What to Know When Buying a Car (And Where I Went Wrong -- Twice)
I don’t drive but with my boyfriend Chris, we’ve bought two cars in the past few years. I can’t say we were particularly smart either time. The first time, we had about $1,000 to spend. We trolled Craigslist and made an appointment to go see someone’s car they had listed. When we got to the corner where the guy said to meet him, he didn’t show. We called and called, getting no answer. We trudged down two miles of road, checking in at used car dealerships and mechanics’ shops, before hopping on a bus to get home. Almost home, we spotted a little used car lot and decided to try our luck.
Sure enough, they had a green Subaru Impreza, a late 1990s model, for $1,000. Tags, title and insurance would cost us almost $500 more. We so desperately wanted a car, we asked how high when they told us to jump.
We got our car in July and had it until my boyfriend’s juvenile delinquent of a brother took it out for a joy ride. He didn’t have a license and the only way to keep the car from getting impounded was to press charges against Chris’ brother. Chris refused, and our car was impounded.
No matter, we’d just renew the insurance we’d let lapse -- yes, we were bad -- and get the car out of impound. Ha!
No such luck. We quickly discovered that the dealership from which we’d bought the car hadn’t ever actually owned the title. We never got a pink slip. We had no proof of ownership unless we could get something from the original tag & title place we’d done the deal through.
We drove in a rented UHAUL truck to the place where we’d bought our Subie. The tag & title place was gone. Her security gates were down and someone told us they’d shut down months ago. No doubt she’d done other shady deals such as the one we stupidly bought into.
Our Subaru was later sold at a police auction and we never saw her again.
The second car we bought was a major upgrade: an early 2000s Lincoln Continental with a champagne color paint job and pale caramel leather upholstery. When I tell you she was beautiful, I mean BEEEEEAUTIFUL. It was tax season and with Chris’ refund, we put a major downpayment on this luxurious vehicle. We put down a total of $3,000 and still had to make monthly payments for both the car and insurance totalling roughly $500.
We paid out the nose for our Lincoln. We bought our Lincoln from a used car dealership owned by a man who would, within a couple of months of our purchase, become Chris’ new boss. As used car dealerships want to do, the dealership we bought from valued the car at probably triple what they should have. And we watched as Chris’ boss later sold the same car to two or three other customers. That Lincoln Continental was a cash cow.
All of this is to say, I’ve learned a bit about car buying as both a purchaser and from listening to Chris talk about the work he did as a used car salesman.
- Know that you will always need at least $1,000 for the initial down-payment, taxes, title and license. You’ll likely see ads for places claiming you can drive away for $500 down. Frankly, this is a lie to get you through the door. But when you show up with literally $500 to your name, watch how quickly the salesman laughs in your face.
- Get educated or bring someone who can turn the key in the ignition and immediately know if something is wrong. Before Chris started working as a salesman, he knew very little about cars. I also knew diddly squat. We were two ignoramuses, and the people who sold us our two cars knew it.
- Don’t buy a car without a warranty. Just don’t, OK? It’s about covering your ass, m’dear.
- If you have a mechanic you trust, you can insist they look at it. Do not allow the salesman to persuade you to take it to the mechanic around the corner. That mechanic is likely on the payroll and will say anything he thinks you want to hear.
- Know that if a sale includes a list of fancy extras, they have jacked up the price so they can add those things. It’s not actually a steal.
- You should absolutely play hardball. Know what price you want to pay -- of course, it helps to base this realistically on markers such as the Kelly Blue Book value of a specific car -- and don’t be afraid to walk away. The salesman will likely tell you everything and anything about the car before he’ll tell you his price. He wants to get you hooked so that you’ll just nod along when he tells you how much it’s going to cost.
- Bank Deal (or “Bank Financing”): When financing a car, particularly at a used car dealership, you’ll often be told that they’re going to try to get you a bank deal. Bank deals build your credit while Buy Here Pay Here deals do not.
- Buy Here Pay Here: The owner of the dealership (or his investors) finance your car. They hold the title until you have paid off the car in full. These deals do not build your personal credit score.
- Certified Pre-Owned Cars: These are vehicles checked and approved for resale by manufacturer programs.
- Finance Lease (A.K.A. “Car Lease”): Rather than straight ownership or purchase of a vehicle, you can lease a car. This means it is owned by a financier who charges you a monthly fee to essentially rent the car. Some car buyers like this because in a closed-end lease, they can walk away without obligation to buy the car or to compensate the company that owns the car for any depreciation not calculated into the original leasing agreement.
- MSRP: Short for “Manufacturer’s Suggested Retail Price.” This is the price advertised in the window of cars on a lot.
- Pre-Owned Car: Same as a “used” car. The dealership just has -- or thinks you’ll have -- a complex about the word “used.”
- Residual Value: The projected market value of a vehicle at the end of the lease, used to determine the cost of the lease at the time of negotiation.
- Trade-In: You can often make a deal to turn over your current vehicle to the dealership you’re purchasing from in exchange for a portion of the new (or used) car’s value.