Car Buying Advice

I've shared my car buying advice with a few bloggers, most recently Ami

http://amimental.blogspot.com/2013/04/movie-night.html

The advice is in a document I keep and send to my various relatives and acquaintances who want me to "help" them buy a car.

In 1986 I got hired to sell Suzuki Samurais. I was out of work (construction) and somewhat desperate. The plan was to sell cars until construction came back. That lasted nearly thirty years. The first managers I worked with were veterans of the Ralph Williams' stores. A taste of their mindset.

http://www.youtube.com/watch?v=DK6BksCzTKs
http://www.youtube.com/watch?v=lb-uE2xWmi8

Enough! Here is the "advice".


A person asked me to help them buy a car,  and I refused. I don’t want the responsibility.  A hardcore manager I had years ago was fond of saying, “That monkey is on your back and you are not giving it to me”.  Advice I will give.

NUMBER ONE RULE:  Never, ever, be in position of  “must buy right now”.  Yes it’s Thursday night, your hooptie died and you can’t get to work, see your squeeze, pick up your kids, etc.  Rent, borrow,  cab,  public transportation, a $800 P.OS that runs, whatever.  I try to always have a backup vehicle of some kind.  Once I commuted for three weeks in a truck with a 18’ cargo box.

NUMBER TWO RULE:  Price is  not the same as cost.  What you spend to buy your ride is just a start.  Insurance!  A Honda Fit may get a ton of miles out of a gallon of gas.  Insurance cost on it will put a hole in your budget.  Maintenance is overlooked.  Most used cars will still have an Owners Manual.  Find it and look up the chapter on maintenance.  Find out what theses items cost.  How? Work a little!   Find a dealership or an independent shop and ask.  The service department at a new car franchise should already have this info readily available.  Anything European has enormous parts costs (like $800+ headlights).  Like a Lexus?  The 60,000 mile service is close to $4,000.  A headlight assembly is $2,500.

NUMBER THREE RULE:  Know why you are buying what you are buying.  Hope your new ride will lead to enhanced social experiences?  Do you have people in your social/family/employment circle you are trying to impress?  Do  clients see your vehicle?  Need a 4x4 to get home or to work?  Is this vehicle your treat, to yourself, as a reward for your hard work?  Do you have kids in car seats?  How long will your back handle getting them in car seats in a coupe? Are you buying something to go on vacation once a year?  Ever think of renting a car for that vacation?  Diligent shopping may produce surprisingly low rental costs.  My personal vehicle is a 1996 Escort Wagon with 186,000+ miles.  It is not pretty.  It is reliable, gets over 30 mpg, hauls my overweight body down the road at illegal speeds and the title is in my file cabinet.  I’m not concerned what others think!  The only thing about any vehicle that impresses me is a large gross profit.

NUMBER FOUR RULE:  Always be emotionally prepared to walk away from any deal.  So, you have spent a lot of time at the process and you “just want to get it over with”? Get a backbone and become an adult!  You have found the perfect car/truck, you love it, and you want to drive it home but the numbers don’t work.  Every good seller wants you to buy right here, right now, don’t let it get away!!!!  Go back to Number One Rule.

PRIVATE PARTY,  DEALERSHIP OR  AGENCY?  The majority of used sales are private party.  It can be a win/win for the seller and buyer.  The seller gets more than they can trading in and the buyer gets to go eyeball to eyeball with those who put the miles on the vehicle.  Beware of the sub species “side winding sewer snake” curbstone dealer.  NEVER NEVER NEVER buy a vehicle from some who doesn’t personally own it and who’s name isn’t on the title!!!!!  I don’t care how wonderful the story is, be Nancy Reagan and just say NO!  ALWAYS have the vehicle checked out by a mechanic.  Be prepared to pay for one hour of  shop time.

 Often the seller, especially a dealership, will be resistant to having the vehicle inspected by a third party.  They are not always being evil; there are many valid reason for not letting a stranger drive away with thousands of dollars to be poked and prodded by another stranger.  Offer to have a firm appointment at the shop and let a seller’s representative come along. The principal items you want checked are timing belt, axles/CV boots, brakes, transmission and cooling system. You want them to check under the seats and behind the dashboard for water damage (a flood car). You do know that buying a vehicle with the “CHECK ENGINE” light illuminated qualifies you for the “Fool of the Day” award, don’t you?  As part of your test drive, locate a safe area where you can observe the vehicle, from the outside, being driven (by someone else) away from you in a straight line.  Observe how well the front and rear tires line up as the vehicle moves away.  This is the best way I know to spot a “framer”; a vehicle involved in an accident. A CARFAX report will tell you if the vehicle was ever a “rental rocket”.  Any vehicle with a SALVAGE title is suspect. Rarely can you obtain financing from a regular lender.  These vehicles often are sold Buy Here Pay Here.  ALWAYS take it to a Body Shop, pay for an hour of their time, and see if the car is intact enough to safely drive. I’ve seen more than one pieced together with rags, cardboard, Bondo and a slick paint job.

When you do business with a dealership you are buying convenience and saving time.  The owners and the staff are entitled to fair compensation.  If you are not willing to fairly pay them, don’t waste their time! Can you do well financially at the dealership?  Yes, if you are reasonable, have educated yourself so you recognize a fair deal and you are prepared to buy right here, right now!  Another hardcore manager I worked for explained his philosophy like this, “I will always let the customer have the opportunity to pay  FULL RETAIL.  After an hour of grinding their tits off I will take a $300 (gross profit) deal.  It just iron, I can get more iron than I can customers.”  I liked well prepared customers.  I loved them when they made an appointment in the morning.  We could have them in an out in an hour. The usual rodeo is three hours on a used and four on a new.  Take a short deal from Mrs. and Mrs. Prepared? - You bet!  Money in my pocket and back on the floor works for me!  What will hurt you is how you approach a car dealership.  Understand everyone works on a commission basis up to and including the owner. They don’t sell; they don’t eat.  They HATE time wasters (by their definition).  If you are looking for “information” or “data” you are a time waster.  If your want to “look around” you are time waster.  No well run dealership will let you wander around unaccompanied.  Don’t like that?  Buy your own dealership and run it however you want.  Show up with a notebook and computer printouts and you are instantly labeled a “consumer commando”.  No experienced salesperson wants to talk to you.  You are a time waster.  You, the consumer, want the Nordstrom treatment at Sam’s Club prices.  Not going to happen, bubba.  You will eventually buy a car but you won’t be happy.  Please understand the manufacturer has a nasty little club over dealerships called Customer Satisfaction Index.  CSI controls lots of different monies dealers and their employees earn.  A few days after your purchase, you are contacted by an opinion taker and asked to rate your experience. You are bummed out by the whole process and unload!  You have just cost the salesperson and their manager more money than they made selling you a car.  Experienced salespeople and managers will lose a sale if they think you will give them bad CSI.  Sunshine, your one deal just isn’t that critical; you are not that important.  Get your facts and your financing in order before every going to the dealership.  Make an appointment.  Try to make it with the TOP salesperson.  Call, and ask, “Who was your salesperson of the month last month”?  Make a morning appointment.  Shop in the first week of the month.  Why?  The top salesperson needs deals and knows how to make them.  A manager will take a short deal in the morning to “get the store open”.  Dealerships sell more cars at the end of the month.  Top professionals know if they are going to have a great month they need to capture the first week sales.  Third and fourth weeks will take care of themselves.

Financing is a huge profit area for a dealer.  Arrange your own before you every start shopping!!! Use a credit union.  Knowing what you can spend helps answer the “what to buy “questions.  If the dealership can beat the credit union deal,  that gives you  a nice option.  Having your financing arranged or cash in hand gives you a real edge in private party sales.  Be very careful in divulging credit information at a dealership (or anywhere).  Your should only do so AFTER you make the deal.  The dealership must report all transactions over $9,999.00 and needs your social security number to do so.  Any dealership that makes you “prove” you can buy a vehicle before negotiating with you is run by lazy, arrogant managers.  Leave!  See Rule Number One.

Trading a car?  You are now a car dealer.  The Used Car Manager is judging everything as “front line ready”.  A FLR vehicle has intact glass.  The windshield is perfect.  Everything works (wipers, power windows, air conditioning blows cold, no lights out, no hole in the dash where the radio goes) and the tires are new or look new.  The vehicle is new car showroom clean.  If your trade isn’t FLR, the manager deducts from the trade value the cost to make it FLR.  If the manager doesn’t want your trade for inventory, then what will it bring from a wholesale buyer or an auction?  He/she has a good idea, based on experience, and that is what they will write down as ACV (actual cash value). ACV, trade allowance to you, and “Book Value” are not the same.  Understand “Book Value” is what a lender will use in evaluating a loan or what an insurance company will use to settle a claim. If your trade is older than five model years it has no collateral value to a lender and the dealership probably won’t keep it. The value of any vehicle is what someone will pay for it.  If you believe you can negotiate up from invoice and down from “Blue Book” you are living in the wrong universe.  What other options are available?  Sell it yourself?  Donate it to a charity?  Say your trade has a “Book Value” of $10,000 and you are in a 30% tax bracket.  Because of the condition of your car no one will give you more than $5500.  This might be a way for you to go.

Selling your trade yourself has serious safety issues.  Do you want strangers coming to your house?  Do you think you can park vehicle in a high traffic area with a “For Sale” sign?  Probably not.  Most municipalities have ordinances prohibiting “curbing” cars.  Rarely will the “buyer” have cash in fist. They want financing schemes.  License plates stay with you unless you are in one of the few states that have a different practice. The buyer wants you to leave the plates on so they can get it home. NO! To make the deal you may need to deliver the vehicle.  As long as your plates are on the vehicle, YOU have all the liability. Use your digital camera to photograph the COMPLETE title transfer.  If the buyers name isn’t filled out and the sale price entered, you have opened yourself to a can of legal whoop ass.

The various agencies that will buy the car for you can save time and money on a new vehicle.  Many are snakes.  The only one I will recommend is AAA.

NO USED CAR IS PERFECT!  If it was it wouldn’t be for sale.  The seller knows, or expects, expensive troubles are coming and they don’t want to deal with it. Your job is to find out what (the mechanic’s inspection) and to negotiate.  I usually walk away from any vehicle with a long list of repairs.  I want the vehicle that the owner says, “I’ve kept up the maintenance and driven it.  Never had to make a repair.”

VERY IMPORTANT.  If you meeting someone to look at their vehicle, don’t take cash with you!  You don’t know for certain if you will see a vehicle or a firearm in your face.  After you have made your deal, go to your branch bank/credit union and get the cash.  Seller doesn’t like it?  Go back to Number One Rule.

UPSIDE DOWN, BAD CREDIT?  You have been making bad financial decision all your life.  Deal with it.  There is no car god that will save your sorry ass.  Life circumstances can put you in a hole (Illness, divorce, uninsured motorist accidents) but  in most cases it is YOU.  Please, be an adult and own your own shit.  Then a dealer can find a way.  Not your way; a way.

 All salespeople believe any customer can be “bumped” $50 a month on a payment.  They believe the two most important numbers to you are the down payment and the monthly payment.  That is how you  became “upside down.”

Drive by your local bank and credit unions. Often, they will have voluntary repossessions sitting in their parking lot. Won’t hurt to go inside and ask.  The lender is trying to get close to the balance due instead of sending it to auction and taking a bigger loss. Same rules apply as in buying a used car.

The military says, “Train hard - fight easy.”  You should say, “Do the hard work before the purchase and drive off with a woody!”

If none of the appeals to you, the work and effort is too much, then go to whatever dealership you want, roll over, sign everything, and get on with your life.  You will have great “whine” material to bore everyone around you.  “It isn’t my fault!  They LIED to me”.   You are a gutless wonder, and you deserve what you get.  Of course, your mileage may vary.