Buying a Car: Some Good Advice

It's interesting reading some of the other services on an early mornng when you run across five or six supposedly good tips in buying a car, none of which have any real connection to reality.

It's likely the author of the piece thought that the advice was great but here are some things to think about before we get much further:

* Never sell your car yourself, you're shooting yourself in the foot, despite what the "experts" tell you
* Don't worry about your car insurance payments until you've chosen your car. The insurance agent isn't making the monthly payment for you; you have a separate payment for the car insurance itself
* Arrange your financing early -- and possibly miss out on savings that a dealer might be able to get you or a program that, if you are a new college grad might gain you a few dollars
* Use the "N" word with the finance or business manager

This is great information if you are brain dead, but here are a few ideas that you won't hear from the "experts." The source of this information, by the way, is the author of this piece who has written about cars and trucks for about four decades and who has been selling them actively at various dealerships for the last 10 years or so.

That said, though, let's look at some of the the "expert" information I was just reading on a competing service. The first piece of advice to the brand-new car buyer (just out of school or in a first job -- if it were me I'd be buying preowned for a first car, but that's another story -- I did!!) was to sell your existing trade yourself.

Let's look at this from a couple of angles: The first is that you've taken that vehicle off the table at the dealership. Now, let's say that it could even have added $1,000 or $3,000 in sweetening to your deal (as a trade-in, so it's subtracted from the price), it's something that's not anywhere in the picture.

Now, if you sell your vehicle yourself, your run into a few small problems. Let's look at a couple of state's: MA or MD (Massachusetts or Maryland for those without good zipcode books).

In MA, if you sell a vehicle privately -- as advocated, you become the "dealer" so you have to warrant the vehicle as free of defects in this manner: under 60,000 miles, three months or 3,600 miles whichever comes first. In other words, if it breaks you are liable to fix it. It's not something that an "I didn't know about it" will cover. The state will void the sale and you will have to refund any money, unless you choose to fix the car, of course.

Over 60,000 but under 90,000 miles, you warrant the car for two months or 2,500 miles and from 90,000 to 129,000 miles you warrant the car for one month or 30 days.

That, alone, can be a corker of an expense and let's say you've sold your car privately, even trying to write a provision that the new owner is responsible for all repairs, as the button goes EHHHHHHHH, wrong. You can't shuck your responsibility as the "dealer."

That's why it's better to give the dealer the headache of deciding what to do with your car.

In MD, the laws are just as strict and, indeed, there are some EBAY-only dealerships which advertise on their sites "Not for sale to Maryland residents," the "Lemon Laws" are so strict.

So, selling your car yourself, not a good idea use it as a trade.

The next piece of advice is to arrange your financing before you go to a dealer. That's not a bad piece of advice, if you can be certain that:

*The rate you are quoted is lower than the potential rate from the dealer who may have access to 15 or 20 finance outlets
* The rate you are quoted is really competitive; what basis points do they use; is it a credit union; is it a personal note (is that the best way to go); is it a car note

How can you know for certain what the dealer may be able to put together for you that could save you some money (it has been known to happen)

Your best idea here is to keep an open mind and if you have to, put a real deposit on the vehicle and then sit down with your folks or a trusted adviser or even some credit union or other bank types to put together a funding plan. The chances are good that the dealership will be able to match you.

Oh, and one piece of advice was to avoid gap or "out of work" insurance. If you get laid off and can't make the car payments and your unemployment won't stretch, you're going to be biking long distances, if not walking -- and your credit will be shot. It's a good idea in this economy, despite what other "experts" tell you.

Another piece of advice is to get your insurance agent involved. What has this got to do with your buying a car, new, preowned, or recently dredged from a brook (I wouldn't touch that one myself, but you never know)? The insurance agent's job is NOT TO HELP YOU OUT ULTIMATELY. IT'S TO MAKE MONEY FOR HIMSELF/HERSELF!!!

Sorry to have to break this pretty balloon, but insurance agents are business people and they are there to make money for themselves, just as a dealership is there to make money for itself.

You can get a range of options from an agent that will help you decide whether you want the Subaru or the Volvo or the Kia, but that's where it stops. Your state has certain requirements and if you are a first-time buyer, you'll find your insurance will be huge no matter what you do, unless you've been driving for a while, because you will be paying higher rates. Also, some cities are much higher than others so that piece of advice is good guidance, only. You cannot let your insurance agent dictate your ultimate purchase because you'll pay through the the nose, anyway.

The best piece of advice here is to pay what you can afford and let that help guide you to the right car.

It's always a good idea to have a decent downpayment for your vehicle. It's about the only thing that's agreeable with this so-called "expert." However, that's only to a point. Don't bankrupt yourself to put down every penny you can afford on your new Banana 8, "the slippery vehicle," -- pun intended. Keep a little in the bank in case you have financial troubles.

In this economy, jobs don't last forever and if you spend everything you have as a downpayment, then you've left youself nothing to fall back on.

Stay liquid -- don't spend it all

It's a good idea to use the dealer's money, anyway, realizing, of course, that you will be paying interest on it. It keeps your own cash liquid, just in case you need, it for something else, like paying rent or for your car. Put your money in a short-term CD and you'll get more return than you think.

The "expert" also advices you to use thee "N" word to everything in the business office. If you just want a basic vehicle and want to get out as quickly as possible, then that makes sense, but simply saying "No" to everything, may cut you off from some interesting offers (0 percent financing and other specials, plus various programs that come and go during the month).

There are some fees you won't escape, period. You will likely be paying for destination, you may be paying for prep, you may be paying for transfer and title and you may be paying a generalized dealership fee.

Let's face it, folks, it costs money to keep a car on a lot for X number of days and it also costs to generate the paperwork for the car and whatever else you may order, so the dealership fee is just a fact of life. It's not going to pay for he whole vehicle, just the lots of paperwork costs generated by federal regulation and record-keeping.

Do you need the extended warranty? Likely or not, if you plan to get rid of your vehicle within the factory warranty period, then don't buy the warranty, if not, then please do. If you are buying preowned, it's a wise buy.

What all of this boils down to is this: if you get two car analysts together, you're likely to get three ideas on anything. Here are a few to think about.

Sources: msn.com, experience