Saturday, July 23, 2016

Used Car Buying By ... Me

Obviously these are just my thoughts.  Not actual financial advice and non-binding (unlike my underwear today which are highly binding).
For many years I drove heavily used cars.  And I drove them into the ground.  I was so proud when I drove an 800$ pick up for 2 or 3 years, then drove it to the dealer to trade in (push pull or drag sale going 500$ for it!  Take that dealer!), and they crushed it into a cube.  Not even worth parts.  I probably spent 500$ on oil which ran directly out the bottom, but still, I made that puppy last.
I think it was a 1972 Ford.  Not sure.  There was an early 80s 3/4 ton van (ugh).  A 1984ish Datsun (NOT Nissan so whatever year they switched the name, that was it) 200SX.  It was junk but my dog and I were adorable driving that thing around.  Including cross country.  Then a mid-1990s Toyota Corolla, obviously.  That one paid for much of itself when it got hit with major hail.  Every body panel had dents, but the glass survived.  The insurance guy asked which garage to write the check to...uh NO, that check goes to the bank to pay of the car.  Woot woot!  
And finally, the 6000$ 1992 (or was it 1994?) Subaru Legacy Wagon.  I think it was '94.  Anyway.  I almost made money on that one.  It drove and drove and drove and drove.  Never even a timing belt.  A few brake issues etc, but nothing like a transmission or other major repair.  Hence, the current Subaru.  Much less used than the others when I got it, though showing age now as I put 30,000 miles a year on it. 
So, I've learned a bit about buying a used car over the years.
My own hope when buying a used car is to get 10,000 miles per 1000$ of car price (a dime a mile).  If I can double that I'm SUPER happy but that only happened once.  So with my current car, I paid 17000 bucks, and planned for 170000 miles...I've gotten 135000 so far with regular maintenance, no big repairs.  I try for the same money game with major repairs like with my old Corolla I needed a new transmission (thanks to crap work at a jiffy lube...I've never been back to a jiffy lube...they drained the transmission and didn't refill it...bastards).  I paid 1300 for a new tranny and had to plan for at least another 13,000 miles.  I got it but I was running on 3 cylinders by the end times and only making 25mph up hill so sometimes it was a struggle to get the cars to last.  You make compromises when you're kind of poor.  Doing that let me save cash for future car purchases.  Now I try to put about 25cents per mile driving into savings.  That goes toward repairs and the next car.  50cents per mile would be better, but isn't workable this year. 
Other car buying advice from my experiences over the years (meaning mistakes I have made):

1) Call and insurance company like Geico or even a few of them, and get an estimate on a couple of pretend car purchases BEFORE you pick a car.  I didn't realize when I got the pick up that the insurance and registration would be much higher than a car of the same value.  Oops...  And that truck was a piece of SHIT.  Big mistake.  An 800$ truck is not worth having.   But, I made it last.
2)  PAY CASH FOR A USED CAR if you can possibly do it. Insurance and interest on the loan are BIG.  If you have a car loan you have to buy comprehensive insurance rather than just liability.   Comprehensive (which will pay off the loan, NOT buy you a new car) costs a ton more.  For example, I have comprehensive right now and it's about time to drop it because the car isn't worth so much anymore.  My current 6 month premium is 440$ish.  Without comprehensive and the other "luxury" coverages (rental car etc), my 6 month premium would be 170$ish.  If you have a loan, the comprehensive is NOT optional.
3) Always take it to a mechanic before you buy it.  Get a full list of what repairs it needs and what the timeline will be.  Never just trust the dealer.  Dealers are there to sell you cars, not make your life better.  The law seems to be "buyer beware" and even if they say it has a warranty, whatever broke or whyever I wanted to take a car back was somehow excluded from the warranty and I had no time/money to sue or fight.  Most used car dealers know that.
4) I try to focus on the mechanical soundness of the vehicle and safety.  I've never worried about color or style (obviously). Once I got a cute car, but that was because it was the cheapest car for sale in town when I was desperate. With super limited funds it wasn't practical to buy the cuter car.  This is why old men have awesome cars.  They are the old men who waited to buy the cute car until they could afford it.  the ones who bought a cute car when they couldn't afford it are still driving the remains of that first car, which now looks like crap while they stand by the side of the road on their flip phone with the hood up and one wheel off.
5) Never tell a dealer how much money you have to spend or let them run a credit check before you settle on a price for the car you decide to buy.  They will use all information against you and they do car dealing all day, every day.  We normal humans just buy cars once in a while.They are better at this than us.
6) Start by looking at the cheapest crappiest car on the lot and slowly work your way up to your limit.  They might come down 10% on price on these cheap cars.  If you look at a car you would love but can't afford, you'll just be sad about what you can afford and may end up over spending.  Better to underspend and be able to  have money for a bit of joy in life than to have a shiny car you can't afford to put gas in or insure properly.
7) If possible, keep back 500$ for the first repair, which it will need because it is a used car.  If you luck out and it doesn't need a repair, then you're 500$ ahead on the next car purchase.
8) Test drive a few models before you start to really shop so you know what you're comfortable in.  That way you can make a faster deal when the time comes...but don't test drive a shiny new pick up because that will make everything else seem like crap.  Test drive cars you could actually afford.  I learned this from those "say yes to the dress" shows.  Once the bride tries on that 10,000$ dress, she blows her $2000 budget.  I now apply this to my car buying and it has helped.

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