Buying a big-ticket item, like a vehicle, can be daunting, especially
if the buyer doesn’t know where to start. when it comes to buying a
vehicle, serious buyers will go beyond the steps. For
example, the art of negotiation.
One of the most important things for potential car buyers to know is that the majority of vehicles depreciate in value over time. If you purchase a new or used vehicle from a dealership, the vehicle depreciates by about 20% of the sale price the minute it is driven off the lot. That means that if you turned around and sold the vehicle within a week, you’d probably only be able to sell it for about 20% less than you paid for it. It’s not like buying a house where the property generally increases in value over time (except during economic decline). Vehicles are not investments; they’re simply a necessary expense in locations that don’t have good public transportation as an alternative. (They could be investments if you get involved in the collector’s market, which is an entirely different game).
It is also important to realize that the cost of owning a vehicle is much more than simply the sales price of the vehicle. All expenses must be considered before accepting the burden on your monthly budget. The sales price of the vehicle is just the beginning. If you’re taking out a loan to pay for the vehicle then you’ll first have the monthly loan payment.
You’ll also have to pay for gas to run the vehicle. The price of gas varies from week to week and by location. Wednesday is probably the best day of the week to buy gas. You also don’t want to fill up while the service truck is at the gas station refilling the storage tanks. When they refill the tanks there are contaminants at the bottom that get stirred up and these contaminants can come through the gas pumps and into your vehicle.
Gas mileage is calculated by the change in mileage divided by gallons
used (or miles per gallon, MPG). The next time you go to the gas
station to refuel, fill the gas tank to full and write down the mileage
that appears on your odometer. Then, after you’ve driven for a while,
return to the gas station and fill the gas tank to full. The amount of
gallons that you purchased is the amount of gas that you used from full
tank to full tank after driving for that time. That number goes in the
denominator of the equation. The number of gallons will appear on the
pump display and on your receipt. When refilling the second time,
you’ll also record the mileage on your odometer. The change in
mileage is the new mileage recording minus the previous mileage recording, and that number goes in the numerator of the equation.
When shopping for vehicles, you can look up gas mileage as one of the features. (Go to any page past the home page at www.CrawfordsAutoService.com to use the free tool on the sidebar). The reported gas mileage is a statistical average that the vehicle generally gets and the vehicle that you purchase could get better or worse gas mileage depending on the condition of the vehicle and the roads where you will be driving.
There will be a monthly fee for vehicle insurance. Insurance fees will vary by the amount of coverage that you want. Liability insurance only pays for any damages that you might cause to the other party when you get in an accident and you are at fault. It won’t pay to replace your vehicle or for your potential medical bills. You’ll also want to consider whether you want roadside service in case the vehicle breaks down or coverage for car rental fees in case you need a replacement vehicle while your vehicle is repaired. This additional coverage costs more per month.
There are many car insurance companies. Some of the more frequently advertised companies are Geico, All State, Progressive, Farmers, Esurance, and Liberty Mutual. Yet, there are many, many others. Their advertisements often tout that by simply giving them a call you could save a significant amount on your monthly insurance bill. That is true because each of their coverage plans are catered to specific types of drivers and these plans change from year to year. Hypothetically, this year Insurance Company A might have better rates for the common commuter with nothing on their driving record, while Insurance Company B might have the best rates for single mothers who are transporting three or more children on a regular basis. When they determine the monthly rate, they take many factors into consideration and many of these factors are company secrets that aren’t publicly announced to potential customers. So, the best way to find the best deal is to get a quote from each company.
Some ways to reduce your monthly insurance cost are to never get a speeding ticket, never get in an accident, get good grades if you’re a student, get married, be within a certain income bracket (not too low or too high), be female, and stay in frequent contact with the insurance company. Most of these factors are based on statistics. They’re not being sexist or having other forms of bias; they have the research and numbers to justify charging a higher monthly fee for drivers who are at a higher risk. Also, many insurance companies offer discounts if you combine your car insurance with other types of insurance that they offer, such as homeowner’s insurance. They call it to bundle discounts.
Shopping for the best car insurance can be a long process. Without a doubt, there is a large percentage of car insurance customers who are paying more because they’re too
intimidated by the research that is required for finding the best deal. You should get used to the idea that you’ll frequently need to call the insurance company and be put on hold to wait for a representative. Be adamant enough with the representatives to get the best deals and avoid getting ripped off, yet be courteous and professional enough so that the representative will still want to help you. Shopping for car insurance can start simultaneously with shopping for a vehicle. Some companies may be able to help you identify the vehicles with the lowest monthly insurance rates. Yet, some of them might not be able to provide a quote until you can tell them which vehicle you’ll be driving.
Besides the vehicle price, gas and insurance, there will be yearly fees for vehicle registration. You can find out the yearly registration fee by contacting your local Motor Vehicle Division (MVD or DMV) or your state’s department of transportation. Some states require vehicle inspections and emissions testing before your vehicle can be registered. This information is also available at the DMV.
There will also be costs for maintenance and repair. The best way to reduce these costs is by taking care of the vehicle and following the maintenance chart in the owner’s manual. If the vehicle has a service light illuminated on the dashboard or if the vehicle starts to have symptoms - don’t neglect it. Neglect will lead to further damage, which will require more expensive repairs. A simple example is brake pad replacement. Replacing the brake pads could cost about $200; but if you wait until the pads wear down completely and you start grinding metal on the rotor, then the repair could easily be
$800 or more. If the vehicle is well-maintained, it will last a lot longer -- maybe even 15 years longer or more. Overall, it costs less to maintain a vehicle than to buy new vehicles more frequently.
Maintenance costs will be a factor in determining which vehicle to purchase since some makes and models cost more to maintain than others. Often, a more expensive sales price of the vehicle also means that replacement parts and maintenance will cost more. Some car manufacturers could even have the same part for the basic and sporty models. Yet, if the same part is ordered for the sporty model then it will cost more. The parts manufacturer figures that if the customer could pay for the sportier model then they can also pay more for the part, even if it’s the exact same part with a different label.
Review of Vehicle Expenses:
Once you’re able to determine a ballpark figure for your monthly expenses of owning a vehicle, you’ll be ready to start shopping. Some people find more comfort in purchasing a vehicle from a dealership because the organization within a brick-and-mortar facility
gives them a false sense of security. The problem with purchasing from a dealership is that they add unnecessary services and fees. For example, in Arizona they might add a “desert care package” and it will be listed with all the other fees. Since most customers don’t know what the desert care package is, they don’t ask about it. It essentially means that they tinted the windows without asking if you wanted it, and they will absolutely be charging you more than it would cost to tint the windows privately. They might also list “theft protection” as one of the fees. This means that they had a technician etch a number into the windows. They might charge $200 for this service which takes the technician about 10-15 minutes to perform. Also, if you’re vehicle gets stolen, the police department won’t use this number to identify your vehicle. They’ll use the VIN (vehicle identification number).
The dealership will have many tricks for justifying an increased price on the bottom line. You can avoid some of these expenses by going through each item on the list and asking them to describe exactly what this means. Don’t accept the sales description; tell them to really explain it. Then, if you don’t want it on the bill, tell them to take it off. If you buy from a dealership you can expect to spend the entire day there. Dealerships also offer poor trade-in value for your prior vehicle.
If you decide to buy from a dealership, the best time of the year to buy is December, particularly on Christmas Eve and New Year’s Eve. In any given month, the inventory on the lot isn’t necessarily owned by the dealership. They have the vehicles on a “floor money” loan. If they don’t keep the vehicle beyond a certain time period, they don’t have to pay interest on the loan, and they make a profit from the sale without an additional expense. If you happen to pick a vehicle that is near the end of its loan period, then the dealership might be willing to sell it at a cheaper price. December is a particularly good time since people are more willing to buy during the holidays and the dealerships want to increase their sales numbers before the end of the year. This makes them more willing to negotiate, regardless of whether the loan period for the vehicle is ending.
If you buy from a private owner, there is no guarantee that they won’t tell you little white lies about the vehicle in order to get you to buy it. However, a private owner won’t be as likely to trick you into spending more for the vehicle than it’s worth. There are tools that you can use to determine the value of the vehicle, and give you a more accurate starting point for a fair price.
Before deciding which vehicle to purchase, you’ll want to write down some of the features you want or decide on the purposes that the vehicle will serve. A pickup truck might make an excellent working vehicle, but the gas mileage could make it a lousy commuter vehicle. Will it be meant for one driver or more than one driver? How many passengers will be transported on a regular basis? Do you need a lot of trunk space? Do you plan on driving it until it dies, or will you sell it once it reaches a certain age or mileage? If you know that you’ll eventually sell it, then you’ll want to pick a make and model with a good reputation for resale value. All these features and more will help determine which vehicle you should look for.
If you buy from a private owner, the shopping will begin within the comfort of your own home. Some resources to find cars for sale includewww.Craigslist.org, www.AutoTrader.com (and the Auto Trader print publication), Yahoo! Autos (autos.yahoo.com), www.Cars.com, and many free publications which are given away at local gas stations and outside public libraries.
When you find a vehicle that interests you, look up the make and model on Kelly Bluebook (www.KBB.com) to see the listed value. Sometimes a seller will list it for higher than the Kelly Bluebook price on purpose. There could be a variety of reasons for doing this, which include: hesitation to sell the vehicle, hope to sell it for more, upgrades that the owner added, or simply the expectation to negotiate.
If the vehicle says “OBO”, it means “or best offer”. This is an open invitation to negotiate. There may also be a variety of other abbreviations, especially if the ad is in print. Printed advertising fees are based on the number of characters or words, so the seller is trying to save money on the ad. If there is ever an abbreviation that you don’t understand, look for an abbreviation key in the publication or look it up online.
If the vehicle has a “restored title”, that means that at one time the vehicle had enough damage that the cost of the repair was more than the total value of the vehicle. It may have been an accident, flood, or another event to cause the damage. The repairs can include anything from engine repair to cosmetic changes to the vehicle. Generally, restored titles are less expensive, but the risk that there is something wrong is much greater.
Once you find a vehicle you’re interested in, call or email the owner for more information. Since the ad may not have all the information you need, here are some questions you might want to ask:
Go through the features listed on Kelly Blue Book and gather any information you need that is not on the ad (Is it a two-door or four-door? Does it have a CD player, etc.)
If you’re a non-smoker, was the vehicle ever driven by a smoker? A smoker wouldn’t care much either way, but a non-smoker will find it very difficult to get the smell of smoke out. Smokers who know they’ll sell their vehicle eventually should never smoke in that vehicle because it reduces the resale value.
Has it had its regular maintenance? Oil changes at 5,000 miles? Etc. -- A vehicle with 100,000 miles that has had regular maintenance is better than a vehicle with 20,000 miles and has never been maintained.
“Would it be OK if I test-drove it to my mechanic as part of the evaluation?”
If you buy from a dealership, they usually include the Carfax. If you buy from a private owner, they&nbsp;may or may not provide the Carfax since it costs extra. Auto Trader online has a place that indicates if the Carfax is available.
What was the car used for and where was it driven most of the time? Were dirt roads a part of the regular commute? Etc. -- Some of the best vehicles were only driven to the grocery store and home by an old lady who never went anywhere else and always took care of her things. Buying a used car from an organization that regularly kept them maintained for top reliable performance can also be a good source, such as an LDS Mission or a business.
Is the price negotiable?
If you’re satisfied with the phone or email interview, then you’ll schedule a time with the owner for seeing the vehicle.
After reading this book, you’ll have a much greater advantage when evaluating a potential vehicle for purchase. You’ll know to check the dashboard lights, the horn, the exterior lights, the battery, and many other parts of the vehicle because now you’re familiar with how a vehicle works. You’ll want to make sure it comes with a complete spare tire kit. Try looking down the side of the vehicle at different angles to see how the light reflects off the paint. If you detect two different coats of paint or areas where touch-up paint has been applied then ask the seller about it. If the side panels and doors look smooth from one angle but then you detect some waviness when looking from a different angle, then the vehicle may have been in a side-impact collision and its safety features could be compromised.
You’ll want to test drive the vehicle. See how it handles, accelerates,&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;and brakes. Go to a stretch of road like a freeway onramp or a long stretch between street lights where you can floor it. At some point in the inspection, you’ll ask for a Carfax report or any of the information the seller might have on previous maintenance and repairs.
One of the smartest things you can do is take the car to a trusted mechanic as part of the evaluation. Find a place where you can develop a direct working relationship with the technician and not a service writer. Crawford’s Auto Repair would be your best choice for a pre-purchase inspection if you live in the Mesa-Chandler-Gilbert area of Arizona. Some shops offer a free estimate but if they know you’re requesting the evaluation to buy a vehicle, then they might charge for the inspection since there is less of a chance of you buying their repair services. The inspection fee will be worth it because the trained eye of the mechanic and the tools they use for diagnostics will enable them to spot things that you don’t even know to look for. They’ll look at the body of the vehicle from the inside, raise it up and look at the drive train and the underside of the engine, the brakes, and they’ll attach their diagnostic device to the vehicle computer to receive any trouble codes that are stored on the vehicle’s computer. A mechanic’s inspection will tell you much more information than simply looking at the vehicle or test-driving it yourself. And a seller who is confident in the value of the vehicle will allow you to have it evaluated by a mechanic.
After a personal inspection of the vehicle and the mechanic’s inspection, if possible you’ll want to use an internet-enabled device to go through the Kelly Blue Book estimate again. Now that you have more information, you’ll be able to get a more accurate estimate from Kelly Blue Book. Also, ask the mechanic for his best estimate on what the vehicle is worth. Between Blue Book and the mechanic, keep this baseline estimate in mind and do not go over it when negotiating. First of all, are you willing to pay this baseline estimate for the vehicle? If you don’t want the vehicle enough to negotiate, then just let the owner know that after evaluating the vehicle you’re not interested. If you are interested then you can start negotiating.
Consider the asking price of the vehicle. Is it lower than your baseline estimate? If it is, then it’s your new baseline, and do not go above it. If the asking price is above your baseline estimate then still do not go above your baseline. You’ll want to make a counteroffer to be as low as it can be without being offensive. It should at least be a couple of hundred dollars lower than the Kelly Blue Book estimate. And you’ll use the information you gathered during the inspection to justify the lower offer. If it needs a repair, then you’ll mention that the price of the repair should be deducted from the asking price.
Be patient. Do not get excited to buy a vehicle. Read the seller’s body language. Hold your ground. Read a book on negotiation, or many books. There is so much to this art and usually, the better negotiator gets the deal he or she wants while the other person makes compromises. If you’re too anxious to buy the vehicle or if you’re too lazy to go through the process of calling sellers and inspecting a vehicle more than once, then you’ll probably pay more. Expect to go through this process a few times before finding a satisfying deal.
After you agree on a price, the seller will take the title to the Division of Motor Vehicles (DMV) or a private title shop and get the title notarized for selling the vehicle. You might use that time to go to the bank or a title loan store to get the money to pay for the vehicle. You can arrange for the best type of payment with the seller. If you pay for it in full from your bank account, then paying with a cashier’s check made out to the seller may be more secure than carrying cash. Then you and the seller will meet up again to trade the payment for the title and keys. After you receive the title, you’ll have to take it to the DMV or to an independent title service shop to have a new title drawn up in your name and get your license plate. Within the next 10 days, you’ll also need to call the insurance company to have the new vehicle added to your current coverage plan or purchase new insurance.
Finding the right vehicle for your needs at the right price will be very rewarding