FoolProof's Car Buying Guide
By Remar Sutton (FoolProof Advisor)
The Good News:
There's nothing better than getting your first vehicle! Everybody remembers that moment.
The Really Scary News:
- As a first-time buyer, you are probably going to pay more for your vehicle, more for your financing, and more for your insurance than anyone else.
- Unless you're very careful and very smart, you're probably going to get the wrong vehicle, or a bad vehicle, or both.
- Do it wrong the first time if you are planning to finance a car-for instance, agreeing to pay more each month than you can really afford-and you can ruin your credit for many years....just as you're starting to build it. First-time buyers by the thousands do this every year.
How bad can it really get if you don't know what you're doing in the car business? Well, you tell me:
- Would it bother you if you paid $10,000 for a $7,000 car?
- Would it bother you if you paid $2,000 for a car worth $200?
- How upset would you be if you paid an extra $2,000 in interest when you finance?
- Would you be upset if your new wheels broke down the day you bought them?
What makes this picture really bad is the fact that it may happen to you because you're young and a first-time buyer. That may not be fair, but it is the reality of the car business: The job of the car seller is to sell you the car they need to sell and at the highest possible price. The car seller's job isn't to worry about you or your budget. The job of the seller is to make lots of money.
Which leads us to your job: getting savvy about the car business.
We're going to take you to some great information. So, let's get started.
Hot Tips before you jump into the Auto Buying Guide:
1. Approach the car business like you approach a very appealing new date. Know how careful, even hesitant you can be when you see a very interesting, appealing stranger? That attitude works really well when it comes to the car business!
2. Don't depend on the seller of a vehicle or vehicle financing to "educate" you about their business. Lots of car people are going to want to spend time with you the moment they think you have money, or have a parent who will help you get your first car. But even the most honest seller can't really help you, as we've said. So what's the message? Don't even go near a car lot until you're educated.
3. Don't think you have to spend a fortune to get a good car. You don't. Many times, the best first car can cost a couple of thousand or less. But there are two rules in the car business which make it very hard to buy a good, cheap car:
- Most cheap cars are junk, especially if you buy them from a dealer. The dealers who exclusively sell "cheap" cars are also often a lot less reputable than other used-car outlets. These sellers usually try to make much too much money on their customers.
- Looks don't tell you anything about the reliability of a vehicle. This is true about all vehicles, but it is much more true if you're looking for a really inexpensive car.
So, how do you buy a cheap car right?
First, you buy it from an individual, if at all possible. And second, you buy the simplest car you can find. For instance, if you're buying a fifteen-year-old car, don't buy one with lots of options that can break, like power windows. We'll tell you more about this in the Information Edge Car Buying Guide.
4. Never buy a vehicle without checking out the cost of collision and damage insurance before you buy it. Did you know in many states it can cost you five times as much to insure an eight-cylinder 2-door sports car than it can to insure an identical car with a four cylinder engine? Sellers of cars generally don't tell you things like that. You don't want to know how many young people can't drive their car (even though they are paying for it!) because they can't afford the insurance.
5. If you are planning to finance it, make your first car the start of a smart credit-building life. If your first car is going to also be your first major credit experience, don't blow it! How you pay your first loan-even if that loan is in your parents' name, or guaranteed by your parents-will impact your credit for decades. Do this right, and you'll never regret it.
Which brings us to the Information Edge Car Buying Guide:
Talk about a fast ride! Let's jump right in.