Need a lot of car buying and financing advice

Parent Cafe
1

<p>My daughter is starting a new job a plane ride away. She needs to buy a car when she gets there. She’s flying into Seattle and has 3 days to find one. She is not a car person – totally clueless (the last thing she wants is to own a car, but she has no choice). </p>

<p>She has test driven some cars and done some research. She wants a small used car, hatchback, with excellent gas mileage and good safety record. So, the Honda Fit, Hyundai Elantra, Toyota Yaris, Nissan Versa, Suzuki SX4. I would love for her to get certified pre-owned, but not sure that will be possible (options are few, prices are high).</p>

<p>I’ve gone onto some of the national websites, like carsdirect and cars.com, and discovered that they are NOT comprehensive. IOW, used cars that are listed as inventory on a dealer’s own website aren’t on there, and there are dealers missing. And no one seems to keep a current list (she’s walked into several local dealers and learned that their online info is not accurate).</p>

<p>There is not much inventory right now and what is out there is expensive. In fact, there are new cars going for less than some used ones! </p>

<p>Questions:</p>

<p>– How prepared would you be in advance? The day before flying out, would you go onto every car site you could find and locate the possible cars and map out which dealers to visit, or is it better to wing it and just visit dealers in person? Should we start a relationship with a dealer online and ask them to find cars for us? Love to hear different strategies.</p>

<p>– How old would you go? If this was your daughter, what’s the oldest used car you’d want her to drive? Getting a car that needs a lot of maintenance would be a really bad idea for her, for many reasons.</p>

<p>– For Seattle/Tacoma/Olympia people – any specific suggestions for good dealers or mechanics? Or, where would you shop for a used car? </p>

<p>– If we want a mechanic to inspect the used car before buying it – how do you find a reputable mechanic in this situation?</p>

<p>Next: financing. How does financing work in a situation like this? She won’t have started her job yet, I assume she’ll need proof of employment and salary to get a loan? Is there anything she should do ahead of time to smooth/quicken the financing process? Does she get a loan from the dealer or from a local bank or one of these online national deals (capital one)? She’s car shopping before apartment hunting, so she won’t have a local address.</p>

<p>And then there’s getting auto insurance … </p>

<p>Dear me, just asking all these questions is making my head spin!</p>

2

<p>First thing … d-e-e-p b-r-e-a-t-h-s.</p>

<p>Your D sounds perfectly capable of handling the transactions required … and considering the situation, that’s the most important thing. You might consider providing some knowledge and wisdom you have acquired through the years, that she has not yet had a chance to learn. I don’t know your D and therefore can’t provide a comprehensive list of things that will benefit her. But here’s what I’d tell my D if she was in your D’s situation:</p>

<p>(1) Everyone buys and finances cars … it’s not Rocket Science, so relax.
(2) The kind of cars she prefers are EXPENSIVE used … and CHEAP new.
(3) Dealer financing is cheaper for NEW cars … but be sure she can payoff the loan early without penalty.
(4) Car dealers can generally register the car for the new owner, but …
(5) Getting insurance is the buyer’s job … the insurance company will need the VIN for the vehicle she’s purchasing.</p>

<p>Good luck to your D!</p>

3

<p>… and yes, in order to register the car she’ll almost certainly need a local address, confirmed with a piece of mail sent to her at that address. In CT, electric or telephone bills are preferred, but I’ve snuck through with a credit card bill (“because my brother pays the utilities.”)</p>

4

<p>My S who just graduated college bought a car. He bought it in our hometown but I thought he should have waited and bought it in his new town. He was able to arrange financing on his own but his father was willing to co sign. We found out that our S only had to pay .5% more to qualify in his own name and it was easier that way. If she was able to qualify to rent an apartment and has some credit in her name, it should be easy to qualify under her name. S only had to tell people that he accepted a job and it seemed to be enough to get an apartment lease and a new car loan.</p>

<p>He decided to buy a new car just because he didn’t want to worry about fixing an older one. Is there any way she can afford a new car. Sometimes there is not that much difference between a new and a nearly new car. The financing is better on a new car and you can finance it longer. Newer cars also have better gas mileage and that was important to our S. The other thing about a new car is that many manufacture’s have a new college graduate program. Our S bought a Ford and got $500 off which counted as his down payment, I know Toyota offered $1000. </p>

<p>We insured his new car under our policy and then as soon as he got to his new city he signed up for car insurance. We went with State Farm, it was easy. He was able to be covered the next day and we had to pay the first months premium. </p>

<p>Small used and new cars are hard to find in our area. S went with a Ford Focus which he is really happy with. We just bought a Hyundai Elantra and we like it a lot. We could not find a Honda Fit or any Honda’s or Toyota’s. Small cars are going as fast as they come into the lot. As least that is the case in our area.</p>

5

<p>I agree with the posts above. Last time I looked (a couple of years ago) the types of cars you are looking for seemed over priced on the used market when compared to the price of new vehicles. The same went for pick up trucks.</p>

<p>Another advantage of buying new is your D can look at cars before she leaves…test driving at the local dealerships. The new car world is very competitive these days and she can probably find a great deal with financing and a top warranty. We purchased an elantra a couple of years ago and I consider it a great purchase.</p>

6

<p>Costcoauto.com if she is totally lost on where to begin her search</p>

7

<p>You can have do her tests drives in her home area. Then go to the websites for internet sales for those dealerships in Seattle. (I agree-have her buy new and have her buy from a dealership that is close to her living situation). Then negotiate with the internet sales person and you can have the deal all but wrapped up before she leaves.
We looked for a used car a year ago and ended up buying a new Hyundai Elantra. Went back and forth between two internet dealership salesmen in our area and one won by $500.
Also, there are some clearing houses where you sign up—sorry, can’t remember which was the best–maybe cars.com–and they email you what they have in their inventory and then call you.
We have purchased our last two cars (Subaru and Hyundai) through internet sales and I would not do it any other way. Also, this way your D will not be alone when negotiating but will have some guidance from you.</p>

8

<p>one more thought–go to the main webpage of the car she decides on and see if there are any incentives --sometimes the salespeople do not let the customer know about these–such as $1500 back if purchased by a certain date. Or they roll it into their lowball prices but don’t mention that is where it came from and that you could get it at any of their dealerships.
Good Luck!</p>

9

<p>If she feels rushed, then maybe she should rent a car for a little while. You can get a weekly rate that won’t break the bank. Sometimes a decision made in haste can be much more expensive in the long run.</p>

<p>Our college graduate got a new Honda Fit and it’s been a great car. She found that the news cars weren’t that much more expensive than the used ones.</p>

<p>Our experience using cars.com was a great one. We filled out a questionnaire about what car we wanted and dealers emailed us back with a price. The price was as good as we got using the Costco Car Buying service.</p>

<p>Agree that internet sales is the way to go.</p>

10

<p>“For Seattle/Tacoma/Olympia people – any specific suggestions for good dealers or mechanics? Or, where would you shop for a used car?”</p>

<p>If you decide to visit Toyota dealerships… Avoid Toyota of Kirkland at all costs. Anyone I talked to had horrible experience with them (and so did we). Actually, avoid any car dealership from the O’Brien Automotive Group. Magic Toyota (in Lynnwood) is OK. We got our 3 Corollas there.</p>

<p>Local dealers like to advertise in the local paper:</p>

<p><a href=“Best car Deals in Seattle”>Best car Deals in Seattle;

11

<p>One thing to remember if she decides on used is to only buy a Certified by Dealer used car. If she does this she does not need to take it to a mechanic because this is what the certification is attesting to (that it is good) and they have to stand behind it. This means she can only get a Honda Certified at a Honda dealer or a Hyundai Certified at a Hyundai dealer…
This post is good refresher for me as I see a new car on the horizon as the 1994 subaru is almost at it’s end. DH just cannot let go and in the meantime I am anticipating and preparing.</p>

12

<p>We’ve been going back and forth about getting a new car. It has been very tempting. My husband and I have bought every car but our first one new – and that first used car was a total lemon. And yes, she has test driven cars. Although it’s been a pretty useless exercise – when I said she was clueless, I wasn’t exaggerating. </p>

<p>The cheapest new car is going to be minimum $15,000, and since most of the new cars on lots have all these extras included, the price is usually north of that. I know that loan rates are less if she gets new, but I still don’t know that she can afford more than $15,000. Those new grad programs do look good – $1000 off a new Yaris might be in her price range. And the Ford Fiesta is another good option.</p>

<p>Because of the earthquake/tsunami, the supply of new Toyotas and Hondas is pretty low now. This is a bad time to look for a new or used small car (NYTimes just did a story about that). Doubt we’ll be able to do that much negotiating. </p>

<p>I can’t give certain details without giving away personal info, but I don’t think renting a car would work. </p>

<p>We will definitely look at costco and some of the other suggestions mentioned.</p>

13

<p>Ok–I am addicted now to this question–if she does not know where she will live then focus on where she will work when choosing where to have the car serviced in the future. It could make that nudge towards one car over another. On the insurance you could start by talking with your own agent and get direction. Her best bet is to have a loan with a credit union (is there one at her new place of work?) or the dealership itself. Are you prepared to cosign if need be?
She could consider a short term lease if things are happening too fast, or as mentioned before, a rental.
I would not buy a used car in today’s market unless I somehow knew the car was tip top and a fabulous deal. I might consider a used subaru to get the all wheel drive as there is need in the PNW if she is planning on skiing, especially. Otherwise, Kia’s and Hyundai’s are a very good $$ deal for what you get.</p>

14

<p>I have some friend’s who went through the AAA buying service. They said it was a wonderful experience and would do it again. They will look for new or used cars. I bought my last several cars through Hertz car sales and they were very well priced (all well below kbb) and great cars. Hertz has a lot of the type cars your D is looking for. I bought a late model used Matrix for below 15K. The cars are also well maintained.</p>

15

<p>FYI many dealers have new grad “specials.” There is a discount off the price of a new car, and special financing based on having a job offer.
<a href=“http://blog.truecar.com/2011/06/09/special-discounts-on-new-cars-for-college-graduates/[/url]”>http://blog.truecar.com/2011/06/09/special-discounts-on-new-cars-for-college-graduates/&lt;/a&gt;
<a href=“CarLocate - Powered by ADD”>CarLocate - Powered by ADD;

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<p>Honda has .9% interest rate right now. I would purchase a new car, I’m purchasing this for D1’s graduation. I don’t have a problem bargaining for a Honda so I guess the supply is there. I walk away recently and just called around and received much cheaper prices. Honda dealers are preparing for the 4th of July weekend.</p>

17

<p>Our D was in a similar situation recently but she opted to do the car purchase where we live, not where she was moving to. She was able to find a 2010 Elantra with very low miles at a HUGE Elantra dealership. What we learned is to narrow choices down to 2-3 types of cars you want, then go to the largest delaership so that there will be a decent selection. In her case, the $ difference from buying brand new and the used one was a few thousand dollars so she opted for the used one.</p>

<p>By the way, she loves her Elantra. I drove it with her cross country and found myself loving it too. A great little car.</p>

18

<p>One other place to consider looking for/at cars is your local car rental places, Hertz, etc. They generally offer an extended warranty that comes with the car & you can purchase a bit longer for just a few more $$. We have had several relatives purchase their cars this way, just a year or two old and shave off a considerable amount from the cost.</p>

<p>You also may wish to consider insurance premiums on the different cars she’s considering, as they can vary widely, depending on the car purchased.</p>

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<p>On the loan - she can see if her current credit union or bank is willing to ‘pre-approve’ her for a loan of x amount at a particular interest rate for the used car. That’ll give her a quick fall-back for a loan as well as a bargaining chip if the dealer wants to try to get her to take a higher interest loan. Also, it could be used if she ends up buying from a private party instead of a dealer.</p>

<p>On the insurance - check with your insurance company and ask about what to do in the event of a new car purchase. They generally will cover the car right away as long as you notify them within a fixed period of time that it was purchased. Your D will need to decide whether she wants to be on your insurance or head out and get her own.</p>

<p>Cars can be serviced anywhere so there’s no need to buy it from a particular dealer unless that dealer offers on the used car some guarantee that’s only good at that particular dealer.</p>

<p>Make sure she checks on [url=&lt;a href=“http://www.kbb.com%5DNew”&gt;http://www.kbb.com]New</a> Cars, Used Cars, Blue Book Values & Car Prices - Kelley Blue Book<a href=“Kelly%20blue%20book”>/url</a> or edmunds.com to get an idea of the expected pricing of the vehicle. There are usually multiple prices - dealer trade-in price (what a dealer would typically buy a car for), the private party price, and then the dealer price (what they charge someone to buy the car), and the certified pre-owned ones are usually somewhat higher than that (it’s essentially like buying insurance or an extended service contract). She should also compare the same year/model/condition cars cost-wise by checking them on autotrader.com or similar sites. This will all give her a good idea of what she should end up paying for the car.</p>

<p>She should just assume the dealer will see her as a fish swimming blindly into his shark’s teeth. Not to stereotype too much but - female, young, first time car buyer, someone who knows little about cars, someone who knows little about the buying process, someone who needs the car right away, etc. is a setup for her to be taken advantage of but she can nullify most or all of this by educating herself up front and being willing to stand firm.</p>

<p>On the mechanic - there’s no way to know who a good mechanic would be for checking out a potential purchase or for servicing it afterwards but you can do a couple of things - make sure the mechanic is ASE certified and you can also use AAA to refer a mechanic in the area. They’re usually not the cheapest mechanics but it gives some basis for the selection.</p>

<p>On the age of the vehicle - it all depends on what she wants and what she can get for her money. It’d be ideal to buy a car that still has some of the bumper to bumper (not just powertrain) ‘factory warranty’ left on it. this varies by manufacturer - some are 3 years/36K miles and some are 5 yrs/60K miles but there’s a lot of variance so check on the particular manufacturer and year for the details. This will usually cover most things that can go wrong unless the car was abused or something.</p>

<p>Personally I’d stay away from the small, often fly-by-night, used car dealers that pop up on (and disappear from) street corners. Some of them are shady, the cars may not be represented properly, and regardless of any guarantee they give, they might not even be in business next week. The used cars at the new car dealers would be a better bet or at a place like Carmax (but I don’t think they’re in Seattle). </p>

<p>She should make sure the title to the car isn’t a ‘salvage title’ which means the car was totaled for some reason by an insurance company (accident, flood, fire) and someone fixed it up to sell again. These sometimes appear on the small used car lots and can cause all kinds of problems. She should have the idea in mind that if the deal sounds too good to be true, it probably isn’t true.</p>

<p>Despite all that, this shouldn’t be hard. People do it all the time so as long as she arms herself with some knowledge and perhaps some prep with the bank and insurance company up front, she should do okay.</p>

<p>Good luck on this.</p>

20

<p>Ok another idea. How many miles is she going to drive per year? I know people are not excited about leasing but if you can only afford so much a month than it’s a good idea. We leased a couple of cars and I thought is wasn’t a bad idea. The biggest was that I had a reliable car and when the lease term was up I just turned it in. Now I buy my cars but leasing worked out well for us at a certain point.</p>

<p>If she cannot pay more than $15,000 it does limit her options. I looked at Ford Fiesta’s in stock in Seattle and the cheapest one was $16985. It looks like they have another $500 off plus her $500 for being a new college graduate but it is still not down to $15000. My S was offered by a local bank 2.89% for 60 months through the Ford dealership and if my H was co signing 2.39%. But when we bought a new car from Hyundai the best we were offered was 2.59% for 48 months. Same bank! I still can’t figure it out! </p>

<p>But I will tell you this. Car dealers are sneaky. We are savvy car buyers and I still think we made too hasty a decision. It’s hard because there just are not that many cars out there to buy and the salesman know this. We thought they had interest rates which they advertised which were not offered or had crazy terms. It was frustrating. It’s is a take it or leave it mentality out there right now. I don’t like it one bit.</p>

<p>One thing to remember if buying a new car. A automatic transmission will be approx. $1000 more.</p>

<p>We found that our credit union could not compete with interest rates that we found at the dealership through local banks. That is very different than the last time we tried to buy a car.</p>