How Man Vs Cash Buys a Car

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I am a lifelong car enthusiast, and former car salesman.

Want to know some of the car buying tips I use to save money?


This is my Honda Accord. There are many like this, but this one is mine.

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I bought this car brand new with 76 miles on the odometer. This car has been amazing, and if Honda wants to endorse me, I will write more detailed information on this car and mine, and my family’s decades long loyalty to their cars (Dear Honda, my contact info is above. Thanks). However…

 

I will never buy another brand new car. Why?

At the end of the day, it’s just a car. The “new car” smell and feel doesn’t last nearly as long as you think it will. It started to feel like just another car after about 45 days, and I became numb to new car smell in a few weeks.

In the early 1990’s, most cars didn’t see 150,000 miles. Now? Most cars outlive 200,000 miles without needing major repairs. Cars are cheaper, safer, faster, more reliable, and come with more creature comforts than ever before.

Although I will be holding onto my Accord for many years to come, I could have easily bought a pre-owned car with even more features, for less money than a brand new car.

Don’t pay the “first owner” car tax if you don’t have to. Always buy pre-owned.

 

Depreciation is a killer.

Everybody has heard the phrase “your car loses value when you drive it off the lot”, but has anyone ever explained WHY?

Depreciation isn’t that your car is now worth less than it was ten minutes ago, it’s that you will be forced to SELL it for less than you paid, ten minutes ago. New and pre-owned cars alike, they are both impacted by two items. Retail Value vs Trade-In Value

Retail: What a dealership hopes to charge for a vehicle for sale.
Trade In: What a dealership hopes to pay you to sell your vehicle to them.

Pro-tip: Trade In is negotiable. Don’t believe that their offer is final. However, be aware that a dealer may give you a higher trade-in value, and move that overpayment to another area of the deal that keeps them making money (new car price, financing, etc)

 

Remember that cars are commodities.

Honda sold 355,557 Accord models in the United States in 2015 alone. That means that in the last four years, 1.4 million brand new Accords hit the road. This doesn’t account for the last few decades of Accords that are still on the streets, and every other model of every other car in the nation.

No matter how “special” a car may feel, it’s probably one of millions that are identical to it. You WILL find another.

 

The car probably won’t sell tonight.

A car dealership may make you feel like if you leave the lot, the car you like will be sold. Why do they do this? Statistically, the majority of people who visit a dealership will buy a vehicle within 72 hours of beginning their search. The dealership wants to be the one to sell you the car so they will use any tactic, including a sense of urgency, to get you to buy.

Although the car being sold is a real possibility, on average, most dealerships turn over 3% of their inventory each day. That means that there is a 97% chance that the car you saw today will be sitting there tomorrow.

 

The dealership isn’t your friend, and they aren’t doing you any favors.

These people sell multiple cars every single day, all year-long. They know how to separate you from your money.

Here’s a secret that I used to employ every single day: “Sell yourself first, the product second, and the company third”. I gave the customer a reason to trust and like me (because you don’t buy things from people you don’t like). Then, I gave them a reason to like and desire the product. Finally, I reassured them that the company is strong, will stand behind their product, and that’s why I work here. This was followed by a smile, handshake, and a trip to the bank to deposit my paycheck.

Nobody is doing you a favor by selling you a car. Nobody is doing you a favor by financing you. Nobody is looking out for your own best interests, except you. Remember that.

 

Get your own financing.

The minute I think want to start looking to buy a car, I check out a payment calculator like THIS one and see if it will fit into my budget. Then, I make a trip down to my financial institution and meet with a loan officer.

By getting your own financing before you ever step onto a car lot, you will know exactly how much you can afford. No questions, no doubts. Most important, you will be able to act as a “cash” buyer. Why does this matter?

The dealership wants people to finance with them. If a customer does this, then the dealership gets control. They can add items to your purchase, blur the cost of your car, hide the trade in value, raise the interest rate, increase the term…literally whatever they want because they know most buyers are only focused on the payment.

If it fits your $250 budget, you’ll sign on the papers and probably won’t read to make sure nothing else was added above your signature.

 

Never buy on the first trip.

Your first trip to the car dealership is to do research purposes ONLY. Sit in the seats, push the buttons, drive down the street. Get a feel for the vehicle, then walk away. Go home and sleep on it. Research the details on that car (safety records, reliability, fuel economy).

If you refuse to buy on your first trip to the dealership, you will be able to clear your head and make a highly informed decision. Plus, you instantly use your strongest negotiating skill. The ability to walk away.

The dealer knows that, if you want the car, you’ll do nearly anything to get it. Don’t walk right into their trap. Walk away and do your homework.

 

Avoid Add Ons.

You don’t need rustproofing, fabric protection, extended warranties, theft protection, or any of the add-ons. They aren’t free, and they make big money for the dealership. If you want them, you can often find it after the sale for much less. Example: Fabric Protection may cost you $50. I prefer to pay $3 and buy the same can of Scotchguard myself.

 

Check insurance rates

You have to insure this car. It’s an important, and mandatory, part of car ownership. Check with your insurance agent before you buy and make sure insurance rates are comfortably affordable. You may be surprised how much (or little) your car is going to cost.

 

Get the lowest rate.

One benefit of securing financing before you ever visit the dealership is that you have time to make sure you’re getting excellent terms and a payment that is easily affordable. Don’t forget, you can rate-shop with many lenders to make sure that you’re saving the most money. Check out our POST on having your credit report pulled to clear up any doubts you have.

 

A deal is only a deal if everybody wins.

In fairness, I believe that dealerships deserve to turn a profit. They have to keep the lights on, and their families fed. However, I strongly believe that you shouldn’t lose the clothes off of your back so they can eat.

 

Get an inspection.

In my state (and most states), “Lemon Law” buyback protection only apply to brand new cars that have spent a percentage of time in the shop for the same issue. Used cars are sold “As Is” and do not come with warranties. If anything breaks, it’s your problem.

Because of this, every single car is “Guilty until proven Innocent” in my eyes. I am not going to spend my hard-earned money on something I can’t depend on. I STRONGLY urge you to have any car inspected by an independent mechanic. This “pre-purchase” inspection will leave you with the facts on the car in regards to needed repairs, prior accidents, and more.

 

Skip the History Reports.

Don’t fall for the “clean vehicle history” report. Those history reports only report car accidents when it’s processed through an insurance agency. If somebody smashes their car into a pole and pays cash to get it fixed, it’s still going to show up as “accident free”. I rely on history reports to see where the car has been registered, and how many people have owned it, but that’s about it. I rely on the inspection for everything else.

 

Using these tips, I was able to stay level-headed and find my car. I spent three months researching and shopped five different car dealerships against each other until I got a price that nobody would beat. I had to drive an hour to pick it up, but it was a 60 minute drive to save $1,100. In other words, I earned myself $1,100 per hour.

 

Good luck!


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