TEN RULES FOR BUYING A CAR
HOW TO AVOID GETTING RIPPED OFF
Though I spent most of my professional life playing music or working in the coffee industry, mostly as a roaster, I also spent a few years working at a high volume Honda dealer east of Seattle and a Volkswagen & Nissan dealer just north of the Seattle area. The Hondas and Nissans were reliable products and thats why I could justify working there as I raised a family. I learned things about the process of buying and selling cars that brought me to the following conclusions. A lot of people have no idea what to expect or who to trust in the car-buying phase of their lives. Don’t shop for a car alone. Bounce ideas off of trusted family members or friends. Discuss, research and compare. If you must purchase a vehicle, these guidelines are for you. Here’s how to not be a sucker.
If you’re like most folks, you don’t want anybody telling you what to do. I’ve shared these concepts with friends who were shopping for cars and many of them pretty much ignored me. If you’ve determined that you need a car, imagine that you have a dad or an old uncle who really cares about what happens to you and wants to give you the best advice he can. That’s me. You’re welcome. Now, here are my Ten rip-off avoidance rules. Will you trust me or not? Drum-roll please…
THE PIRATE SHIP RULE: The most important rule of all. If you follow only one of these rules, make it this one: Re-train your brain so that when you look at a car dealership, you see a pirate ship. Beware of that pirate ship and never set foot upon it, or on the land around it. The pirate ship is a metaphor, but a very accurate one considering what you will encounter when you willingly entering a car dealership. I promise you that the super friendly guys at the car dealership will behave like pirates and they will plunder from you all they can, while acting like your friend with a great big smile. This concept isn’t a secret. Deep down you know it. You’ve been warned so many times, yet you still consider it. Do not go to a car dealership for anything!
THE NEW CAR RULE: Never buy a new car. The only exception to this rule is if you have way more money than you need, or at least more than enough, and can afford to waste some of your money on “profit for the manufacturer and the dealership.” If you’re not well-off or financially advantaged, let someone else buy the new cars. You can buy used cars from folks like them after they’ve had those cars for two, three, four or five years. Let them eat the depreciation so you don’t have to. New cars are a TERRIBLE INVESTMENT. New cars depreciate in value about 20% the first year, and between 15% to 25% in the next two years thereafter. If your car cost $35,000, that will translate into a 3-year depreciation-loss of as much as $17,500 to $24,000. The numbers may vary, but never in your favor.
THE SMART MONEY RULE: If you can afford to pay for a new car outright with no loan, lease a new car for three years instead. You’ll get the use of a new car and you can change to a different one every three years. It’s a pretty nice way to go if you have the extra income. You don’t need to go to a dealership to do it. You can lease a car online, but the level of research you do will determine how easily the transaction goes. Take the money you didn’t spend buying a new car and put it in a no-load mutual fund (after researching the best ones and minimizing your risk,) or put it toward real estate. Statistically speaking, the folks with higher income and higher levels of education, lease cars - they don’t buy them. To understand the reason why go back to rule number 2 and re-read it.
THE TRADE-IN RULE: Never trade in a car. Always sell it yourself. There is plenty of information on how to sell your car. Do your research and take action. Reread rule number 1. Car dealerships profit many thousands of dollars on people’s trade-ins. Warning! Beware! If you’re trading in your car, you didn’t listen to rule Number 1!
THE CREDIT UNION RULE: Stay away from major banks when financing your car. Borrow your money from a credit union, chances are the rates will be much lower. Always compare your rates online, do your due diligence, but stay away from big banks and all car dealership finance offices. See Rule Number 1.
THE 5-WAYS TO BE A SUCKER RULE: Don’t be a sucker. Never allow a car dealership to negotiate the terms of your car buying experience. They’ll use every cheap carnival trick they can come up with including these 5:
“The UA” or under-appraisal of your trade. Under-appraising, is the first step toward thousands in profit for a car dealership. They’ll convince you it’s not worth much. If you don’t want them to turn your money into their profit, NEVER go to a car dealership for anything! Not even a brochure!
The “payment distraction”…despite my warnings, you may find yourself at a car dealership. By now, they may have talked you into negotiating the monthly payment, while they’ve been distracting you from the interest rate they are marking up for great profit. That’s what car dealerships do! Why are you there?
The Set-up. Psychology 101. They’ll insinuate or cleverly hint that things are going to be priced much higher. You’re worried because it all seems way too expensive. Price, payment, interest rate, etc. Then later, after haggling, they’ll make you happy with a payment that seems better than what they originally taught you to fear. However, it will still be the payment that is most profitable for them. You’ll be happy with that payment because they “set you up” to think its a great payment. It’s not a great payment for you. It’s a great payment for them because it has a lot of profit for them, built into it. Why are you in a car dealership at all? I warned you!
The four-square method of negotiating on a piece of paper marked with four squares will look very official. But it is all part of an illusion designed to manipulate you. Trickery is afoot in this carnival-like three-card monte sideshow. Dealers will wear you down with this method and offer you a pencil or ball point pen to get you to “initial” your commitment. At that very moment they’ll increase their profit greatly and you’ll pay for it for years. If you stay away from a car dealership you’ll never have to worry about this scheme. STAY AWAY!
There’s a fool born every day. Now ask yourself, why would you want to risk being a fool? Why are you at a car dealership? I thought I told you: Always, refer to the first rule. Re-read rule number one now and never forget it.
THE RESEARCH RULE: Do a lot of research. Never “impulse buy” a vehicle because you like the color, the way it looks, or because you think you’ll look cool driving it. Maybe you’re bedazzled by the genuine woodgrain dashboard? Or worse yet, because you’re tired of looking for a car, or tired of worrying about your car issues, you just give in to the urge and go down to your local dealer. You’re not tired. You’re lazy! Too lazy to plan ahead and consider the consequences of a high interest, long term loan, for a product that is going down in value every day! Spend a lot of time researching the reliability and fuel efficiency of whatever USED vehicle you are considering. Check out Consumer Reports, paying for access to this information will be money well spent. Low cost of ownership should be at the top of your list of requirements for your used car purchase. Gas mileage, plus maintenance intervals and other costs of ownership, are all things you should be considering. Take your time! Cross reference between these websites to check car values, availability, and reliability:
https://www.consumerreports.org/cars/
https://www.autotrader.com
https://www.kbb.com
https://www.edmunds.com
https://www.craigslist.com
THE BRAND RULE: Buy these brands, USED, with confidence (But never from a dealer): Toyota Corolla, Honda Civic, Toyota Camry, Honda Accord. These are four cars you can depend on if you’re looking for a great used car value. They are all known for low cost of ownership and reliability. These are all excellent cars to buy. The Toyotas will have a little less road noise, The Honda’s will feel a little more agile and responsive, but all of the differences will be very slight. Corollas and Civics, have smaller and more gas-efficient engines. Camrys and Accords have more power but burn a little more gas. A low-miles, “senior citizen” owned, 2nd or 3rd generation Toyota Prius Hybrid will save you a lot of money at the gas pump. Toyota and Honda minivans are reliably good if that’s what you need. Looking for a pickup? Nissan and Toyota will be among the most reliable. There are other reliable brands and models of cars and trucks but you must rely on third-party research and consumer ratings to choose the right ones! Re-read rule number 7.
THE PRIVATE PARTY RULE: Buy your used vehicle from a private party but have the car inspected by a reliable, well known, local (non-dealership) mechanic. Again, refer to rule number 1!
Make sure to put the car’s vin (vehicle identification number) into the data base known as:
https://www.carfax.com/vehicle-history-reports/
Spend the money on this report, or ask the seller to provide it. This way you’ll know if the car has been in any bad wrecks, and sometimes you’ll also see maintenance records as well.
THE CONSUMERISM RULE: If you’re convinced you need a car and there’s no other path, this rule may be invisible to your mind, no matter how many times you read it. Maybe you want a shiny new car with all of its new car smells and modern technology. Unless you are financially well-off, it is quite possible that you really don’t need one. In fact, if you think strategically, you could move to a place with light-rail transit and fill in the transportation gaps with an electric bicycle instead of a car. If you need a car occasionally for longer trips, you can rent one. If you’re an average earthling, your human ego and your quest to reach for the status-quo could drive you to over-extend yourself, borrowing tens of thousands of dollars just to be part of the car-owning system of this modern consumerist society. Have you given any thoughts to the additional monthly expense of full-coverage insurance for whatever car you are considering? If you get sucked in to buying a new car, or are merely financing a used car, you’ll have a large mandatory insurance payment to go along with your large car-loan and interest payment, right up until it’s paid off. The whole thing is a mirage created by advertising campaigns and the never-ending human urge to conform and consume. For many folks it’s completely unnecessary. Fight the urge with all of your might. If you need a car, save up for it and pay cash or get a smaller loan for a used Civic or Corolla. You’ll be smarter than 99% of the car buying public. When in doubt: Always refer to rip-off avoidance rule number one and NEVER GO TO A CAR DEALERSHIP FOR ANYTHING.
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