How do I learn to buy a car?

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TorusSpotter
Posts: 16
Joined: Sun Nov 26, 2017 10:00 pm

How do I learn to buy a car?

Post by TorusSpotter »

I've never bought a car before and need to do that now. My impression of the car industry is that it's a lot of scammers and I have to go out of my way to protect myself, which feels tedious. Are there any resources for learning how to choose what make/model fits your needs, finding a seller (FSBO, dealership, something else?), doing all the pink slip / registration / etc stuff, not getting ripped off on financing, getting car insurance, etc? I feel like if I go into this process I won't know what's normal and what's not and I'll get advantage of.

I don't really car how it looks, I just want a regular car that's ideally low maintenance and nice MPG. I keep a 20k emergency fund and am fine using up to 10k of it for an all-cash purchase if it helps.

Thanks very much,
mhalley
Posts: 10432
Joined: Tue Nov 20, 2007 5:02 am

Re: How do I learn to buy a car?

Post by mhalley »

Clark Howard would be a good place to start.

https://clark.com/cars/how-buy-used-car/
https://clark.com/cars/best-places-buy-used-car/
https://clark.com/cars/buying-a-used-car-with-cash/
If you plan on financing, sign up for credit karma or get your credit score from discover. Arrange for the financing before going to the dealer. You might consider a car buying service like true car. You can do better yourself but that would get you started. You can start with geico or similar for the insurance.
Last edited by mhalley on Thu Apr 08, 2021 11:42 pm, edited 1 time in total.
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quantAndHold
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Location: West Coast

Re: How do I learn to buy a car?

Post by quantAndHold »

This is probably a pretty good place to start. https://www.consumerreports.org/buying- ... -used-car/ Ignore the fact that it’s targeted at teenagers, it’s got the right basic info. The April issue of Consumer Reports is their car issue. It gives a good rundown of the cars that are available, used cars to buy or avoid, etc. I would start by getting a copy of that and reading it through.
phxjcc
Posts: 1329
Joined: Thu Aug 23, 2018 3:47 pm

Re: How do I learn to buy a car?

Post by phxjcc »

1. Go through Costco for pricing.
2. Say NO to everything the Finance guy at the dealership offers.
3. Wait at least 6 months for supply constraints to ease.
4. Get your financing through a credit union.
5. Go to Reddit /askcarsales to see the underbelly of the business.
CFM300
Posts: 2541
Joined: Sat Oct 27, 2007 5:13 am

Re: How do I learn to buy a car?

Post by CFM300 »

If you're interested in a used car, try carvana.com

I have friends who have had very good experiences with them.
fourwheelcycle
Posts: 1968
Joined: Sun May 25, 2014 5:55 pm

Re: How do I learn to buy a car?

Post by fourwheelcycle »

Knowing how to buy a car is like knowing how to not sell your equity index funds when the market drops. Vanguard's PAS says one of the main things they do that makes their service worth 30 basis points is to coach their clients not to sell when the market drops.

The key to buying a car is to never give in to car dealer tricks, like taking your keys while you test drive their car and then not giving your keys back to you until you sit through their entire sales pitch. Or reading you "like a book" and then selling you a fully loaded car you don't even need, at full sticker price, when they figure out you have a very compliant personality.

When I buy a car I figure out three makes and models I can live with, usually a Honda, a Toyota, and a Subaru or Volvo. Or, I figure out the exact car I want. Either way, next I send emails to several car dealers after looking at their online inventory to see that they have the car(s) I am considering. I tell them what I want, color(s), engine, and trim level, and ask them for their price. If they don't respond, or respond with "Come in and let's talk", I cross them off my list. If they give me a good price by email, or call me and give me a good price on the phone, I keep them in the running. Then I look at all my responses and call one of the dealers to say "You are my first choice, can you give me $X price? I can come in tomorrow to look at the car and buy it if I like it." Cash or loan does not seem to be a factor to the dealers, but I usually pay cash.
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: How do I learn to buy a car?

Post by livesoft »

Change your attitude. You are the scammer. The car dealers are not scammers. They would go out of business if they were. Then follow the other advice on this thread, on the internet, in books, from your mom, etc.
Wiki This signature message sponsored by sscritic: Learn to fish.
bloom2708
Posts: 9860
Joined: Wed Apr 02, 2014 2:08 pm

Re: How do I learn to buy a car?

Post by bloom2708 »

Save some money, find the car you want, find a good enough price, buy the car, don't buy a bunch of add ons.

Find your nearest Subaru dealer. Find a Subaru Crosstrek in the price and color you want, test drive, buy.

Why that car? That is what the magic 8 ball told me. :D
genzboglehead
Posts: 14
Joined: Fri Jan 18, 2019 7:48 am

Re: How do I learn to buy a car?

Post by genzboglehead »

I'd recommend checking out the guys at yourautoadvocate.com. They also have a YouTube channel.

They're all about educating the buyer and do a pretty good job at it. I used some of their tools to buy a car in January.

Here's something you should know about buying a car: there's huge diminishing returns to the amount of time you put in. Once you decide what you want (by far the most important part). You can begin negotiating for a deal. I'd recommend finding a really solid deal and then running with it. You can make yourself crazy searching for a few $100. At one point I just decided that I liked the car they had and the price was fair (I was searching used). I drove and bought the car 2 days later. Just know you're shopping a seller's market - if you truly need a car RIGHT NOW, you might not get the price you'll be able to get in a year or two when the pandemic/shopping habits have all calmed down. \

There are some really good posts around here about the negotiation process if you're buying new. Used is a bit of a different beast because there typically aren't directly comparable vehicles due to differences in mileage/condition. For the Hondas/Toyotas/Subarus that bogleheads love, the depreciation curves are such that buying a car a few years old doesn't really make sense.

That's kind of a bunch of random thoughts, but I really recommend the guys at YourAutoAdvocate. They have ex-car dealer employees who help explain what's happening on the other side of the table, so you will feel more comfortable.

Finally, have fun! It's a big purchase but it should be one that reflects your values and what you want to do with it. Go on a bunch of test drives and find something you like.
ReallyLikeToSave
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Joined: Wed Dec 11, 2013 11:52 am

Re: How do I learn to buy a car?

Post by ReallyLikeToSave »

All good suggestions.
Another option to consider for a new car is to use a broker. They usually charge a flat fee ($400-$500) and they will get you the car you want and deliver it to your door. Their services are mostly about convenience, most dont claim to get the absolute lowest price - so at a minimum I would suggest you choose the car with the spec (color, features) you like and then get an email quote from a dealer and then tell a broker to beat it. Good luck
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lthenderson
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Location: Iowa

Re: How do I learn to buy a car?

Post by lthenderson »

TorusSpotter wrote: Thu Apr 08, 2021 11:10 pm My impression of the car industry is that it's a lot of scammers and I have to go out of my way to protect myself, which feels tedious.
The car industry is not full of scammers. It is just because cars generally involve larger sums of money, those few who do get scammed tend to be very vocal about it. I have sold many cars and have never had any issues with scammers and know people who buy, fix and flip cars for a living that would also say that as long as you take easy to implement precautions mentioned in many threads in this forum, the likelihood of getting scammed is very low. Probably the best advice I would give you is to just buddy up a knowledgeable friend who has your interest at heart but isn't financially tied to the vehicle you want to purchase.
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Watty
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Re: How do I learn to buy a car?

Post by Watty »

There are two very different questions;

1) How do I learn to buy a used car?

2) How do I learn to buy a new car?

These are really two very different processes.

A lot depends on your financial situation and sometimes if you have a very limited budget buying a used car is really your only choice. I think pretty much everyone here, including myself, has been in that situation so if that is the case then be sure to post the details about just what you can afford and you will get plenty of helpful suggestions to help buy a car.

The used car market has gone crazy and prices are very high right now with people buying cars during the pandemic and a lot of threads and new articles about that. This is not a great time to buy a used car.

Even in normal times some cars like Hondas and Toyotas do not depreciate fast enough to make buying a relatively late model Honda or Toyota a great deal. Lots of people(including myself) have posted here that for Hondas and Toyotas they buy them new because the used car prices for them are so high.

I can’t help you much with the mechanics of buying a used car since it has been a long time since I bought a used car.

My impression from your post is that money is not that tight for you so buying a modest new car with a car loan may be an option for you. That makes buying a car a lot easier since the dealership will handle all the paperwork for you. A new car will likely have a lot of the new advanced safety features that started becoming more common is about 2018.

My basic car ownership strategy is to buy modest new cars that do not depreciate quickly and have a reputation for being reliable. These are usually cars like lower priced Toyotas and Hondas. I then keep them for about 10 years or 120K miles and then I will sell them even if they are not having any problem then buy a my next new car. A one owner, well maintained, well running, never wrecked ten year old Honda or Toyota is sort of the holy grail of used cars for some used car buyers so they will pay a lot for them.
TorusSpotter wrote: Thu Apr 08, 2021 11:10 pm My impression of the car industry is that it's a lot of scammers and I have to go out of my way to protect myself, which feels tedious.
One advantage of buying a new car that is a fairly common model is that they are basically a commodity so you can just keep focused on the "out the door" (OTD) price of what it would cost you to drop off a check and drive away with a car. It really does not matter if they play games and add a large dealer processing fee as long as something else is low so the OTD price is OK.

With a new car you can buy it at any dealership and still have it serviced at whatever dealership is the most coinvent. This means that you can get bids from dealerships that are two+ hours away but still get it serviced locally.

One way to buy cars now is to negotiate the deal over the internet so that by the time you go into the dealership you have a "done deal" so you basically just need to drop off a check, fill out the paperwork, and drive away with the car. They will still likely try to sell things like an extended warranty, extra paint protection, rust protection, etc so you may need to say "no" a bunch of times but that is not a big deal.

Never ever buy an extended warranty when you buy a car. They are usually not a good idea but if you ever decide you want to buy one for some reason you can still buy it at any time up until your full warranty expires, and you can buy it from any dealership in the country who might be willing to sell it for less. If you are going to buy an extended warranty then the time to do it is a few months before your full(usually 36 months) warranty expires.

If I ever got into a dealership where I had negotiated an online deal and they tried to change it when I got into the dealership then I would walk straight out of the dealership but I have bought three new cars that way and none of the dealerships tried to play any last minute games. There is one gray area though since it is possible that the car you had the deal for may have sold before you got into the dealership but they can usually substitute an identical car, or one that identical but a different color.

Here is a post that I did about my online car buying experience a few years ago.

viewtopic.php?f=11&t=239526

There is also a huge ongoing car buying thread that has been going on for year that you could read the first few posts of and then go to the end of it to ask questions.

viewtopic.php?t=124638

This is nothing new either, back in the dark ages people used to negotiate deals like this by sending faxes back an forth. Not all dealerships will do this and if you are trying to get a deal on a popular car that is in short supply it may not work well but for a common car roughly a third of dealerships are willing to make deals over the internet.
TorusSpotter wrote: Thu Apr 08, 2021 11:10 pm Are there any resources for learning how to choose what make/model fits your needs,...
It is important to distinguish your needs from your wants.

Even with with several kids people can get by just fine with a compact car even though they might want a large mini van.

One thing to keep in mind is if most of your driving is just commuting to work but you take a couple of vacations each year then you can just rent a larger car when you go on vacation.

There is an ongoing somewhat sarcastic joke here is that the only "Boglehead approved" car is a Toyota Corolla and there is some truth in that since the Corolla does have a lot going for it(and I own one). You might start by considering what need would not be meet by a Corolla.
TorusSpotter wrote: Thu Apr 08, 2021 11:10 pm I feel like if I go into this process I won't know what's normal and what's not and I'll get advantage of.
Before you start car shopping you should get your financing set up if you will need a car loan. Credit unions are often good places for car loans and if you have that setup then you can let the dealer try to beat that. Sometimes price incentives are ties into you getting a dealer loan and that can be OK since you have the option of refinancing the loan or paying it off after several months. For example to get some sort of discount you may be required to use the dealer financing for a minimum of three months.

Also get your car insurance figured out before you go car shopping since you will need that before you can finalize the deal. Be sure to get quotes for the different car models you are considering since it may vary by more than you might think. In some cases there may be a "sport" trim level that might cost more because people who buy the "sport" version tend to have more accidents.

Figuring out what to pay is tricky and the MSRP (manufacturer suggested retail price) means nothing and you should not pay anywhere near that except in odd situations like some high demand car that is in short supply

You may be able to find forums for that car model where people have posted what they have for new cars you can get a starting point but looking at the Kelly Blue Book and Truecar websites.

https://www.truecar.com/prices-new/toyo ... code=30062

https://www.kbb.com/toyota/corolla/2020 ... eid=442108

IMPORTANT: do not give those websites any of your information since you will not only be bombarded with sales people contacting you, but if they give the dealership your information as a lead they will also be paid if you buy a car from that dealership. That means that you will pay more if you buy a car since the dealership has to cover that cost.

For a 2021 Corolla LE these give a Truecar market average price of $18,626 and a KBB price of $18,701 (Fair market range of $17,668 to $19,733)

These should include everything except for your state taxes, fees, etc that actually get paid to someone like your state DMV. These can be significant.

These are just a starting point though and unless a car is in short supply in your area you should easily be able to get that price. I mentioned those not because they are actually a good price, but because they are at least more realistic than the MSRP which was over $21K for the Corolla. You never know until you try but I would think you might be able to get a Corolla for less then $18K(plus registration, taxes, etc.)

Dang that turned into a long post. I will get my second shot in less than two weeks so I can get out and about then.
MathWizard
Posts: 6560
Joined: Tue Jul 26, 2011 1:35 pm

Re: How do I learn to buy a car?

Post by MathWizard »

You may not have a good experience the first time, but once you
find a dealer/salesperson that you like, stay with them.

If you don't work on cars, I would not do for sale by owner.
I've replaced almost everything on a car, and still got burned on one.
With FSBO, they will never see you again, so you need to be very
particular.

I also use CarFax, as that at least gets me the public records on the car
from the VIN, so that I can see if the car has been in an accident.

To get a sense of vehicle pricing, kbb.com , edmunds.com
and cargurus.com can show you what used cars are selling for
to get you in the correct range.

Good luck.
NYCaviator
Posts: 1967
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Location: NYC

Re: How do I learn to buy a car?

Post by NYCaviator »

1. Use a car buying service. You tell them exactly what you want and they shop multiple dealers to find the car with the exact specs you are looking for. They can even do this with used cars.
2. Try Carvana or one of those delivery services. You can get a great price because they have cars all over the country that they will deliver.
3. Go to a set-price dealership. More and more dealers are going to that model; they won't negotiate. The price on the window is the price. The way they get you is with extras (rust proofing, extended warranties, etc.) and ridiculous financing options (like 72 and 84 months becoming the norm for most people :oops: )
4. Try CarMax or one of those used car only dealers. I've had some friends who have had really great luck with those.
eric321
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Re: How do I learn to buy a car?

Post by eric321 »

Leasing also can work well. Sometimes there are EV incentives (likely going to increase further). Leasehacker is a good resource and Edmunds to calculate residuals.

For an outright used purchase, look at cars the have depreciated or are not loved for some value. There are some good deals on a Chevy sonic, cruze or Malibu compared to a yaris, corolla or camry. A Fiat 500x would be cheaper than the equivalent jeep renegade. Mitsubishi are often overlooked as well.

A carmax lot is a great place to start. You see lots of new cars from different manufacturers grouped by size with price tags. Carmax marks their cars up, so once you figure out what you want to buy, compare prices elsewhere.
rockstar
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Re: How do I learn to buy a car?

Post by rockstar »

I did auto pricing/financing as a job a long time ago. Let me tell you. Nobody really gets a good price. There are some outliers, but they are really rare. And it's usually the dealer screwing up. Your best bet is to use a program like Costco to get a good price. It's not the best, but it's not bad either.

When I designed pricing at that job, we took into account the ego of the buyer. We wanted the customer to leave the lot thinking they got a good price. It's more perception than reality. You want a good buying process.

There are a bunch of knobs you can move to make sure the dealer always get a good price out the door. At the end of the day, they're trying to maximize their advance rate on their lending program, which is why cash is king. If you know the customer wants a good rate, you jack up the price. If you know the customer wants a good price, you jack up the rate. And you can move items into margin or into fees. At the end of the day, it doesn't matter to the dealer whether you paid a high margin or high fees. It's all the same to them. If the customer is constrained by PTI, you push out the term. If the deal isn't looking great, you subsidize it by selling insurance products on top of it. The mark up on maintenance plans is almost 100%. You're not going to leave the lot with a good deal.

If you want to get the best price, then you have to buy what's not selling. You will get the best price on the oldest inventory on the lot. And you'll get an even better price if you pay in cash.

So at the end of the day, bring cash and buy the vehicles no one wants. I'm talking about the inventory that has been sitting on the lot for more than two months. This stuff will eventually end up back at auction if it's used. If it's new, the dealer will probably try to trade it with another dealer if they ever get the option.
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