain your quality of life while not spending this money, then you are good. If not, reduce the amount you are putting aside by a figure and check again. This will help you figure out what you can afford without any risk.
3) Remember that there is more than just the loan payment to consider. You also need to take into account gas mileage (if you are filling up more, than you are spending more on the car) and a change in your car insurance. Cost of gas relative to gas mileage you can figure out on your own, and you can call your insurance agent to find out what the change in your insurance will be.
4) Use a good chunk of that savings account you're testing with as a down payment on the car. You are already putting the money aside, so this gives you a kick start. Any money on the down payment is money you do not have to take out on a loan. This also allows you to get the car you want (see #1). If the car you want is $30,000 and you can only afford payments for a $22,000 loan, then if you can put $8,000 down, you can get that car you want.
5) Remember that there will be tax, title costs, possible delivery fees, and other things that the dealership will tack on. The sticker price is NOT the final price of the car. You can normally get the final price from the dealer without signing anything.
6) The longer the term of the loan, the more you will pay overall. While a 6 year loan will give you lower monthly payments, the additional interest you'll pay over a 3 year loan will end up costing you more money in the end.
Anyway, I hope this helps.
Talk to your bank about financing, see what kind of interest rate they'll give you. Talk to the dealer about financing, see what they give you. Subaru discounted the taxes, freight and all other surcharges and gave me 0.9% financing after I spent a total of 12 hours over two days negotiating. 12 hours to save probably 4 or 5 grand? That's a hell of a return on time invested.
Used cars they may even be more flexible on, depending.
Anyway, whatever you do, do not set your heart on a car. You have to be able to walk away or you will get taken to the cleaners.
Also I agree about financing - dealerships are only worthwhile if your credit is good enough that you qualify for 0%-type financing deals... which is not impossible (I did at 25, with a grad student income), but if you have any credit issues at all your bank is probably going to be better.
Obviously buy within your budget, but think about the extras that seem like a lot now, but can really make driving more enjoyable. Things like an AUX jack, power mirrors, heated/cooled seats if your climate calls for it. Not to mention all the safety stuff like airbags, etc.
For example, my 2008 Accent doesn't have auto lights, meaning I have to turn a knob to turn my lights on, or more crucially, off. Guess how many times I've left them on and drained the battery; more than I'd care to admit.
That's not the car's fault, though.
I could see if it left the headlights on, but it just leaves the side lights on - virtually impossible to see them in anything but complete darkness. When would you ever want to leave your side lights on with the engine off?
So be sure to look at the little stuff like that. An extra $200 or whatever may seem like a lot initially, but may be well worth it in the long run.
Figure out how much you want to pay, per month for how many years.
That is your budget.
Then figure out how much money that will be from a bank (as you will also pay interested) or from a dealer.
then decide whether or not you want a new or used car.
Ever since Kia, and other "cheaper" manufactures went fuck it, technology is cheap and started shoving keyless starts and all kinds of cool shit in their car, the values of four year old cars have significantly dropped as the rest of the manufactures have followed suit.
Really, if creature feature technology is not a big deal, look in that area.
Satans..... hints.....
http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx