FINAL CAR BUYING TIPS

This is the final article in a series about buying automobiles. We have discussed how to buy new cars, how to buy used cars, trade ins and the finance office. This time we are going to clean up the loose ends. Here are a few other items for you to review.

• As the relationship develops, the salesperson will want to know how you expect to pay for the vehicle. Tell them you are prepared to pay cash by obtaining a loan from your own bank, but if they can get you a better rate you will consider it. Tell them your score but do not tell them your bank’s interest rate or they will know they only have to beat that number rather than give you their very best rate. If they do not offer you a rate that beats your bank’s rate, then get the financing from your own bank. If they offer you a better rate than your bank or credit union, tell them you want a loan approval “subject to your credit score being as stated”. This way there is no inquiry on your credit report unless you are certain you will be approved.

• When you find a car you like, be sure to compare the sales tax rate if you take delivery at the dealership or at home or work. If you can save a couple hundred dollars by having them deliver it to your door, I would suggest you do that.

• Try to avoid using finance companies because rates are very high.

• Do not believe a dealer when they tell you a vehicle has never been in an accident. They might be lying or simply unaware of a previous problem. The bad boys will put a sticker on the car that says something like, “All sales are final” or, “As is”. If you should later find out the vehicle has been in a wreck, you cannot do anything about it. Therefore do one of the following 1) demand a vehicle history report such as is available through Carfax 2) require a WRITTEN warranty of at least 30 days 3) or take your vehicle to a qualified mechanic for an inspection before you complete the deal.

• If you need to upgrade your car but you also want to buy a home in the near future, you should buy the home first, unless you have a very good credit rating and strong income history. It is much harder to get a home loan when you have car payments than it is the other way around.

• Consider using a line of credit loan that is secured by your home for your auto loans. They allow more payment-flexibility because you can pay interest only, or add principal anytime you wish. Another benefit is you don’t have a new inquiry on your credit report. Next, you might get a lower interest rate. And finally, the interest you pay is probably deductible. If you don’t have enough equity in your home, ask your banker if they would consider taking your property as primary collateral and the title to the vehicle itself as additional collateral. If so, you may still qualify for lower interest rates and the interest deduction.

• Miles per dollar – My nephew and I came up with the idea of measuring how many miles you get out of a dollars worth of purchase price. If you buy a new $24,000 vehicle and drive it 100,000 miles and then sell it for $4,000 you got 5 miles per dollar. That is fairly normal. But if you buy a good used car for slightly over wholesale at a dealer for $14,000 and then you put an additional 90,000 miles on it and sell it for $3,000 you get over 8 miles per dollar. That is very good. The best I know of was Matt who bought a van from the GSA auction for $2,000. It had only 24,000 miles on it. He drove it back and forth to work for six years and put an additional 105,000 miles on it, then he gave it to a charity. That is a whopping 50 miles per dollar. Way to go Matt!

• Regarding auto repair shops. This can be a hit and miss proposition. For routine matters like oil changes and brake jobs, I recommend you ask the people you know if they have had good luck with any particular shop or mechanic. For more serious repairs I prefer experts. For example take a vehicle with a transmission problem to a transmission repair shop. If you are uncertain about the ethics of these people, call the Better Business Bureau or a consumer protection agency to find out if there have been complaints filed. Be sure to ask what type of warranty they offer and get it in writing. Finally, if you find an honest shop stick with them.

Nearly everybody buys autos from time to time, so it is worth the effort to read these articles.. The most important thing to remember is that the dealer needs you, not the other way around. Don’t let them get you emotionally involved. As long as you remain on an intellectual level, you should do great. Remember, there are thousands of cars out there. Good luck.

Comments anyone?

Check out my other blog.