That's easy. In the last month I needed to buy a car. My van is pretty unreliable. My 2 Miata's only hold two people and it's been a real pain taking two cars when 3 or 4 of us have to go somewhere at the same time.
And I can't find a used car I want at a price I'm willing to pay. The math just isn't working out. At least not in my favor.
I found a 2008 Toyota 4Runner. 60k Miles for $19,000
6 years old. Now mind you this car was around $29,000 when new. The new model can be had for $34,000 with tax. $0.25 per mile is really cheap for those first 60k miles. He may have put on a set of front brakes and possibly a set of tires but that's about it except oil changes.
The next 60k miles and 6 years will probably see this car go to 8 or $9,000. That's a pretty linear depreciation. That's actually the sign of car that holds it's value. This is the kind of car you can buy new or used and you won't go wrong.
Did I mention that my Mother has a 2000 4Runner with 174k miles. New $20,000. Less than $200 a year to maintain. That includes tires, brakes, oil changes and batteries. That's less than $0.12 a mile, that's 12 cents, even if she junked it today. But, it still runs great. The key to that might just be driving your car like an old lady (she was 70 when she bought it). Also doing routine maintenance. Keeping it in a garage it's whole life.
Friday, August 8, 2014
So, should you buy used?
Only if you can find the used car you want. Even a used car for most people is worth less the minute you drive off the lot. Just because you like that car doesn't mean someone else does.
If you buy from a dealer they had to make some money on it. That could be $100 or even a few Thousand. If you bought it from a Private Party and it's a car everybody wants "today" it might not be a car anybody wants 6 months from now. When new model cars come out, dealers usually discount last years model so almost everyone has a car that is worth less. The new pricing books usually come out every 3 months at least. There are exceptions to the rules but they are very few.
Don't buy a White car. Very few people want white cars. The only people who should buy white cars are people who plan on putting business graphics and phone numbers on them. Even where I live in Arizona a white car doesn't stay any cooler on the inside. Silver is OK because it hides dust but it's just one step above white.
Black. They look pretty but it takes a lot of work to keep them that way. The darker the car the more it takes to maintain the paint. Just go look at www.chemicalguys.com and see what they have to do to make an older black car look nice.
www.bankrate.com has some really good advice on how to test drive and buy a used car.
I have bought many used cars in my life. I have had some very mixed outcomes.
Here are a few recent ones.
Dodge Grand Caravan.
Don't buy one. I did. Never again. Although it has lots of room, disappearing and fold flat seats they suck.
Dodge Grand Caravan. 3 years old with 60k miles. Pretty bare bones. What do you want for $16000. Anyway it served us pretty well for the 6 months we had it but it again just wasn't a car we really liked. It fit all the dogs, the kids, camping gear and it held a lot of dog food. I sell dog food. When we sold this one 6 months and 6k miles later. We took a big bath. Almost $7000. That hurt. Nobody wants a bear bones minivan. Especially one where the rental car companies dump thousands of higher end models on the market every year. If you really want one buy a loaded Chrysler Town and Country. It's the same car but a much higher trim grade. It will also cost about 30% more.
The we have our Ford Flex. We got a decent deal on it and drove it for 6 months and about 6k miles. We didn't really like the Flex. It was to big. We called it The Boat. When we sold it we only lost $1000 so that wasn't to bad for putting on 6K miles. It wasn't white. It had the options people wanted and it was actually a pretty nice car with lots of room. Almost as much room as a Honda Pilot. It just sits much lower.
I also have a 1999 Mazda Miata. Bought it with 150k plus miles on it for $3000. I might have even paid to much. But for 3k it runs great, AC works well and if it gets damaged or needs a big repair I can just junk it. Plates are cheap and I don't need collision insurance. Also I don't really worry when I park it if someone is going to scratch, dent or ding it. That felling is almost as nice a driving in your brand new $40,000 baby. The one you park far away from everybody else. The one where you would just cry if it gets a bruise.
If you are only going to keep a car for 3 years or less, buy used. Buy a car that is already 3 years old. Let the other guy take the really big depreciation hit. Close to 50% on most cars.
If you take your time and look around for exactly what you want you can get a pretty good deal. You might like it so much you keep it longer than 2-3 years. If you don't it wont cost you that much either. Most 3 year old cars still have around 30-40k miles where the maintenance is still pretty cheap.
Stay away from Salvage or Rebuilt cars unless they are really cheap and you plan ok keeping it a very long time. That's like Herpes. So is a Carfax with Frame Damage. take at least 25% of the value of the vehicle.
If you buy from a dealer they had to make some money on it. That could be $100 or even a few Thousand. If you bought it from a Private Party and it's a car everybody wants "today" it might not be a car anybody wants 6 months from now. When new model cars come out, dealers usually discount last years model so almost everyone has a car that is worth less. The new pricing books usually come out every 3 months at least. There are exceptions to the rules but they are very few.
Don't buy a White car. Very few people want white cars. The only people who should buy white cars are people who plan on putting business graphics and phone numbers on them. Even where I live in Arizona a white car doesn't stay any cooler on the inside. Silver is OK because it hides dust but it's just one step above white.
Black. They look pretty but it takes a lot of work to keep them that way. The darker the car the more it takes to maintain the paint. Just go look at www.chemicalguys.com and see what they have to do to make an older black car look nice.
www.bankrate.com has some really good advice on how to test drive and buy a used car.
I have bought many used cars in my life. I have had some very mixed outcomes.
Here are a few recent ones.
Dodge Grand Caravan.
Don't buy one. I did. Never again. Although it has lots of room, disappearing and fold flat seats they suck.
Dodge Grand Caravan. 3 years old with 60k miles. Pretty bare bones. What do you want for $16000. Anyway it served us pretty well for the 6 months we had it but it again just wasn't a car we really liked. It fit all the dogs, the kids, camping gear and it held a lot of dog food. I sell dog food. When we sold this one 6 months and 6k miles later. We took a big bath. Almost $7000. That hurt. Nobody wants a bear bones minivan. Especially one where the rental car companies dump thousands of higher end models on the market every year. If you really want one buy a loaded Chrysler Town and Country. It's the same car but a much higher trim grade. It will also cost about 30% more.
The we have our Ford Flex. We got a decent deal on it and drove it for 6 months and about 6k miles. We didn't really like the Flex. It was to big. We called it The Boat. When we sold it we only lost $1000 so that wasn't to bad for putting on 6K miles. It wasn't white. It had the options people wanted and it was actually a pretty nice car with lots of room. Almost as much room as a Honda Pilot. It just sits much lower.
I also have a 1999 Mazda Miata. Bought it with 150k plus miles on it for $3000. I might have even paid to much. But for 3k it runs great, AC works well and if it gets damaged or needs a big repair I can just junk it. Plates are cheap and I don't need collision insurance. Also I don't really worry when I park it if someone is going to scratch, dent or ding it. That felling is almost as nice a driving in your brand new $40,000 baby. The one you park far away from everybody else. The one where you would just cry if it gets a bruise.
If you are only going to keep a car for 3 years or less, buy used. Buy a car that is already 3 years old. Let the other guy take the really big depreciation hit. Close to 50% on most cars.
If you take your time and look around for exactly what you want you can get a pretty good deal. You might like it so much you keep it longer than 2-3 years. If you don't it wont cost you that much either. Most 3 year old cars still have around 30-40k miles where the maintenance is still pretty cheap.
Stay away from Salvage or Rebuilt cars unless they are really cheap and you plan ok keeping it a very long time. That's like Herpes. So is a Carfax with Frame Damage. take at least 25% of the value of the vehicle.
Thursday, July 31, 2014
Before You Buy a Car.
| Do Your Homework! |
Don't ever answer the question "How much a month can you afford" when you are at a car dealer. You should have used a loan calculator up front and now how much the bottom line out the door price needs to be to stay within your budget. Then look for the car that fits the Dollar amount.
Never finance a new car for more than 60 months or a used car for more than 36. You should also have at least 10% down or a trade with that much value.
You have a trade, maybe you should just keep it until you can put at least 20% down or maybe even pay cash because you didn't have car payments for 4 years and saved the difference.
Never buy more car than you can afford. But never buy less car to save money that you can afford to spend. What do I mean by that. If you want leather seats and you can afford leather seats, don’t buy the car without them. You will only be unhappy sooner and start thinking about wanting another car sooner. You want Bluetooth and you can afford it. Buy it. Don't take the car without it. If you follow my advice you are going to be driving this new car for at least 6-8 years.
Can you pay cash for the car?
Even if you do have the cash pretend you are going to finance it. Then you won’t blow your life savings all in one day. You might want to buy a house someday. You say you already own a house. Buy a rental property. That's how you accumulate wealth. Not buying cars. Buying cars for most people is like drinking beer. It just takes months instead of minutes for the cash to go down the toilet.
Experts say that your debt payments should not exceed 35% of your monthly income. That includes anything you have to make monthly payments on. Rent, Mortgage, Credit Cards. If you have a regular payment to make very month add all that up. for example.
You make 50K a year. 35% of that is $17.5k/12 = $1,458 dollars a month. So if your rent/mortgage is $700 a month, you have other debt payments of $300 a month that leaves you with $458 a month for a car payment.
On a 36 month loan that will buy you about $14,000 of car. You can use many of the Car Loan Calculators on the web to figure this out. That's probably a used Honda Civic or a new Honda Fit.
60 Months and that will get you around a $25,000 car. Congrats, you can now afford a New Honda Civic.
Shop the web. Edmunds.com KBB.com NADAGuides.com Cars.com ConsumerReports.com Craigslist.com Google Reviews, prices, video reviews. Know more about that car than the person selling it to you.
You have now picked your car, your options and you know exactly how much you can afford to pay.
Do you have financing secured? Well you should, unless you are paying cash. You can always have the dealer try to beat the deal you have but never count on them to do better if they have no competition. Credit Unions are usually the best. Then maybe your local bank and even CapitalOne.com The key is to be ready before you say yes.
Now, if you are buying used do you buy private party or dealer?
Most private parties think their car is always the "excellent" condition car. Odds are good it isn't. Unless you are really good at buying used cars I usually tell friends to steer clear of private party sales. The pitfalls are numerous. There are also lots of curbside dealers out there. They just sell cars from the auctions and as a wholesale dealer I can tell you that lots of cars at auctions now days are some pretty bad deals. Most dealers keep the good cars for themselves.
Also most people trading up for a new car save sales tax when they trade in their cars. That's why they aren't much cheaper than at the dealer. And that dealer price. It's always negotiable. The people selling on the street. They just look at what the dealer is asking and think the tax is your savings. Just watch Pawnstars sometime. You usually have to see 7-10 cars or be the 7th or eighth person to look at their car to get any deals from a private party. If you have time to waste or like meeting people who love their cars more than they want to sell them then have at it.
5-10 years ago I would never buy used from a dealer. How things have changed with the internet. Dealers have to charge less and private sales cost more.
I never would have thought this in the past but lately I would stick to the Dealer Certified Used Cars. Many of those cost the dealer and extra 1k-2k dollars to do that but they actually add value to a car. Now days getting two keys and a set of matched tires can be worth $500 or more. Add that to many of the other things a CPO car is usually worth it. Especially cars like BMW and Mercedes.
By the way, unless you have a boat load of extra cash or really want to have your car delivered in Germany never ever buy a new Luxury Car.
| They're Great! |
I was looking at a LimeRock Edition BMW M3 the other day at a BMW Dealer. Only 7k miles on it. New $81,000 not even 2 years ago. Sticker on the window today 76k. Special Internet Price. 67k. Real price I wasn't that keen on spending 60K to find out. I have a hard enough time leaving my 2011 Miata in a parking lot let alone a 60k dollar plus Orange billboard that screams take me or hit me.
| Happy Face! |
Should you buy a new car, a used car or keep fixing the old one?
There is no one right answer. If you are independently wealthy and can spend as much as you want. Buy whatever you want, whenever you want, as much as you want. And by all means, trade that car in every few weeks or years so the rest of us can buy your car and not have to buy a new car or really old used one.
The truth though is that less than 6% of car buyers keep their cars for less than 5 years now. So much for that new car smell every few years.
And just one other fact. It's not the wealthy people who buy new cars all the time. That's the fastest way to lose money, not keep it.
Here's what AutoMD.com, a site that rates car-repair services, found in its self-serving poll:
Drivers Keep Vehicles for Over 10 Years
Over 10 years - 78%
8 - 10 years - 15%
6 – 7 years - 4%
3 – 5 years - 3%
Over 10 years - 78%
8 - 10 years - 15%
6 – 7 years - 4%
3 – 5 years - 3%
So for the majority of us, the 97% who can’t afford to keep a car less than 8 years, the real answer is do the math. Then use your head, not your heart.
Math is unemotional. Numbers look like this (1,2,3,4,5) You should never buy a car based only on this :) or one day real soon you will look like this :(.
How long do you usually keep a car?
The less time you keep a car the more likely you should only buy used cars. Cars depreciate on average 50% in the first 3 years. By Year 5 they have lost another 12% on average . Even the cars companies that say they hold their resale value don’t do more than a few percent better.
So lets take a $20,000 car.
After 3 years it can be bought for about $10,000 where the average car has 45k miles on the odometer.
At the end of year 5 you would have 75k Miles on it and could sell it for about $7,600.
The original owner paid $0.45 a mile and the second owner paid $0.08 a mile. The second owner probably had to buy a set of tires and change the transmission fluid and maybe even a battery but they still got one heck of a deal. And of course this is depreciation alone. The original owner paid more in sales tax, insurance and if you live in a State like Arizona you paid a lot more each year for license plates as well.
The $20,000 dollar car had $1,600 in taxes, $500 in license fees and probably an extra $200 a year for insurance. That’s an extra $2,700 dollars for the 3 years you owned the car. If you buy a $40,000 car just double the numbers.
Now lets see how much in depreciation alone it costs to keep a car 8 years. $20,000 car. 8 years @ 15k miles a year = 120k miles.
If it’s a basic Honda Civic you could probably sell it for $7,000 but lets go on the safe side. If you kept that car in good shape I doubt that you couldn’t get at least $4,000 for it on a bad day. You’ve kept up on all the maintenance and haven’t beat it to death. $16,000/120,000 = .14 cents a mile it cost you to own that car.
A car that you picked out, know the history on since day one and has served you faithfully and could even be yours if you want for the next 4 or more years.
Until now we have just covered buying new or used. How about fixing the old car?
You will hit a point where it cost’s more to fix your old car than it’s worth. That might not be the point where you stop fixing it though. Many people will tell you that when you have a repair that is costlier than what your car is worth that you should unload that car.
I disagree. I have a 2002 Chevy Astro Van with 275,000 miles on it. The value is now between $400 on the days (very few) it’s not running and $3500 on the days it is. To find a suitable replacement is almost $10,000 and most of those have 80k miles on them or more. For that much money I can probably keep my Astro running for 10 more years. I do a lot of the work myself and it’s not my primary car. The only problem is my wife wont take it long distances anymore. O.K., neither will I. In the last 3 years it has broken down twice. That’s why we have AAA Plus. 100 Mile tow radius to wherever you want your car taken. That would usually be my garage.
So have you decided what you are going to do? You might want to read the next couple posts and see what I have done. In my years have I have bought both new and used cars. I even keep fixing one with over 250k miles.
Wednesday, July 30, 2014
Sirius XM Radio. Is it worth it? Maybe.
I have been a Sirius XM subscriber almost since the very beginning.
Before Pandora, Spotify or Slacker it was about the only thing around where you could get commercial free music, especially if you were out in the middle of nowhere.
We also have iPods and other devices where you can store 1000's of songs on something the size of a pack of cigarettes. At least for all of us over 40 who actually bought records or CD's. Now days you don't have to buy 10 songs for each one song you like.
Sirius has been adding subscribers. Mostly because almost all new cars that come with it for free for some period of time.
So is it worth renewing once the free trial or your last subscription is up? By the way, you can cancel at anytime and get the balance of your subscription fee back.
Do you need Oprah or Howard Stern? Do you live somewhere you can't get cellphone service or internet in your home or car? Are you an over the road trucker? Then maybe, just maybe you need satellite radio. Maybe you just want it.
Well if you do then here is something you should know.
As I said before. I have been a subscriber for years. So many years in fact that it turns out I have a package that they no longer offer. Now usually that means you were grandfathered in on some great deal that they no longer offer and you can't get it that cheap ever again. Here's where you should start laughing.
Only in the world of subscription services are you grandfathered in to a bad deal, and they never offer you the better deal unless you speak up. That's right, they just let you go along paying more, usually much more than they charge new customers. That alone should be enough to make you want to say goodbye forever. But does that make us walk out the door and never look back. Of course not. Before they let you go they will make amends. Why? Because some of your money is better than none of your money.
Now how did I know to look into the new deals, after all, they just charge your credit card at renewal time. Well, if you are an annual subscriber they send you a notice once a year that outlines what you are paying and how much they are going to whack your credit card for.
AUTOMATIC SUBSCRIPTION RENEWAL NOTICE
They are warning me in big letters I'm about to get screwed. Then they go on to thank me for being such a loyal listener. Not customer but listener. That sounds so much better than customer.
All told for One car and one internet log on that I can either listen on my computer or iPhone, the measly sum of, $273.50 per year. Holly Cow Bat Man.
More than $20 a month. You can get commercial free Pandora and Spotify for that and almost add Netflix as well. I like Stern but not that much. Once he goes Sirius can kiss half their "Loyal Listeners" goodbye.
So anyway, I call the number on the letter. The number that you can usually find on a letter that most people probably don't look at. Try to cancel on their website. You can't. You're lucky if you can even find the number anywhere on there. It's there but it's hidden. I'm giving it to you here so you can call today and cancel or at least get a better deal. 1-888-245-7496
So here's how my conversation with the nice woman from Sirius goes, and she was very nice.
Me: I just got this letter from your company and I would like to cancel.
Her: We see you have been a loyal listener since xxxx. I also see you have a plan we no longer offer. I can give you our All Access Plan. It includes everything you have now for $220 a year. (they add taxes and fees to those rates you see on the website).
Me: Sorry, that's way to much for as little as I listen.
Her: Hold on. ......... We do have a special offer that you can get one year of All Access for $129 a year.
Me: No, that's still over $10 a month for something I might listen to a few hours a month.
Her: Well, if that still to much we do have a 6 month offer for $53
Me: That sounds reasonable. So that would be $106 for the year?
Her: No. That offer changes to $44 for every three months after the 6 months is up. We will automatically charge your credit card unless you call us to cancel.
Me: Will you send me a reminder letter?
Her: No, you will have to put it on your calendar if you want to cancel.
Me:That's too much effort. How about a one year deal for a better price?
Her: I do have $120 available and on that deal we will send you a letter.
Me: You know what. I'm sorry I wasted our time but I'm just not willing to pay $10 a month for your service.
Her: Hold on one last time and let me see what I can do. ........ 1 minute later. I have one last offer I can make. I can offer you one year off All Access for $80 and we will send out a reminder at the end of the year.
Me: OK
There is one other offer they will make you a few months after you cancel as well. They send you a letter where they offer your 6 months for $25. It does not include internet access though. At least with I.A. we can have it in one car and use our iPhone in the other car or anywhere else we have internet. You are not just limited to listening in your car. Actually the car is the only place I listen.
So the real question is did I save almost $200 or did I frivolously spend $80 that I really didn't need to ? Pretty soon, $80 here and $80 there adds up to real money.
Next, DirecTV. They use the same tactics but my service has a $300 cancelation penalty right now. Is it worth paying it? Just Maybe but that's another post.
Remember. Do the math. Numbers have no emoticons.
Before Pandora, Spotify or Slacker it was about the only thing around where you could get commercial free music, especially if you were out in the middle of nowhere.
 |
| Howard Stern is Sirius Radio |
Sirius has been adding subscribers. Mostly because almost all new cars that come with it for free for some period of time.
So is it worth renewing once the free trial or your last subscription is up? By the way, you can cancel at anytime and get the balance of your subscription fee back.
Do you need Oprah or Howard Stern? Do you live somewhere you can't get cellphone service or internet in your home or car? Are you an over the road trucker? Then maybe, just maybe you need satellite radio. Maybe you just want it.
Well if you do then here is something you should know.
As I said before. I have been a subscriber for years. So many years in fact that it turns out I have a package that they no longer offer. Now usually that means you were grandfathered in on some great deal that they no longer offer and you can't get it that cheap ever again. Here's where you should start laughing.
Only in the world of subscription services are you grandfathered in to a bad deal, and they never offer you the better deal unless you speak up. That's right, they just let you go along paying more, usually much more than they charge new customers. That alone should be enough to make you want to say goodbye forever. But does that make us walk out the door and never look back. Of course not. Before they let you go they will make amends. Why? Because some of your money is better than none of your money.
Now how did I know to look into the new deals, after all, they just charge your credit card at renewal time. Well, if you are an annual subscriber they send you a notice once a year that outlines what you are paying and how much they are going to whack your credit card for.
AUTOMATIC SUBSCRIPTION RENEWAL NOTICE
They are warning me in big letters I'm about to get screwed. Then they go on to thank me for being such a loyal listener. Not customer but listener. That sounds so much better than customer.
All told for One car and one internet log on that I can either listen on my computer or iPhone, the measly sum of, $273.50 per year. Holly Cow Bat Man.
More than $20 a month. You can get commercial free Pandora and Spotify for that and almost add Netflix as well. I like Stern but not that much. Once he goes Sirius can kiss half their "Loyal Listeners" goodbye.
So anyway, I call the number on the letter. The number that you can usually find on a letter that most people probably don't look at. Try to cancel on their website. You can't. You're lucky if you can even find the number anywhere on there. It's there but it's hidden. I'm giving it to you here so you can call today and cancel or at least get a better deal. 1-888-245-7496
So here's how my conversation with the nice woman from Sirius goes, and she was very nice.
Me: I just got this letter from your company and I would like to cancel.
Her: We see you have been a loyal listener since xxxx. I also see you have a plan we no longer offer. I can give you our All Access Plan. It includes everything you have now for $220 a year. (they add taxes and fees to those rates you see on the website).
Me: Sorry, that's way to much for as little as I listen.
Her: Hold on. ......... We do have a special offer that you can get one year of All Access for $129 a year.
Me: No, that's still over $10 a month for something I might listen to a few hours a month.
Her: Well, if that still to much we do have a 6 month offer for $53
Me: That sounds reasonable. So that would be $106 for the year?
Her: No. That offer changes to $44 for every three months after the 6 months is up. We will automatically charge your credit card unless you call us to cancel.
Me: Will you send me a reminder letter?
Her: No, you will have to put it on your calendar if you want to cancel.
Me:That's too much effort. How about a one year deal for a better price?
Her: I do have $120 available and on that deal we will send you a letter.
Me: You know what. I'm sorry I wasted our time but I'm just not willing to pay $10 a month for your service.
Her: Hold on one last time and let me see what I can do. ........ 1 minute later. I have one last offer I can make. I can offer you one year off All Access for $80 and we will send out a reminder at the end of the year.
Me: OK
There is one other offer they will make you a few months after you cancel as well. They send you a letter where they offer your 6 months for $25. It does not include internet access though. At least with I.A. we can have it in one car and use our iPhone in the other car or anywhere else we have internet. You are not just limited to listening in your car. Actually the car is the only place I listen.
So the real question is did I save almost $200 or did I frivolously spend $80 that I really didn't need to ? Pretty soon, $80 here and $80 there adds up to real money.
Next, DirecTV. They use the same tactics but my service has a $300 cancelation penalty right now. Is it worth paying it? Just Maybe but that's another post.
Remember. Do the math. Numbers have no emoticons.
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