Do I Need All Wheel Drive or 4WD?
on Jan 30 in New Cars tagged deciding what to buy by jasonl
If you’re thinking about buying an all-wheel-drive (AWD) or a 4-wheel-drive vehicle (4WD), here are some things to consider:
Listen to this article:
- Safety: Most of the time AWD/4WD vehicles are just as safe as regular vehicles, but there are a few exceptions. Take a look at the government crash test ratings for the models you’re considering to make sure.
- Expense: AWD vehicles, and now some 4WD vehicles, usually come with some extra electronic safety systems. Two of these systems, stability control and traction control, have been shown to reduce single-vehicle accidents by as much as 40%. If you factor the value of these electronic safety systems into the cost of AWD or 4WD, it may not seem so expensive. There’s one more thing to consider: while an AWD/4WD system costs $1500-$2000 more, it may help you get out of a sticky situation (you know, like being stuck in a snow drift at midnight on a deserted mountain road…). You definitely want to weigh the expense against the convenience of these systems, especially in places where it snows.
- Fuel Economy Impact: This is something that some people use to justify not buying an AWD/4WD vehicle – the common misconception is that AWD/4WD vehicles use more gas because of the way the systems are designed (more parts are turning when the vehicle is moving, so therefore there’s wasted energy and the fuel economy is worse). However, when you look at the mileage ratings of comparable AWD/4WD and non-AWD/4WD on the window sticker, you’ll find that simply isn’t true. If you compare the AWD version of a vehicle to the two-wheel drive version, you’ll find that the fuel economy is identical or very close (provided the engines are the same of course).
- Resale value: There are some markets in the country (Colorado, for example) where if you decide not to buy AWD/4WD, especially in a vehicle that people expect it on, you’ll lose a lot of resale value. In these “4wd markets” 2wd vehicles have lower resale value because no one wants to buy a two-wheel-drive Suburban or F150 (because the perception is that 4WD is a necessity). Conversely, there are some markets (South Florida, for example) where 4WD or AWD aren’t really needed, and therefore resale value on a 4WD/AWD isn’t usually any better.
- Insurance Costs: We have found that AWD tends to reduce insurance costs on vehicles, but 4WD tends to increase insurance costs. Call your agent to be sure, but there is a benefit to looking at AWD over 4WD most of the time, at least in terms of insurance savings.
When you’re thinking about getting AWD or 4WD, make sure you consider safety ratings and extra safety equipment that may come with the option. Also, ask yourself if you can afford the extra expense of AWD/4WD and if it is worth some peace of mind. There’s no need to worry about fuel economy, but resale value is critical to your decision – take a look at your local market and find out if AWD or 4WD is valued in your area. Finally, make sure to call your insurance agent to find out about insurance costs for each type of vehicle.
As always, take your time when buying a new or used car. Do your car research, get multiple car financing quotes, and feel free to contact us with your questions.
Special Ordering a New Car: What You Should Know
on Jan 24 in New Cars tagged deciding what to buy, New Cars by jasonl
Special ordering a new car is supposed to mean that you get exactly what you want, usually within a couple of months. Unfortunately, it’s not that simple. Here’s what you should know…
Most automakers don’t accept orders on new vehicles between two and three months before the end of the production year. Generally speaking (depending upon model and manufacturer) you can’t order anything between the months of April and August because production years tend to end in the last few months of summer.
With some manufacturers there’s no point in doing a special order. A lot of companies make cars overseas, and because these cars have to travel across the ocean, there’s more than just the standard two-month to complete the special order — there’s also the two-month shipping time. Because of the amount of time it takes, overseas manufactures don’t really like to do special orders. If it’s even possible to order a car, it’s often strongly discouraged.
When you’re thinking about special ordering a new car, keep in mind that some automakers only allow you to buy cars within certain option groups. If you’re looking at getting one or two options from the package, special ordering might be a waste of time. Toyota is famous for making customers buy option groups, and so is Honda – for example, a lot of times they won’t sell you a sunroof unless you buy the “sunroof package.”
Special ordering a car doesn’t always make the most sense. If there’s a special feature or package that you absolutely have to have, than by all means do a special order. But when you order a specific feature or package, try not to order something too out of the ordinary because it will affect your resale value. If your car is too unique, you may not be able to find a buyer when you’re ready to sell. People tend to buy vehicles that are similar to the other automobiles on the road, so don’t order a car that’s so different no one will want it.
The last thing to think about before you order a new vehicle is that you might be able to get a better deal buying off the lot. You may have to compromise on the color, or features, or both, but if you buy off the lot you’re always going to get a good deal. In fact, buying off the lot is almost always the best deal, the reason being that new car dealers have to pay interest on every car that’s on the lot – every day that a new car sits on a lot, it costs money. Therefore, dealers try to sell the cars they have quickly so they don’t end up paying a lot of finance charges for inventory.
In other words, new car dealers are more interested in selling the inventory they have on the lot right now than the inventory they’re going to get in two months.
As always, take your time when buying a new car. Do your new car research, get multiple new car financing quotes, and feel free to contact us with your questions.
Should You Buy a New Car?
on Jan 15 in Buying, New Cars tagged deciding what to buy, New Cars by jasonl
You’re thinking about buying a car, but you’re not sure if you should buy new or used. First of all, if you’re not sure of what type of car you need or how much money you have to spend, make sure you look at our advice on figuring out what you need in a car and figuring out a car budget. Once you’ve figured out your budget and the features that you want, you can then determine if a new car makes the most sense for you.
Generally speaking, there are FOUR reasons to buy a new instead of used:
1) You plan on keeping whatever you buy for more than five years. If you keep a new car for five or more years the long-term costs work out to be less than buying an average used car and doing the same. Even better, for every year you keep a new car past five, the ownership costs get lower and lower. Keep a new car for 10 years, drive it until the wheels fall off, and you’ll save a fortune.
2) You require a special feature. If you have a special purpose or need (like towing a big RV or trailer, hybrid engine, etc.) a new vehicle is often times the best or only way to go.
3) You’re “picky.” You want a specific color or feature; you don’t want anything with scratches, dents, or a funny smell; you need the sunroof AND the manual transmission, etc. Since you’re paying good money for a car, you should try and get what you want…but if you’re really particular about features, condition, etc., don’t bother looking at used. You’re probably not going to be happy with anything that you find and you might waste a lot of time.
4) There’s a tax benefit for buying new. A lot of people who are self-employed will actually save money buying a new car because it’s a tax write-off. We can’t speak for what is or isn’t a tax write-off for your specific situation so the best thing to do is call your accountant and find out. However, new cars tend to make more sense for people that have their own business.
In summary, there’s also a lot to be said about buying a used car, but new cars have their benefits too. If you’re leaning towards buying a used car, here are some questions you should ask yourself before buying a used car. But if you find yourself identifying with one of the four reasons we’ve given then you should feel good about buying a new car.
As always, take your time when buying a new car. Do your new car research, get multiple new car financing quotes, and feel free to contact us with your questions.
How To Pick The Best New Car To Buy
on Dec 16 in New Cars tagged deciding what to buy, New Cars by jasonl
The task of choosing from the more than 900 models of vehicles available on the auto market can be overwhelming. If you follow these five steps, you’ll find the process much easier.
1) Decide on the type of vehicle you want, whether it’s a truck, an SUV, a coupe, 2-door, 4-door, car with automatic transmission, car with manual transmission, etc. We have a post all about figuring out what kind of car you need, and you can go through this to help you decide on what type of car meets your requirements.
2) Make a list of the models that suit your needs. There are a lot of websites that will help you with this, but our personal favorite is Edmunds.com. They will give you a list of all the vehicles that meet the requirements you specify.
3) Start narrowing down your choices even further by crossing out any vehicles that don’t meet your budget or that aren’t reliable. We’ve got a car payment budget calculation tool, and we also have some great car budgeting advice for you to read. Also, with new cars, it’s important to ignore special financing and rebate offers when you make your purchase decision, since most similarly priced models will have similar incentives.
4) Test Drive. Now that you have a list of cars that meet both your needs and your budget, and that are reasonably reliable, here’s the fun step: test-driving. Look at the vehicles, sit in them, drive them, and make sure you get a feel for them. Try to get a sense of whether you like the vehicle or not. Too many people fall in love with vehicles they’ve never driven, and the minute they sit in them and actually drive them, they don’t like them anymore.
5) Pick Your Top 3. After you’ve driven all the models on your list, you will know which three you like the best. The last step is to do more research: take the top three for another test drive and compare them to each other, and pick a winner from there. If you get through your list and you’ve test driven everything on it and you still haven’t found anything that you like, it’s probably because you’ve missed a feature that you want, or maybe you’re even looking at the wrong type of car. You’ll need to go back from step 1 and re-evaluate what you want and need.
As always, take your time when buying a new car. Do your new car research, get multiple new car financing quotes, and feel free to contact us with your questions.
Should You Buy A Used Rental Car?
on Nov 19 in What to Buy tagged deciding what to buy, Used Cars, used rental car by jasonl
Used rental cars can be found on just about any car lot in America, and for good reason. They’re an excellent compromise between buying an older used car and buying a brand new vehicle. Used rental cars tend to have fairly low mileage, they’re almost always less than a year old, and they’re thousands of dollars less than a new version of the same car. Unfortunately, used rental cars also tend to be a little rough around the edges. Because rental cars are commonly used and abused by their renters, they tend to have more scratches, dents, dings, and general wear-and-tear than a non-rental car of the same age. But just because a used rental car has a little more wear, that doesn’t mean they’re not a good deal. None the less, they’re not for everyone. Here’s how you can figure out if a used rental car is right for you:
Note: Here’s some tips you can use to figure out if a car used to be a rental.
1) How long are you going to keep it?
Just like we talked about in Questions You Should Ask Before Buying Used, it’s important for you to know how long you’re going to keep the car you buy. Used rental cars tend to have more general wear, so they don’t hold up as well 5 to 10 years down the road as a privately owned used car. If you’re looking to buy something that will last forever, you probably shouldn’t consider a used rental car.
2) Do stains, smells, scratches, and dents really bother you?
While no one likes stains, smells, scratches, etc., most of us are willing to live with one or two. But the thing about used rental cars is that they almost always have more stains, more smells, more scratches, and more dents than you’d find on a non-rental used. Don’t get me wrong here – some used rental cars are in excellent shape (particularly those commonly rented by retirees). But if you’re sensitive to certain smells (like cigarette smoke, for instance), if you’re a neat freak, or if you’re just picky (which is OK as far as I’m concerned), a used rental car isn’t a good choice.
3) Are you simply looking for basic transportation?
If you’re not going to be emotionally attached to your car, a used rental car is an excellent idea. They often qualify for factory backed “certified used programs”, which include upgraded warranty coverage and special financing rates that often compare to new vehicle financing rates. Here’s a good example of what I’m talking about – I had a customer who was a traveling salesman. He spent most of his life in his car, driving from place to place. He needed a car that was fairly new in order to keep up appearances, as well as something that was very reliable (preferably with a warranty). But he didn’t really care about wear and tear, and he wanted to spend as little money as possible. For him, a used rental car was the perfect choice.
4) Are you credit-challenged?
If your credit is less than perfect, a used rental car is a good way to buy a fairly new car while keeping your monthly payments down. Used rental cars often qualify for factory backed “certified used” programs, which usually have aggressive financing available for people with bad credit. Used rental cars also tend to be easier to qualify for (credit wise) than other used cars because of the way they’re valued by the bank. If you’re credit challenged, make sure you investigate this option.
5) Rental cars are well maintained and tend to have few mechanical problems.
It may sound crazy, but rental cars are usually better maintained than cars owned by a private individual. Rental car companies don’t actually buy new cars from the manufacturers — they lease them. A company like Hertz will lease a new Toyota Corolla from Toyota, returning the vehicle to Toyota once it reaches a certain age or mileage (hence the terms “fleet vehicle” and “program car”). One of the terms of the lease is that the rental car company must perform all the manufacturer’s suggested maintenance, and must retain proof of doing so. Rental companies also tend to do a nice job of getting things fixed or adjusted under warranty.
As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.
Figure Out What You Need
on Sep 06 in What to Buy tagged deciding what to buy by jasonl
When buying a car, one of the first steps is to figure out what you need the car to do. Here are some good questions you can ask yourself to figure out what kind of vehicle you need and want:
1. 2 door or 4 door? Car, truck, or SUV? How many seats do you need? Automatic or manual transmission? Light or dark colors? DVD player?
Do you need 5 seats all the time (because your family is five people), some of the time (just when you car pool), or almost none of the time (just when relatives visit once a year)? Do you need a pickup bed because your work requires it, or because a few times a year you need to haul some equipment? If you can honestly and objectively evaluate your needs, you can save yourself a lot of money. I’ve met lots of people who told me they needed a particular feature because they had a special circumstance (relatives visiting, hauling a boat, etc.). However, when I asked how often this special circumstance actually occurred, I found out it was only once or twice a year. When I pointed out it was cheaper to rent a car that filled this need once or twice a year that it was to buy one, I ended-up saving the people hundreds of dollars a month. Don’t let that one extreme circumstance convince you to buy a feature you don’t really need, or at least one that you won’t use very often. You can almost always rent a big SUV, a truck, or anything else you need for that one time a year when you have relatives visit, haul something, tow something, etc. When you’ve figured out what you really need, make a list.
2. What do you like the most about your current vehicle? What do you like the least?
This question will help you figure out if you’re using all the features you have. Here’s an example — I knew a couple that would lease a new SUV every two years. Because they were so busy, they would usually come into the dealership separately. The husband would always make sure the SUV had a sunroof, and the wife would always make sure the SUV had the nicest stereo. Here’s the funny part — the husband asked for the sunroof because he thought his wife used it, and the wife asked for the stereo because she thought her husband used it. We finally figured this whole thing out when we had a chance to talk to both of them together, and they realized neither of them were using these features! Needless to say, the next SUV they got didn’t have a sunroof or the upgraded stereo.
The other reason you should evaluate your current vehicle is that it’s a good way to figure out if you don’t have a feature you really need. For instance, if your favorite feature on your current vehicle is the engine power, but your most hated feature is the poor gas mileage, you can use your experiences to figure out which is more important. Just like above, make a list of the things you like and the things you could live without.
3. Are there any new features or options that you absolutely must have? Any that you can’t stand?
Next time you’re in a parking lot, take 5 minutes and look at some other kinds of cars. Even if you’re not interested in owning a big Chevy SUV, you might like the idea of having a folding row of seats. Or maybe you want a hatchback because they’re so easy to load. Maybe you’re interested in a vehicle that has an upright sitting position, or maybe you’d like to have 4wd or AWD for the winter months. Make a list of the features you might be interested in and the features you don’t want — that’s a good way to help you figure out what’s most important to you.
By now you should have three lists — 1. The features you need; 2. The things you like about your current car and the things you could live without; 3. The new features you want and the ones you can’t stand. Looking at all three of your lists, you should be able to figure out pretty quickly if a car is going to work for you. With your lists in mind, it’s time to go window shopping. Take a look at cars and decide if they meet your criteria — if they do, test drive them. If they don’t, look at something else. When you find one you like, check out our new car buying guide or used car buying guide for advice on getting the best deal.
Young Drivers Should Buy Used Cars
on Sep 06 in Who Should Buy Used? tagged deciding what to buy, Used Cars, young drivers by jasonl
If you are a young driver (under 25), or if you are buying a car for a young driver, you should definitely consider a used car. Often times young drivers end up with a new car because there are a lot of positives for young owners — new cars are safe, reliable, and usually offer some sort of first-time-buyer financing or rebates. New cars also tend to get young buyers really excited. However, before you go to the local dealership and buy a brand new vehicle, consider the following:
1. Younger drivers are most likely to trade-in their new car too soon. Young people — don’t take this the wrong way. We’re not saying that you’re irresponsible because you want to trade-in your car every year. What we’re saying is that younger drivers, as a whole, have the most life-changes of any buying group. Think about it — odds are very good that a person 25 or younger will do one of the following:
- Move out of state (for a job and/or college).
- Get married. We know, we know, it’s not in your plans, but look at the statistics. It’s a very real possibility.
- Move back in with their parents. Will your new car keep you from being able to pay rent?
- Have kids. Sure, you’re not planning on it, but how many people do plan on it?
- Join the military, peace corp, job corp, etc.
The fact is that the best part of being young is that you don’t have to make any commitments or any long-term plans. You can be in college one day, and living in downtown Boston the next. Single today, married with a child this same time next year. Living in a big city now, living in a small town tomorrow. You get the idea.
Because young people’s lives change so much so quickly, it’s almost impossible to buy the right car. The new 4-door economy car you buy today sounds great, but what if in two years you need a 4×4 to get to work? That new coupe seems like the perfect car, but what if you have a family? In fact, you could buy a car and then get offered a job in a big city where you don’t need a car. Because things can change so much, the best bet is to buy something cheap and reliable until such time that you know what’s going to happen for the next few years.
2. Young drivers tend to be hard on new cars. OK – this point is a little personal. Hopefully, we haven’t offended anyone. It’s just that, in our years of experience in the car business, a car owned by a young person usually has more wear and tear than a car owned by just about anyone else. Maybe it’s all the partying, all the hauling your friends around, or maybe it’s just that you’re too busy to worry about anything else. We know it’s not a reflection on your character, just a circumstance of your situation. But no matter why it happens, the fact is new cars with excessive wear and tear are very hard to trade-in. Buying a new car and tearing it up can result in you having to keep that car until it’s paid off — for a lot of young people, that might as well be forever. With a used car, you can’t hurt the value as much if you tear it up. It was cheaper to begin with.
For parents buying cars, here’s another thought to consider: If you buy your young driver a new car, what life lesson are you teaching them? Better to buy them a safe, reliable, and cheap used car than a nice new car. That way they’ll learn they have to earn the best things in life just like you did. At least that’s our opinion.
3. Young drivers should buy used to save money. People under 25 already have enough to worry about — why should they saddle themselves with a big car payment? School, high auto insurance costs, and a healthy social life all cost money. Since most young people have to start out in an entry level job, should they really commit themselves to a big new car payment? After all, no one wants to see them move back in with their parents…
We hope that our frank advice here wasn’t offensive to anyone under 25, but we want to make it clear how many young people we’ve seen struggle with car expenses. While it’s extremely tempting to buy a nice new car when you’re a young person, we’ve seen it backfire more than half the time. I can’t tell you how many times I sold a new car to a young person, after suggesting they consider a less expensive used car, only to see them return a year or two later and try to trade that same car in. Had they bought the less expensive used, trading would have been much simpler. In fact, had they bought a less expensive car in the first place, they probably wouldn’t need to trade at all.
Questions You Should Ask Yourself Before Buying Used
on Sep 04 in Who Should Buy Used? tagged deciding what to buy, Used Cars by jasonl
When considering a used car, you should ask yourself some questions:
1. How long are you going to keep it?
If you want to keep a car for more than 5 years, buying used isn’t always a good deal. Depending upon the mileage and age of a used car, it can sometimes be a really bad idea to buy used if you’re planning on keeping it for a long time. For instance, if you drive 15k miles a year and you buy a car with 75k miles on it, you’re not going to get more than 2 or 3 years out of it before you start spending major money on repairs and maintenance. While you might have saved big bucks because you bought used, if you end up spending thousands of dollars on repairs two or three years down the road, did you really save? The point is, buying new is more expensive but it is worth it in some cases. But before you decide, ask yourself…
2. OK — How long do you think you’ll really keep this car?
Most people buying a car will say that they’re going to keep it for at least the next five years, but the average term of ownership is only 39 months (about 3 years). The truth is that most of us overestimate how long we’re going to keep a car. And there’s a good reason for this — as our lives change, so do our cars. Three years from now you could have a new job, a new house, a new pet, a new hobby, a new baby, etc., any of which would require you to change vehicles. Also, ask yourself how long you’ve kept cars before. If you’ve never had a car for more than 3 years before in your life, why would that change?
3. If you’re not going to have it for very long, why buy a new car?
The biggest advantage of buying a new car (aside from that wonderful smell) is that you know it will last a very long time. You can make sure it’s properly maintained, you know it’s strengths, personality, etc. But if you’re only going to have a car for two or three years, all the advantages of having a new car go away. They’re expensive, they depreciate, and they’re hard to trade-in until they’re almost paid off. For all these reasons, if you’re only going to keep a car for 2 or 3 years, buying used makes a lot of sense. Used cars are less expensive, they don’t depreciate as much, and if you get one in good shape with a warranty you shouldn’t have any repairs or expenses.
4. What’s your financial situation?
Do you have any outstanding credit-card debt? What about 2nd mortgages, home equity loans, or student loans? If you can answer “yes” to any of those, you might want to think about going with a used car. Getting an inexpensive used car can help you pay off your other debts early. Once all that other debt is gone, feel free to treat yourself to a nice new car.
One last question — Are you picky? I mean, really really picky? If you are (and that’s OK as far as I’m concerned), you should buy new. Used cars always have scratches, dents, rattles, squeaks, stains, etc. None of that stuff should be too bad, but ultimately a “used” car is, in fact, used. Make sure you’re OK with this fact before you buy one and you’re sure to be happy.
Everyone Should Consider Buying a Used Car
on Sep 04 in Who Should Buy Used? tagged deciding what to buy, Used Cars by jasonl
If you’re in the market to buy a car, there’s a good chance buying used can save you money. While there are a lot of factors to consider when deciding to buy a new or used car, here’s a few reasons to think about going used:
1) Used cars don’t depreciate as much as new cars.
Everyone knows that new cars depreciate thousands of dollars when you drive them off the lot. Used cars also depreciate, but usually they do so much more slowly and in much smaller amounts.
2) Used cars are often half the cost of new cars.
Most new cars lose 25% of their value the first day of ownership, and 40-50% within 2 years of being purchased. In other words, a 2 year old used car/truck/SUV is HALF the cost of a brand new one. Usually, these 2 year old vehicles are still under warranty and they have relatively low miles.
3) You can often afford a nicer used car than you could buy new.
If your budget doesn’t allow you to buy the new car of your dreams, switching to a used vehicle allows you to get more features and luxury (often for a lower price).
4) Used cars can be purchased with warranties similar to new cars.
If you’re biggest concern is buying a reliable car, remember that you can often buy a warranty on a used car that will meet or exceed the standard new car warranty.
5) Used cars give you more options in the future.
Often times, when you buy a new car you find yourself locked into a vehicle for a few years. Perhaps it’s just a three year lease, or maybe you decided to take the 0% financing for the next 6 years. In either case, it’s difficult or impossible to trade the vehicle in until your financing or lease is over. With a used car, it is much easier to trade-in and change vehicles.
Whatever you decide, make sure you always follow our basic advice. Do your research, get quotes online, and take your time.
