How not to buy a car
About six months ago, my wife’s car was rear-ended by a delivery truck while she was on her way to work. Fortunately, she was not seriously injured but the car was a total loss. If you’ve ever been through this process, you know how much of a pain it is. The path to getting the word from the insurer that your car is totaled is not a straightforward or quick one. Then once you get the word, the real fun begins. You get to haggle with the insurer to get the most money possible from them. That’s a whole other story.
This story is about how not to buy a car. After we were notified of the amount we were getting reimbursed for the totaled car, we looked at our budget and savings and came up with a number we felt comfortable spending on a replacement vehicle. I think it was $9,000. If you’ve tried to replace a perfectly good family car with $9,000 recently, you know what we were up against. It’s next to impossible.
Obviously, we were looking for used. So I begin the online research and narrow our search to the usual suspects - Honda Accord or Civic, Toyota Camry, and Nissan Altima. There were others on the initial list but they were scratched for one reason or another. We set a babysitter up for Saturday and start visiting listings. Some of the highlights:
- Honda Accord in our price range. After searching the lot with a salesman for a few minutes, I find the car. And its wheels are missing. All of them. And the car is laying on its belly. We leave.
- Nissan Altima in our price range. Searching the Carfax report we find three owners in the last six months. We leave.
- Toyota Camry in our price range. We drive it. It’s nice. We ask how much. Salesman: “Oh, I can’t let you buy this one.” Me: “Why not?” Salesman: “It’s not ready yet.” Me: “Wow” We leave.
We end up looking at a Volvo dealership that has Toyotas on the lot. It’s now 8 hours into the day and we’re tired and starting to get grumpy. My wife’s eye turns to Volvo station wagons (her dream car). I have done know research on these. I have no clue what a good price is. Before I know it, we’re driving one. Twenty minutes later, she’s on the phone with her mom who’s checking prices and ratings on Consumer Reports. Now I know Volvo hasn’t had good reliability in recent years and I’m skeptical, but this is her car.
After the obligatory back and forth over price (we end up offering more than our ‘target amount’), we come to agreement. While we do paperwork, the car is getting ‘prepped.’ Did I mention the ‘Check Engine’ light was on during the test drive? So in our case ‘prepped’ meant ‘resetting light so suckers think there’s no problem.’ Thus accomplished, my begins driving home. Can you guess what happens next? Wait for it… The ‘Check Engine’ light comes on again.
So the next day I take the car to our local mechanic to have it generally inspected and so they can tell me about the light. My wife calls them later and then calls me. Wife: “What’s the most expensive thing you can have to replace on a car besides the engine?” Me: “The transmission.” Wife: “Try again. Give up? The car’s catalytic converter is shot and needs to be replaced. About $2,000.” Me: “Holy crap.”
The next day, the calls to the dealership begin. To their great credit, they were sympathetic and after some back and forth, agreed to let us find another car on their lot. My wife takes the next day off and, with my admonishment to buy a Camry or Accord, goes back to the dealer. Can you guess what happens next? My phone rings. Wife: “I found a great car.” Me: “Oh yeah? What is it, the Camry I spotted?” Wife (voice full of excitement): “No. It’s a different Volvo station wagon only newer!” Me: “Oh, no.” Wife: “And it’s not that much more.” Me: “How much is ‘not that much more?’” Wife: (unintelligible)
So that was six months ago and we paid way more than we wanted to for a car we didn’t start out to buy. On the plus side, it’s been a good car so far and I learned how not to buy a car.
April 24th, 2007 at 12:12 pm
We just bought a Honda Odyssey - buying a car is a necessary purchase, but such a dumb one. Of course we got the leather and all that baloney. We love it, but of any large purchase, it definitely ranks at the top of my stupid list.
But I wanted to haul our two kids around with ease.
April 26th, 2007 at 8:36 am
April 26th, 2007 at 9:03 am
April 26th, 2007 at 7:47 pm
After knowing people who work in dealerships, you’re better off buying a used car from somewhere like Carmax. They do more, inspection-wise. I had a friend take her sports car to Carmax for an appraisal. She bought the used car from a high end dealership. It was still under warranty, and we eventually found out why. The previous owner bent the entire frame of the car and tried to hide it by having it bent back. Carfax didn’t disclose this information. The guy at Carmax let her know that she had a Lemon on her hands, and they wouldn’t even buy it from her, for fear of endangering someone else’s life. How sad is that.
April 27th, 2007 at 8:26 am
We ruled out Carmax early on because, from what I could see, their prices were generally about $1,000 over everyone else’s. I see lots of their nameplates on cars, though, so I guess many people have had good experiences with them. That sucks about the carfax report being wrong, though.
April 30th, 2007 at 5:02 am
Carmax sucks, They’ll offer you 75% of the owner-to-owner value of your current car and then resell it for 110% of that. Yeah, they supposedly won’t sell you a bent up wreck, but that’s just a ploy to make you feel like they’re looking out for you. How the EFF do you think they pay for those pretty showrooms, nice garages, primo locations, and kids activity rooms? (Hint…if you’re dumb enough to use Carmax, you probably can’t figure out the answer to this question).
NOTE…You should probably be skeptical anytime someone is demonstrating a successful business model in buying goods back from one consumer and reselling them to another consumer.
I’m all about saving money and we do it well at my house. Guess what? The last car I bought was a NEW car!!! That’s right. Personal Finance Heresy! From CarsDirect.com actually, but that’s not my point. My point is that I could buy a BRAND NEW Honda Odyssey EX-L for $27,000. Well, that car is 3 years old now, my wife has bonked it once, we’ve driven across country in it, and finally the warranty is running out (right at 3 yrs & 36k). But we have not had a single problem with this car. Yes, I could’ve bought a used one that someone else took the depreciation on, but I would’ve been buying a year-old car with 20,000 miles on it and that would’ve probably only saved me $4-5k.
So here’s my new philosophy…it’s not whether you buy new or used that saves you money because you get what you pay for. Car buying and selling is a losing, but necessary, transaction. So my idea is simple…the less car transactions you make in your life, the less money you will lose on them.
if you’re personal finance saavy, you’re probably already considering a reasonable car. You probably know how to do your research, and you’re probably going to pick a model that has high resale value because of its reliability. While that might sound good, what it really means is that you’re going to be paying a higher percentage of the new price to get that car. For some models, they can sell for 70%+ of their new price even after the expiration of the warranty. Are there deals out there? Sure. Are there deals that appear too good to be true and end up jamming you? Also, yes.
The one thing you probably don’t know when you buy a used car is how well they took care of it. But even if they hand you a folder documenting every on-schedule preventative maintenance action, the one thing you almost certainly won’t know is how the previous owner drove the car. Do they dodge potholes? Do they speed away from every light only to stomp on the brake pedal at the light 100 yds. ahead. See where I’m going here? Mileage isn’t what kills cars. If it was, all the non-wrecked ones would crap out at the same time. Hard use is what kills cars. High RPM event counts are what lead to engine problems. Poor shifting practice ruins clutches. Hauling crap wears out suspensions. I could go on…but I’ll spare you.
You only get so many stress events out of a car. Those are generally averaged out by mileage. But if the previous owner has done lots of them, you don’t have as many left as you think you’re paying for. If you buy a new car and don’t do very many of them, you can make the car last longer than the average, meaning you might get 15 years out of a car after paying 100% of the price instead of only getting 8 years out of the car (11 total) after paying 70% of the original price.
If you are smart and deliberate in your selection, and if you keep the car for a long time, you can buy a new car without any guilt and enjoy the heck out of babying it.
April 30th, 2007 at 10:22 am
I don’t know why some people are so vehemently against buying new cars. I have no problem with it at all. We went used this time because we didn’t have a lot of money I wanted to put into a car right now, didn’t want to borrow and have a payment, and like a safe car (it’s amazing how much more important that is to me now with a wife and child I love - when it was just me, who cared?).
I love the new philosophy! “the less car transactions you make in your life, the less money you will lose on them.”
I’d like to hear about the buying experience with carsdirect.com, by the way.
May 1st, 2007 at 5:23 am
I don’t work for them…just to be clear.
I’d never bought a new car before, was reluctant to get one (both of ours worked fine), but I was under extreme nagging pressure to buy the Odyssey (which had morphed from a Yukon or a Trailblazer). So I did exhaustive research. By the time I got to carsdirect.com, I felt like I was fully armed with all the potential pitches a salesman could throw at me. When they (via e-mail) answered all my skepticism and doubts with answers that were sometimes the painful truth (like you can’t cut some of those fees), I was cool and good to go. So I picked everything I wanted in/on the car (much easier with Honda’s because they make about 3 models) and they just told me which dealership to pick it up at (not the closest to my house, but 30 minutes away). It took a little over an hour to get out of there, but I didn’t have to deal with any “offers” or anything.
Frankly, I don’t mind salesmen and I don’t really enjoy the whole game with them either. But while I can make time to look on the internet, talk to people, and maybe take one test drive, I don’t have time to drive all over the place and wheel and deal. With CarsDirect.com, I got the car I asked for, at what I knew was a good price, without hassle.
Oh yeah, and we didn’t need a minivan. It was nice to have the whole back end for the cross country, and the automatic sliding side doors are awesome, but that third row seat gets almost no use and we’re probably going with a sedan in the next move. I am in a unique situation, however, that will probably cause me to make an premature car transaction soon. I got 2 cars transported to a remote location at no cost to myself and cars sell for a huge premium in this location. So the van I bought in 2004 for $27k can probably sell in the next few years for hopefully $20k. The van as transportation, particularly with kids getting older and probably having more commuting in my next location, is worth less to me than a vehicle I could buy with just the amount I sell it for.
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June 19th, 2007 at 12:18 pm
A catalytic converter for a late model Volvo is about $300 for a bolt in (meaning about 1 hour labor) or a $50 for a generic part that can be welded in (in about an hour). That repair estimate needs a second opinion.
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