“When buying a used car, punch the buttons on the radio. If all the stations are rock and roll, there’s a good chance the transmission is shot.”
‘60’s Disc Jockey
All You Need To Know
At this point in your life, cars are not status symbols nor are they affordable so the goal is to eliminate them or reduce the cost-the initial cost to buy and the ongoing cost to run and maintain. So we need to do a self-test.
First, where do you live? If you live in metro New York, Chicago, San Francisco or London, don’t buy a car and either sell your existing car or leave it at your parents. Take the bus, subway or walk to work and enjoy not thinking about car repairs, insurance or the cost of gas.
If you live in a suburb and work in a suburb or live in Los Angeles, Atlanta, Dallas, or any other “newer” city you probably need a car.
Which car? Either the car you have now that Mom and Dad gave you when you went off to college or a three to five year old A car. A cars are cars with names that end with an A—Honda, Toyota, and maybe Mazda. Not Chevrolet, though things are looking up.
Which model? The cheapest ones as in Honda Civic or Accord and the Toyota Celica or Corolla.
Get it where? I prefer the want ads in high-end neighborhoods like the north shore of Chicago, Westchester County in New York and any suburb south of San Francisco on the highway to San Jose. All big cities have rich places. Look there first.
Why? Rich people take care of their stuff, don’t really need the top price but are selling because they don’t want to give a perfectly good car away to a dealer.
How to pay for it? Save, beg, borrow, steal it.
What else? Find a good, honest mechanic (they really do exist) and build up an emergency fund to pay for the inevitable repair.
That’s all you really need to know but here are a few of the details.
This is pretty basic and intuitive. If you live in a big city that has invested in public transportation over the last hundred years, ditch the car and take the train, bus, subway. Buy a cheap monthly ticket (it’s subsidized by all the property owners in the city so take advantage) and leave the driving to somebody else. Take the bus or train to work, to shopping, to museums and ballparks. Just don’t take it at midnight. You shouldn’t be out then anyway and the people you meet will know it.
If you live in a suburb and take a train in to the city you probably need a car to get to the station. If you live in the city and reverse commute, you need a car and if you live in the suburbs and work in the suburbs, you need a car.
So that decision is made. If you have access to public transportation, leave your old car at home or sell it. If you don’t have access to public transportation, you need to keep the car you have or, if you don’t have a car, get the most reliable transportation for the least amount of money.
Keeping What You Have (Because It’s In Better Shape Than You Think)
If you got your current car when your were a freshman it is now, let’s see here, about four years old or older if you bought a used car at the time. If you got it in high school, the car is now at, or about, seven years old. Time to get a new one. Wrong, keep the car you have IF you or your dad or somebody kept it in reasonable shape. Reasonable shape means that you changed the oil about every three to five thousand miles, changed the timing belt when required, got new tires once in awhile, put on new brake pads when needed and didn’t abuse it when driving. By that I mean driving too fast, stopping too suddenly, and basically whipping it around. OK, you did that but not all the time.
You keep the car because it won’t break. Huh? Oh, stuff will break like the battery gets old, the starter won’t start, or the air conditioning stops but the basic car will not break. The engine will not explode, the car won’t rust away, the front of the car won’t detach from the back because of…the Japanese.
I’m a big fan of capitalism but some strategies are based on flawed models. The basic business model for GM, Ford and Chrysler (when Chrysler was a US company and not part of Mercedes) was to build the cheapest car they could, with technology like carburetors, drum brakes, and lousy exhaust systems that rotted over night. So the business model was 1) build a cheap car that 2) looked nice but 3) broke early and often causing the US consumer to buy a new car every three to five years. And the business model worked up to just about the time you were born. If you want a few laughs ask your parents about the time their Pinto exploded or water splashing in their face driving through a mud puddle.
But then the Japanese got wise. In the 50”s, 60’s, and 70”s Made in Japan meant junk. Sony and Honda were among the first companies to abandon the junk model. Sony introduced radios and Honda introduced motorcycles. Not Harleys but cute, little dependable motor scooters and bikes. The key word here is dependable.
Building on the motorcycles, Honda introduced little cars and the Toyota jumped in and everybody in Detroit laughed but people bought ‘em because they had fuel injection, disk brakes and parts that didn’t break. And they got great fuel mileage. And they galvanized the bodies so they didn’t rust out after two years in Chicago.
The US car companies laughed again because, they thought, and there is a perverse logic here, if the cars didn’t break or rot there was no need for consumers to buy a new car. The Japanese bargained that people would always buy new stuff when they got bored with the old stuff and they figured people would buy their products again because they were higher quality and a better deal for the dollar. And the Japanese were right.
Anyway, the US companies have gotten the message and are making better cars and have been for the last ten years. So if you have an existing car and it works pretty good, keep it. Take it to a mechanic, have them check it out, fix what you have to, build up your emergency fund, keep your cell phone handy and put the number of a tow truck company in the glove compartment and drive.
If You Have To Buy
If for whatever reason you do not have a car and you need one, buy a three to seven year old car, preferably an A car-a Honda or Toyota.
The old adage was that buying somebody’s used car was buying somebody else’s problem. This old adage is based on the old Detroit business model—build cheap cars that will break so the consumer has to buy a new car every three to five years. But the old model is out and so is the old adage.
Buy a three to seven year old car because they are well made and if they break they are relatively easy to fix. But where you buy the car is the key.
Where To Get It
Willie Sutton was a bank robber. He was captured, escaped, captured, escaped and so on. After one capture a reporter asked him why he continued to rob banks. Willie answered, “Because that’s where the money is.”
I have the same philosophy when buying used cars or anything used for that matter. Go where the good stuff is and that is where people have money. Rich people are smart because most rich people made their own fortunes, they know value, and they won’t bargain for the last dollar, usually. They aren’t going to give stuff away but they will settle for a reasonable price. And maybe you will remind them of their kids or grandkids and they will cut you a break.
It is also fairly easy to find them. Read what they read. Find the local magazine or weekly paper and go through the classifieds. (This is the same strategy outlined in Chapter 6, “Winning At Renting” and same philosophy. Don’t reinvent the wheel.)
As an experiment I just “Googled” the Pioneer Press Classifieds. Pioneer Press does “newspapers” that cover the north shore of Chicago. It is also the same source we used for finding our coach house described in Chapter 6. The used car section lists Hondas and Toyotas along with Volvos, Mercedes, Jaguars and every other make but concentrate on the Hondas and Toyotas. The owners are selling their well-maintained cars at a reasonable price because they know they will get next to nothing for them as trade-ins. And it just isn’t Chicago, every city has rich people. Your job is to find them.
Alternative sources for car buying include Ebay (I bought a car off Ebay and still have it), autotrader.com, samba, and other sites specializing in categories or makes. You might also check out car rental companies. They are constantly selling cars and the cars have been well taken care of, not by the customers, but by the company. There are also used car lots that can come in handy but only rarely. But the categories go pretty much like that--first, an individual seller preferably from an affluent community, then internet sites like Ebay, then car rental companies, then used car lots. I bought one car from a used car lot and it worked out great but usually car lot cars are the most expensive.
Now, how to we pay for this thing?
The best approach is to save up the money. Individual sellers are usually not going to finance you and cash makes the transaction go really smoothly—in fact; cash makes all transactions go smoothly. If you can nurse the old car along for a year or so or there is some access to public transportation, save up and pay cash.
But you’re saying “Hey, stupid, I got to get to work now and I don’t have a car. Now what?” How about begging? Call Mom and Dad and say or write them an e-mail laying out the car (remember to note that it is sensible, reliable A car), the cost, and your proposal to borrow the money and pay them back with interest over a period of three years.
BUT, you say, my parents are bigger spendthrifts than me, financially up against the wall and so strapped with credit card debt that they are thinking of personal bankruptcy. OK, Plan B. Borrow the money from: The Seller
The Credit Union at work
A Used Car Lot that will finance—‘we tote the note’
Borrow On Your Credit Card
These are in descending order of costs getting more expensive as you go down. But if owning the car is an absolute necessity, you have to do one of these. Your best bet when you are in this situation is the credit union at work or the used car lot that will finance. Since it is your first time out I would stick with the “Pre Owned” departments on the lots of big dealers. It is not the best deal but it can be done relatively quickly and the car will probably be in good shape.
Whichever route you go, the rule will be to pay it back as fast as possible and save up the money so next time you don’t have to go through this humiliating experience.
Finally, like Willie Sutton, you could steal the car but that has other consequences.