Or how to not get “taken for a ride” in your car buying process…
This guide has 3 parts:
So let’s get going…
1. WHY do you want a car/vehicle/time-machine?
Well, I mean find the reason for wanting to own a vehicle. Because it’s one of the most important clues that will help you make a number of decisions in this process.
Why is that, you ask? It sure as hell don’t take a genius to figure out that depending on your use-case(s), budget, intended lifetime of the vehicle once in your possession, and other similar factors – at the very least it will determine the make and model, or at least a shortlist thereof, maybe budget factors, even colour in some cases.
So let’s answer a few questions to determine which of the many car-buying routes you should take, mkaaay? kay!
Determine if you must own a new or an used vehicle, by considering the following pros and cons for either:
- pros for new: well, it’s new; supposedly it doesn’t break all that often,… oh, wait; that new car smell; you can afford one every month; for bragging purposes; you like the suffer the depreciation of it yourself, instead of letting rich people take that original 0-2-4 year hit, etc.
- cons for new: all of the above (because they’re cons, cleverly pretending to be pros), and then some; like, second to a home, it’s the highest depreciating item people buy; definitely the fastest depreciating too; it’s never an asset, only a liability; some car enthusiasts will fight me on this, but frankly, even amongst that niche market, those feisty ones are a minority; it’s mostly a money sink, depending on make and model, or where it’s been assembled, and by whom; people tend to be emotionally attached to their new toys (cars included), so if someone else is scratching it, said people tend to suffer and waste time fixing these random accidental problems (yeah there’s insurance, but that goes up after claims), etc. I honestly can see mostly downsides for buying an absolutely new car, and advise against it, always. There are only a handful of people that should buy new, or lease, as it makes sense only in very few cases. However that’s a debate for another time
Determine your intended uses for it, by considering these questions you need to answer for yourself:
- do you need carrying capacity? (then focus on [mini]vans and SUVs primarily, sedans just won’t cut it)
- is it a daily driver? (then something topping reliability charts, so most def’ Japanese) or just weekend getaway car?(you could do with even American cars in this case) or even twice-a-year Sunday showoff? (ciao Italian Alfa Romeo convertible… that will be in the shop more than on the road, not to mention you’d be missing the kidney you had to sell to get one of those beautiful pieces of junk to begin with)
- decent fuel economy or you won’t really give a rat’s about the fuel price for the foreseeable future and enjoy rolling in a big ass V8 with 9 miles to the gallon (or like 30 liters per every 100 km, for those of us metricly inclined)?
- do you go off road or live in a rural area with gravel and such? or like fancy things like, you know… not getting stuck in the snow? (then you need an AWD machine; or 4WD; or 4×4; and winter tires first of all; Not all full traction systems are created equal. In my experience you want AWD for consumer type vehicles. Don’t mess with the 4×4 or 4wd badges. Also in my experience the best AWD systems are in this order: Audi’s Quattro > Subaru’s Symmetrical AWD > Mercedes’ 4matic > BMW’s xDrive. The rest are irrelevant really. Ask any petrol head worth his/her salt
- will you be hauling your family a lot in it? If so, child seat-ready, safety ratings must be a concern, not to mention all sorts of airbags and whatnot… definitely worth the question
Calculate TCO (Total Cost of Ownership) over the course of the life of the vehicle (while in your possession, of course), by considering some factors like:
- monthly and yearly distances driven
- cost of petrol and fuel consumption (this will help determine brand/make and model also, not to mention the general type of car body you need, SUV or sedan, etc.)
- parking, both at home and at work, or other destination, depending on your particular situation
- monthly insurance cost (most new vehicles require you to have full insurance, most older vehicles can be insured for the minimum, e.g. you only insure against you being at fault and wrecking someone’s car, it will not pay for yours, only for theirs)
- ownership tax
- other fees (want a vanity license-plate? how about renewing your driver’s license? perhaps count in one speeding ticket per year, even if you generally drive slow? perhaps a parking ticket for that one time you get caught? you name it, throw in a number, because some of these will happen)
- cost of consumables and frequency to replace them. Some cars need more often oil changes. Others may consume tires faster, and so on); tires, filters, fluids, battery, brake pads and rotors. Whatever else specific to some cars;
Determine your finances for this purpose. The maximum amount you’re willing to spend, all in, to drive off the lot with the title in your name and everything:
- Say you’ve determined that your goal TCO is not a dime over $20k, with the intent to keep the car for 5 years. That means that you need to buy the car, pay for insurances, taxes, parking (if applicable), consumables, servicing it and putting gas in it without going north of $20k. In this case, you should seek to not spend a dime over $10k for the actual purchase of the car! Because that’s how much you can realistically afford, assuming you’d only average $2k a year for the rest of the costs. Which is quite optimistic a cost for North America imho.
Alright, you now already know more and are ahead of most people impulse buying that new sports car on credit, or lease it. And get stupidly in debt in the process. For the ‘privilege’ of having a liability that ends up owning them by the time it lost almost 70% its value to depreciation.
Congratulations, but our journey is just starting. The next two parts in this series are the meat of the process of buying a car, so get ready to have some fun and save lots of money.
And, if you feel magnanimous for this pure gold right here, I’ll take a coffee 😛
With all this information you now have, go ahead and answer all the questions (and if you can perhaps think of some that I may have missed, factors that might matter to you more), and write out the following shortlist of attributes you should have reached by now. But for at least 3 different cars:
- used or new
- if used, year (use something like CarComplaints.com or Edmunds.com, or ConsumerReports.org etc. in order to determine the most reliable, unreliable cars, and what people that have them are saying. Do your math, emotionally unattached. Go watch youtube reviews about the make/model/year combo and see what’s wrong with every one of the 3 cars on your shortlist)
- max $$$ you’re willing to sink in the luxury of driving a car
Reason to have 3 is that the next step will be to figure out how many of each are on the market, average prices, parts availability and so on. Important details that will help you save very significant amounts of money both during the negotiations. Also during the use of the vehicle over its lifetime with you, of course.
If 1 or 2 make/model combos are not in high enough supply in your market, you still get a car. But perhaps not your first option. Big deal… you still win.
Which is why I’m advocating being honest with yourself and your needs. And try to keep the emotional investment away all throughout the process. Because it will always only end up costing you, instead of benefiting you at all.