   Buying first car - money questions!
  Its high time Ive owned an automobile. Ive decided to go with a new car, not used, and purchase, not lease. I'm a little intimidated by all the fine print that flashes for a split second at the end of every car commercial, and worried about the huge document I will no doubt have to sign at the dealership. Pretty much my highest priority is getting a good price.How much haggling can I do with the salesman? Can I get the car for lower than listed price, or are the margins pretty thin already? I suck at haggling but I also dont want to be the only sucker paying full price.A lot of advertisements are saying things like 0% financing for 48 months. Does this mean that I can basically take 4 years to pay for the car, and get it for the same price as if I had paid the full price up front? In other words, I'm basically getting a loan from the dealership for zero percent interest? I might actually be able to scrape together enough cash to buy a cheap car flat-out all at once. Is this a good idea? I kind of like the idea of getting it done and not having to think about payments for the next 4 years. On the other hand, depending on what the 0% financing stuff means, this might be a bad idea. Because I could have kept my money in a savings account earning interest, instead of doing the dealership a favor and paying all up front. On the other hand, maybe I can get more knocked off the price of the car by paying in full up front, since the dealership no longer has to give me a zero percent loan. And maybe an even bigger discount since they no longer have to keep me on file and look for my payments every month for the next for years. How much is that overhead worth to them?Does my logic above make any sense? Are there any other money considerations I should be looking at? Thanks a lot!   
  Don't buy a new car. Ever. It's never, ever worth it.   ;  I'll oppose that. Never buy a used car, they cost more in maintenance than you would have payed for a new car.Putting a lot of money down on the car will reduce how much you lose to interest.Taking the loan, over paying outright, will build your credit score.Read the fine print on the 0% financing stuff, there is some catch. At the minimum, they can likely slam you with interest if you miss a payment.More than the price, they are going to try to sucker you into the monthly payment. Low payments and long loans at a lower rate can still end up costing you more overall than short loans with a higher rate.  Consult your bank, they have investment people there who will tell you all the numbers you need to know without the pressure of a salesman.   ;  I would recommend getting a low mileage car that's still under manufacturer's warranty vs. buying new.If you buy new, just check the fine print and calculate payments * months to make sure it adds up right.  The 0% interest might be an incentive to sell more cars but you may end up paying a higher price, or have to purchase an extended warranty or something similar.For price, go to carsdirect.com .  You'll get access to the true dealer's cost, which is often lower than their invoice cost, and it will give you a target to shoot for in your zip code. You'll also be dealing with fleet managers this way instead of salesmen, so it's a quicker, easier negotiation.  I did my first new car this way and had the price worked out before I even showed up at the lot. It was about a grand under the invoice price and 4 grand under the sticker price, but each manufacturer is different.   ;Quote:Ive decided to go with a new car, not used, and purchase, not lease.The choice between new and you depends on lots of factors.How long will you keep the car?  Usually the cutoff line is around 5 years.  If you plan on selling it before 5 years, then the repair costs of a used car will (generally) be less than the higher cost and interests of a new car.  If you will keep it for more than about 5 years, then the higher initial costs will be offset by significantly lower maintenance costs.Obviously, there are some variables in the above stuff.  Some vehicles do not age well.  Vehicles need maintenance.  If you don't maintain them, they will break down.Assuming you plan on keeping the car for at least five years, and you are planning on getting regular maintenance 4x/year, and it is a mainstream vehicle that has a reasonable resale value, then sure, a new car is probably the best idea.If any of those are not true, then you should consider a different option.Quote:How much haggling can I do with the salesman?You can do a lot of haggling.  Look online to find the actual cost of the vehicle to the factory.  Know EXACTLY what you can afford out the door.  Negotiate on the out-the-door cost, not the vehicle costs.  The auto industry has learned to add 'fees' and options and useless duplicate warranties that can add several thousand dollars to the cost.  Negotiate on out-the-door cost.  You can also find lots of books about how to negotiate online.One thing that I have seen work before, but is working less now that people are more Internet savvy, is to negotiate through email with multiple dealerships. May work, may not.Depending on many factors, dealerships may be willing to take an actual loss on a vehicle just to get it out the door.  The new car from model year 2008?  They want it gone to make year for model year 2011 coming out soon.  Are they close to a corporate deadline or goal?  If they haven't made it yet, you might be able to get a better deal, or even convince them to take a loss.  If they have already exceeded their quotas you won't get much in that area.  Go read a few books on the subject of car negotiation.Quote:A lot of advertisements are saying things like 0% financing for 48 months...What the large print giveth, the small print taketh away.  :-)As for financing at the dealership, it is almost always a bad deal.  You are mixing two transactions.  One transaction is the purchase of a vehicle.  The other transaction is a loan.Some places will give you a "better deal" on the vehicle if you use their financing, knowing full well that they will get more money from you than if you had paid a bigger price up front but used your own financing.  Some places will give you a few months at a low cost, but do so by increasing your loan by that much money and paying the first few months using some of the principle, effectively just tacking on the most expensive interest on to the loan.  Some loans are 'interest only', others are 'interest first', other loans have prepayment penalties, and so on.Go get pre-approved for a loan from your credit union or bank.  Know *EXACTLY* how much vehicle you want to afford.  This will help as you pick it out.Don't make the mistake of mixing the transaction.  Look at their loan offer, and compare it to the loan offers from other institutions.  They might be able to offer a good deal, or it might be a bad deal.  Chances are it is a bad deal.  Take the paperwork, and leave the dealership.  Go back over to your financial institution, and ask them to compare the dealership's loan to the one you thought you wanted.  Most credit unions are honest and will help you make a fair comparison.Quote:I kind of like the idea of getting it done and not having to think about payments for the next 4 years. On the other hand, depending on what the 0% financing stuff means...You either earn interest or pay interest.  Which do you think is better?Since the companies are used to people financing through their own bank or credit union, there is no big benefit to declaring you will pay cash up front.  In fact, there can be some bad reasons for doing so.  Depending on how you are negotiating, once you announce that you will not use their financing they know they need to keep the prices higher since they won't get it from you on the back end of the transaction.We don't know your financial situation.  Talk to your parents, or to a financial adviser, or a credit union's financial adviser.  They can help advise you.Quote:Are there any other money considerations I should be looking at?Yes, many. Check out Consumer Reports, find out what are good vehicles and what are not.  Read several books on negotiating for auto purchases.  You don't sound confident, so learn.Find out the resale values of those vehicles you are interested in.  Know that sometimes a brand can be good, but individual models and some years are bad.  Just because Foomatic makes good cars does not mean that the Foomatic X54 is a good car.  Or maybe they did a full redesign, and the 2010 edition is actually rather horrible even though the previous years were awesome.Talk to mechanics.  They know what they see in the shops.  They know what is cheap to fix, and what cars have expensive repairs.Buyer beware, and all that.  :-);  I concur with ChurchSkiz for the most part [frob too]. If you do decide to buy a new car check with your bank or savings and loan or credit union about their loan options. They'll typically give you a better deal than the auto-dealer will and if complications arise with car dealer regarding the loan, they'll typically work as your advocate in relation to the car dealer whereas the car dealer... we'll ask yourself, is the car dealer selling you a car or selling you a loan? Also, be sure to get the insurance that will pay off the loan entirely should you get in an accident and total the car. The last thing you want is to get stuck making monthly payments for a smashed up car rusting somewhere in a junkyard.   ;  Most banks won't loan you anything for a car without a guarantee that you have insurance against a total loss that will at least pay off the loan.I most recently went with a reasonably new used car, and bought a warrantee/service plan beyond what was still left from the manufacturer.  That way I don't have to pay basically any maintenance costs for at least a few years, as it's rolled into my monthly payment.   ;  There is nothing wrong with buying a used car or truck. If you have even basic mechanical knowledge this will save you more money in the long run. I paid $2000 for my truck, then after a year later and about another $2000 in parts, (With a portion of the work done by myself) I now have a reliable work truck with newer parts than most of the vehicles on the road. New cars/trucks are not worth even half their sticker price! Your paying for the union workers to make $70 an hour to bolt on lug nuts. Not to mention that car salesmen are some of the shadiest people on the planet. Much could be said about the quality of some older makes and models of vehicles in contrast to many newer ones.... People try to buy what they cannot afford, which is a part of the whole economy crisis. My old truck however will continue to last and remain desirable long after your new plastic Ranger or Titan goes back to the recycler. Gotta love those new Obama motors, my carburetored beast get's better gas mileage than most trucks equal to its size, and twice as good as some that are smaller. LOL!  Thanks to technology we now have Ipods, Satelite radio, GPS navigation, remote starting, etc.... With mostly the same terrible gas mileage. Hooray for innovation!   ;  On Used vs New: Remember that the resale value of the car goes down a few grand as soon as you drive it off the lot. I'd recommend buying a *slightly* used car and let someone else take the depreciation. Have you considered "certified pre-owned" types of programs? On Haggling: I'm not a good haggler either, so the best thing you can do is have someone else do it for you: Get 2+ dealers involved and have them fight each other for your attention. "Dealer A said he'd sell me the same car for $2000 less...". I did that when buying a mattress and went back and forth between 3 stores until i got the price i wanted and a 5% low-price guarantee. All without "haggling" as such. Also: bring someone with you who knows about cars. You're easier prey when by yourself.On Money: - If you take out a loan, it builds your credit. If you pay cash, i don't think it does anything for your credit.- If you pay cash, that's a lot of money you can't use for investment purposes. It takes money to make money, and if you spend it all on a car, then you're missing out on a lot of cumulative profit down the road.- If you pay cash, you spend less on the car in the long run. If you take out a loan, you pay more due to interest.- Technically, interest rates are as low as they are going to get right now. Historically low, even. That part is true.- If you have the cash to buy (most of) the car outright, but could make more money through investments than you pay out in interest, then you come out slightly ahead at the nd of the loan period (i.e. you end up paying less for the car overall then paying cash). You need to be clever to pull this one off though.;Quote:Original post by leiavoiaOn Used vs New: Remember that the resale value of the car goes down a few grand as soon as you drive it off the lot. I'd recommend buying a *slightly* used car and let someone else take the depreciation.Very few people try to sell the car immediately after driving it off the lot.  :-)So oversimplified statements of "buy used!" or "buy new!" are useless, much like the flame wars over the best languages, or the best operating systems, or the best color.  Every situation is different.  Every person is different, with their own financial situation.  Every vehicle is different.  Ever person will use the vehicle differently.  Consumer Reports and other sites have tools to help you answer the new/used questions.  The biggest questions are the amount of time you will own the vehicle, and the estimates for the repairs and maintenance over that time.  Generally around 5 years of ownership is the crossover point.Always remember:  THERE IS A REASON THEY ARE SELLING THE VEHICLE.Are they selling the vehicle because they buy a new one every five years?  Are they selling it because they won the lottery and want to make room for their new Lamborghini?  Are they selling it because they lost a job?  Are they selling it because it needs $7000 in engine repairs?Even for new cars, there is still a reason dealerships are selling the vehicle.  You ought to be able to figure out why why they push one car over another, why they stock the ones they do, and plan your purchase based on what you want to buy, not based on what they want to sell or what they happen to have on the lot.Always remember:  A VEHICLE NEEDS MORE THAN GASOLINE.I've seen so many people completely destroy vehicles by ignoring their maintenance.  A car needs more than just gasoline.  It needs at least four visits to the mechanic every year.  The *RIGHT* mechanic.  At the beginning, that means somebody who can best maintain the new cars, and at the end, somebody who knows enough to put in the right used parts to save money and be compatible with the existing parts.  The best bet is somebody you know and trust, who knows you and your car, who can explain what is needed, (and possibly more important) can explain what is what is not needed.Simple lube jobs aren't enough.  It doesn't just need oil and air filters. You need every fluid checked frequently, you need spark plugs checked, belts checked and replaced as they wear, hoses checked and replaced as they get brittle (and hopefully before they crack!), flush/replace all the various fluids at the appropriate times.  Firestone offers a lifetime alignment service (which I have), so after hitting a curb, get the alignment checked.  Get your tires rotated on schedule.  Etc.Four visits a year is the minimum.  I stop by the first week of every month and have them fill my tires, and enjoy a brief conversation.  I know an ugly green truck that was nearly 25 years old with over 300K miles on it, with regular maintenance, that it never had serious mechanical problems.  When it was basically a rust monster it was donated to charity.  I also saw a kid in high school who ruined his car his senior year because it had not had any maintenance since he bought it at age 16.  Regular maintenance makes all the difference.For my situation:I buy a car and drive it until it dies.  I purchased a new car in 2002, and it has over 120K miles on it.  I keep it well maintained, and it has never given me a serious mechanical issue in eight years.  If I had chosen to purchase a used car, I likely would have needed to replace it by now and had significantly more maintenance costs.  Both my mechanic and I know the complete maintenance history of the vehicle, and we can both spot issues long before they become expensive. It is expected to last at least five more years, unless it dies in a collision.I have looked at several used cars.  I have purchased three over my life.  Each time I considered a vehicle I had two different mechanics both check them out.  I've taken several cars over to the shops, and after being told 'no', by the mechanics, moved on to a different vehicle.  Eventually I find a vehicle that both mechanics agree is a good vehicle in good shape at a reasonable price.  And those are the ones I've purchased.One of those cars lasted 4 years, eventually dying of natural causes.  Another lasted 3 years, and died by collision with a person who admitted they were trying to balance their checkbook while driving.  My wife still drives the latest one.  It is expected to last another 2-3 years, then hopefully it will get hit or we'll sell it off to somebody desperate for an older vehicle.   