October 3, 2023 • 41 mins
That new-car-smell is closer than you think! In this episode, Matt and Molly welcome Car Talk’s Editor-in-Chief Jamie Page Deaton back to the show to weigh in on the differences between leasing, financing, or outright buying new and used cars. Learn how to enter a dealership with confidence, uncover the tools you need to score the best deal, and determine whether or not you need that extended warranty or service plan!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
So you want to buy a car. You figured out
your budget and which car you want. It makes sense
for your needs. Plus you can afford the monthly payments,
insurance and annual maintenance, and now it's time to get
down to business and actually get those keys in your hand.
But figuring out how to get the best price and
where to direct your research can be overwhelming, and walking
(00:30):
into a dealership can feel a little like you're swimming
in shark infested waters while you're covered in fish guts.
This is a totally normal feeling, though. According to the
results of Capital One's Auto Navigator survey from twenty twenty,
only twenty six percent of participants felt confident shopping for
a car, and only twenty four percent we're sure of
their negotiating abilities in the dealership. It's no wonder given
(00:54):
how complicated buying a car can seem. Even if you've
done your research about which car you want, then they're
figuring out how to finance that car. Should you always
buy it outright if you have the cash, or should
you still take on car payments with a loan. Plus
let's get into car buying online. Please start taking notes,
because this is.
Speaker 2 (01:15):
Stuff.
Speaker 1 (01:18):
What's up my freewheeling joy riding hands at ten and
two friends. Welcome to another episode of Grown Up Stuff
How to Adult, the podcast where we learn the secrets
to growing up and feeling like knowledgeable adults. As always,
this is Molly and I am joined by my co
host on two Wheels, the motorcycling mat Still though, Matt,
we are back here to talk about buying a car
in this pardieu. As the French would say, do you
(01:40):
want to give the grown Up Stuff fam a little
recap on what we talked about last time?
Speaker 3 (01:44):
Totally? In our previous episode, we talked to Jamie Page
Deeden about creating a car buying budget, and she reminded
us to not forget things like insurance, regular maintenance costs,
and gas. She also taught us about some of the
latest safety features in cars today.
Speaker 1 (01:59):
Backup cam standard baby whoo whoo.
Speaker 3 (02:02):
That's right. But there's also lane assist and censors that
can tell you when you're getting sleepy.
Speaker 1 (02:07):
Oh yeah, that was crazy. It scans your eye movements
and tracks how tired you may be. Insane.
Speaker 3 (02:14):
Yeah, and Jamie also dropped some knowledge on hybrid's and
evs and gave us some very useful information on the
average range for these types of cars.
Speaker 1 (02:23):
Right, and honestly, I had no idea there were two
different types of hybrids, so that was a real eye
opener for me. She also had some great tips for
figuring out the reliability of your future car. But we
don't want to tell you everything, So if you haven't
gotten a chance to hear all of these gems, go
back to that first part with Jamie and give it
a listen.
Speaker 3 (02:42):
As a reminder, Jamie spent fifteen years as the executive
editor of the US News and World Reports Best Cars team,
and today she is the editor in chief of Car Talk.
Speaker 1 (02:52):
But Jamie is back again today for another round of
car buying conversations. Jamie, welcome back. Thank you so much
for joining us again for part two of this conversation
on how to buy a car.
Speaker 3 (03:05):
Now.
Speaker 1 (03:06):
I want to cover something that we didn't get a
chance to hit in part one, and I think it's
important to highlight what are the biggest misconceptions, in your opinion,
that people have about buying a car.
Speaker 2 (03:16):
The biggest misconceptions that people have when they're buying a
car actually has very little to do with the car itself.
It's that they have to take the financing the dealer
offers them. Most people do not walk into a dealership
with a load in hand, and that is a huge,
huge mistake because the dealers make money by referring people
(03:38):
and getting people finances, so they get a kickback from
the financing company or bank that they're working with, and
they can get a bigger kickback if they put you
in a higher interest rate. Huh, So they're incentivized to
kind of make you pay way more than you should
for the car over time. So the number one thing
if you don't do anything else when you're buying a car,
(03:59):
go online, get yourself, you know, from a credit union
or an online only bank. Those are the two types
of businesses that tend to have the lowest rates. Go
get yourself your own car loan already in hand. And
then when the dealer's like, ooh, I can take care
of you with eight percent, you can be like, bam,
I got five point five already. Beat that and that
will save you. I mean, people focus so much on
(04:20):
the price of the car or like their monthly payment
that they don't look at the overall cost, and that
overall cost is really driven by your interest rates. So
the lower you can get it, the better you're gonna
do and shop around for the interest rate the same
way you shop around for a car.
Speaker 3 (04:34):
So I've actually heard from some people that dealers will
oftentimes get you the best interest rate. Is that just
completely not true?
Speaker 2 (04:41):
It's not completely not true. But it's better to go
in with another option. So even if the dealer can
beat it, that's great, go with what the dealer's offering,
but just walk in there with approval for a loan
where you know the interest rate and you know about
what your payment's going to be, so that you just
have that other option. If the dealer isn't going to
be able to match it, you'll save money. If the
(05:02):
dealer can beat it, great, you'll save money. But either way,
just make sure you've got another option.
Speaker 3 (05:07):
Right.
Speaker 1 (05:07):
Let's look at when we're buying a new or used car,
cash versus financing with a loan versus leasing. So this
is my very very basic understanding, and I kind of
want to go through that versus see if I'm right
at all, cash you're literally putting it all upfront. Financing
with a loan kind of similar to buying a home.
You're putting that twenty percent down, and then the loan
(05:30):
is covering the rest of the cost. And then you're
paying back that loan with interest depending on what the
interest you've agreed upon. And then leasing a vehicle. I
feel like it's like leasing an apartment. It's never really yours.
You're paying like rent on the car for a period
of time. Are these right? Do I have any of
these accurately?
Speaker 2 (05:48):
First, you're right about buying with cash. You're just handing
over the cash.
Speaker 1 (05:51):
Okay.
Speaker 2 (05:52):
There will be personal finance people who will be like, hey,
if your interest rate on your loan is lower than
the return you could get from investing that cash, then
the loan. But I'm kind of like that's super complicated.
I would just rather pay cash. But I mean, like,
you really have to look at interest rates at the time.
If they're super low, absolutely go ahead and do that.
The benefit of doing that too, is like, all your
(06:13):
cash isn't tied up in a car, sure, so you
maintain some liquidity with the loan. You got it right,
You're paying for the privilege of borrowing money for that car.
You don't have to necessarily put money down. But it's
a good idea and then the loan company makes a
profit by you paying interest to them, and if you
don't make the payments, they're going to come take your car,
So just know that.
Speaker 1 (06:32):
Don't love that.
Speaker 2 (06:33):
And then leasing, it's not quite like leasing an apartment.
Leasing is essentially a loan, but only on a portion
of the value of the car. So let's say you're
looking at a forty thousand dollars car. If you get
a loan, you're financing, and let's say you don't have
a cash but you have a super high monthly income,
so you're going to go ahead and finance the entire thing. Well,
you're financing forty thousand dollars worth of car, and then
(06:57):
you know, you make those payments for five years or
however long, and at the end you own the car
and you can do whatever the heck you want with it.
With a lease, though, you're only leasing a certain portion
of the car's value. So that forty thousand dollars car,
you go into the dealership and you're like, I want
to lease it, and they're like, great, we project that
this car is going to be worth twenty five thousand
(07:19):
dollars in three years if you only put ten thousand
miles a year on it, so you're only financing that
fifteen thousand dollars difference between the forty thousand that the
car is worth today and the twenty five thousand dollars
that they project it will be worth at the end
of the lease. A lot of these rules just don't
take into account the reality of the economy today for
(07:40):
a lot of millennials and Gen zs, which is, we
don't have a lot of cash lying around. Yeah, so
we can't do that, and we do need to shop
on payment. So what this does, because you're only financing
that fifteen thousand dollars over three years, is it makes
the monthly payment a lot lower, and so it's kind
of a way to get into a car at a
more affordable rate. The other thing that I really like
(08:02):
about it is that at the end of the lease,
let's say your lease terms say, all right, this car
is going to be where twenty five thousand dollars at
the end. But let's say like that car is exploded
in popularity, or it's not available, or you know, there's
been production issues, and the car ends up being worth
thirty thousand dollars at the end of the lease, you
get to pocket that five K. And a lot of
(08:23):
people think, you know, when you lease a car, it's
like renting a car. If I rent a car from
the hurts at the airport, I have to take it
back to the hurts of the airport. That's not how
leasing works. You can take that car anywhere and sell
it as long as what you're getting is more than
the payoff amount of the lease. And so that equity
that's built in. If the car is worth more than
what's in the lease, like that equity, that's your money,
(08:45):
and it's great because you can use that to roll
into the next car that you're going to purchase. The
other really great part of it is if the car's worthless.
So let's say the lease says it's worth twenty five
thousand dollars, and at the end of the lease it's
worth twenty you're.
Speaker 1 (08:58):
Not on the hook.
Speaker 2 (08:59):
You just get to walk away, and that's like awesome
because you don't have to worry about it. Now. I
will say, you do have to be careful with leasing,
because if there's a certain number of miles that you're
going to get in the lease, you know, ten to
twelve to maybe fifteen thousand miles a year or what's
most common, and if you go over that, it is
really expensive. So if you get a three year lease
(09:20):
at ten thousand miles a year and you turn it
in with like forty thousand miles on it, they're going
to charge you twenty five cents a mile.
Speaker 1 (09:27):
Ikes or more.
Speaker 3 (09:28):
Oh my god, so yikes on that.
Speaker 2 (09:31):
And the reason that they do that is because that
value at the end of the lease is based on
the mileage that the car is going to have. The
thing to keep in mind, though, is it basically means
you will always have a car payment because you lease
a car and then you go get the next one
and then then the next one, Whereas if you either
finance a car or pay for it with cash, at
a certain point you're going to own that car, and
(09:52):
your monthly cost then drops quite a bit because you
own it, you're no longer making payments on it, and
leasing has kind of over your life span, like if
you do it over and over again, it's going to
end up being more expensive than if you just bought
a car and drove it into the ground. But again,
a lot of people aren't in a position where they
can have these super high monthly payments, super high loans
(10:13):
where they have thousands of dollars to put down. And
so if you absolutely need a car and you can
only afford a certain payment, leasing is a decent way
to get into it.
Speaker 1 (10:23):
So follow up question about the leasing to parallel with
it with leasing an apartment, which I know you said
isn't exact. In an apartment versus buying a home, we're
not responsible for anything that breaks. Now, if we're leasing
a car versus owning a car, does the dealership then
pay for if anything wears down? Or are we on
the hook for those repairs?
Speaker 2 (10:45):
You're on the hook for those repairs. The good news is, though,
because leasing is almost exclusively for new cars, there are
used car leases available. They're terrible, don't do it. But
if you're leasing a new car, the car is only
going to be at maximum three years old. If you
get to three year lease, what's gonna go wrong? You're
gonna be on the hook for maintenance. Although some dealers
might throw in a paid maintenance plan, some of the
(11:07):
manufacturers will also throw in a paid maintenance plan, depending
on what incentives they're offering that day. Right, you're on
the hook for repairs, but the car is only three
years old, so those costs are not going to be
particularly high.
Speaker 1 (11:18):
That makes sense. If you're someone who loves driving the
latest and greatest model of cars, leasing may be worth exploring.
You could switch cars every three years, which is an
average lease term, without needing to take out a loan.
In fact, your monthly lease payments can cost up to
(11:39):
one hundred dollars less compared to the average car loan payment.
That being said, if you're in it for the long
haul and you put a lot of miles on your car,
maybe you're not a car lease kind of person. Kredit
Karma says the average mileage limit on a lease is
between twelve to fifteen thousand a year. If you go over,
you could be charged anywhere from ten to twenty five
cents a mile over that limit. So let's just use
(12:01):
some quick math. If you go over that limit by
just a mere thousand miles, at twenty five cents a mile,
you're paying an extra two hundred dollars. My friends, that's
a night in a decent hotel or a round trip
airfare to New Orleans.
Speaker 3 (12:17):
I've read a little bit about getting pre approved for
a loan is this something that we should consider and
if so, how might we go about starting that process.
Speaker 2 (12:27):
Yeah, you should absolutely do that. Most lenders, when you're
getting pre approved for a loan, what they do is
they give you basically a pre approval certificate. Sounds kind
of weird. In some cases they will even give you
basically a blank check that when you fill it out
and sign it, the loan goes into effect. But you
should be going and shopping around and have that loan
(12:48):
kind of in your back pocket that approval, because that
allows you, then, you know, while you're at the dealership
to just kind of call up and be like, yeah,
I'm going for it. But just because you're preapproved does
not mean that you are necessarily going to use that loan. Now.
A very important thing to do, though, is as you're
comparing kind of loan offers, make sure you do it
all within a two week period because they're going to
(13:10):
do a hard pull on your credit which is going
to knock your score down. So if you go at
the beginning of the month and you get a quote
from one lender, and then you go at the end
of the month and get a quote from another lender,
in that time, your credit score is going to go
down because you had a hard pull at the beginning
of the month, and that's going to get you a
higher rate and just overall less favorable loan terms for
the ones that you do later. So like, set aside
(13:32):
a day and go out and get approved for a
bunch of loans and then take those to the dealership
with you, because again, if the dealer's like, I can
get you eight percent and you're like, I got five
percent right here, let me just call up the bank,
pull the trigger and get the loan going.
Speaker 1 (13:46):
So you mentioned favorable loan terms in your opinion, what
constitutes favorable loan terms.
Speaker 2 (13:53):
Interest rates are so high right now that I feel
like favorable loan terms do not exist. But right now,
with interest rates as high as they are, there are
some promotional loan terms that are around three to four
percent now, like two years ago, those were sky high.
Right now, that's about as good as you can do.
So really look for anywhere between you know, three and five,
(14:15):
maybe even six percent. What you really want to avoid
is there are a lot of predatory dealers out there
that will get you into a car with like twenty
five percent interest, which at that point you might as
well say yeah, especially if you're in the military. They
tend to hang out around military bases. It's messed up,
But like it's going to depend on your credit score,
it's going to depend on your debt to income ratio,
(14:38):
your debt utilization, like all the good stuff that everybody
kind of knows about, but those favorable loan terms, Like
what you really want to look for is to get
the shortest loan that you possibly can with the payments
that you can afford. So you can get your payments
lowered by going for a seven year loan because that
spreads out the payments a lot longer. But you're going
(14:59):
to have a really hard time building equity in the car,
so you're going to be in that upside down situation
like we talked about. But if you can do a loan,
if you can handle the payments for like three years,
you're going to be golden because then you'll have the
car that'll have probably another five to ten years of
life left after that if you maintain it well and
take good care of it, and you'll have that five
(15:21):
to ten years without a car payment. Now, I still
recommend you make a car payment, but make it to yourself,
because guess what, then, when it's time to buy a
car again, you have a huge amount of cash and
you're ready to go.
Speaker 1 (15:36):
As a reminder, being upside down on a car loan
happens when your car is worth less than the value
of your loan. Jamie gave the example last episode of
the depreciation that happens the second you drive your car
off the lot. So let's say you borrowed twenty thousand
dollars to buy your car, and after driving away from
the dealership, it's actual value dropped down to fifteen thousand.
You're now upside down on your loan, and if your
(15:58):
car is totaled before you make up that difference, the
insurance company is only going to cover the value of
your car and not the full amount owed on your loan.
Speaker 3 (16:10):
We've talked a little bit about favorable loan terms and
that people with good credit can expect to see somewhere
between like a three to six percent interest rate and
an interest rate of like fourteen to twenty five percent
is something that it should absolutely be avoided. But it's
got me thinking about those with less than perfect credit,
what range of interest rates might they expect to see?
On a loan.
Speaker 2 (16:31):
Yeah, keeping in mind that I'm not a bank. Seven
to twelve percent. Wow, you can, I think, do a
little bit better. If you live in an area that
has a local credit union, you can generally get better
rates from credit unions, and that credit union is going
to take kind of more of a personal look at
your financial setup, whereas like Bank of America is going
to run you through an algorithm and be like, this
(16:51):
is the best we can do. With a credit union,
they might be able to take a little bit more
of a holistic view of view. So even if your
credit score isn't great, but you have a history of
on time payments, they might be willing to take more.
Speaker 3 (17:03):
Of a risk. That's a great incentive for our audience
to keep, you know, working on bumping up their credit score.
But also it's good to know that there are options
out there for people with a less than perfect credit score.
So in our research for this episode, we found a
survey conducted by Cox's Automotive and Auto Trader that the
digital age has transformed the car buying experience, with eighty
six percent of car shoppers in the US using the
(17:24):
Internet for car research and fifty six percent of car
buyers just saying that they would be open to full
on purchasing a car online, like given the shift in
the emergence of online only businesses like Carvana like Room,
what really are the pros and cons of purchasing a
car completely online versus purchasing one in a dealership.
Speaker 2 (17:43):
So, I mean the pros are you can be really
antisocial and do it without like putting pants on.
Speaker 1 (17:49):
If you hate people and hate pants, we've got a
car situation for you.
Speaker 2 (17:54):
Carvana for people who hate pants. I mean, it's just
way more convenient. The other thing that is a huge
benefit of it is they have nationwide inventory. Oh so,
like if the car that you want is an available
near you, they can bring it to you, whereas you
know your dealer is going to be like sorry, sad trombone.
Most of the online car buying places give you a
(18:15):
return period of like I think it's like five days
or maybe three hundred miles, which is nice because you
haven't had a chance necessarily to test drive that car
or even inspect it. Because right now, you know Carvana
and Room, they're just used cars and you're not going
to be able to get it inspected. So if you're
going to go that route the day they drop that
car off, take it to a mechanic for an inspection
(18:36):
while you're still within that return period. So if it's
a bad car, you can get rid of it. The
advantage of a dealer is that you're going to have
somebody who can generally just walk you through the car
all the features. You're going to be able to test
drive it, and then you're going to have, you know,
a place to go for maintenance if it's a new car.
But generally speaking, you can kind of put your hands
together and combine both of those things with like CarMax,
(19:00):
big use car dealer, but just in general now it's
really nice because you're not confined to the cars that
are just in your area, and you have a really
good view of what those cars are worth, what a
reasonable prices, so you can go. A site that I
really like is car Gurus. It was founded by one
of the guys that founded trip Advisor, and so they
(19:20):
have a huge number of used car listings and then
they've got an algorithm that's based on location and features
and mileage and condition that'll tell you if that price
is a good price or not. So that is one
really really helpful thing. There are a bunch of other
sites that do similar things, or you can just kind
of do your own little piece of analysis and say, okay,
well this seems a little bit over price, considering there's
two more over here. You know, same cars, same mileage,
(19:42):
and there are a couple thousand dollars less. If you're
looking for a new car, dealers hate this one secret.
There's a company called True Car, and you can go
and get a guaranteed price certificate from True Cars so
you don't have to negotiate, which is another nice thing
to have in your back pocket, because if you get
to the dealer and you're like, I'm going to try negotiating,
then after fifteen minutes you're like, this is going terribly
(20:03):
I'm just gonna whip out this price coupon and make
them monitor that. Now you do have to go to
a participating dealer with True Car, but it's an option
if you don't want to negotiate. But really, the best
way to buy a car just kind of depends on you.
If you're somebody who wants to go negotiate at a
dealer and touch everything before you buy it, go do that.
If you're somebody who doesn't want to talk to anybody,
(20:23):
go to Carvana. If you want to have a mix
of the two, go to CarMax.
Speaker 1 (20:28):
In March of twenty twenty one, ABC News reported that
nearly thirty percent of new car sales in twenty twenty
happened online, and the majority of people who bought cars
online they're failing pretty good about it. Based on a
survey conducted in January of twenty twenty two by Progressive,
seventy eight percent of people who bought a car online
in the previous two years said they found the experience
(20:49):
quote highly satisfying, and many experts are predicting the trend
will continue to grow. But if you're not quite ready
to make the leaf online, as Jamie mentioned, CarMax could
be a good in between option. While CarMax has brick
and mortar locations that allow customers to purchase a car
in person, they also have the option of buying online. Plus,
(21:09):
if you decide to shop in person and they don't
have the specific car you want, they can ship it
to you. While most traditional dealerships are limited to selling
you only what they have in stock at their specific location.
Speaker 3 (21:23):
So the last segment that we want to get through
is all just talking about dealerships, because you do have
to be social, and you do have to wear pants,
and you just need a little bit extra pants before
walking in there. So let's say that we found the model,
the exact model of the car that we want to buy.
What are some final considerations to make before walking into
a dealership and what advice you have for the moment
(21:46):
that we do walk in.
Speaker 2 (21:48):
Okay, well, first, I mean, not wearing pants could be
a viable negotiation tact. But the main thing the moment
you walk into a dealership, and I think everybody forgets this,
you're allowed to walk out. They will sit you down
and they will kind of try and tire you out,
but you're allowed to leave. They're not cops, right, You're
allowed to leave at any moment. You can stand up
(22:10):
and say, you know what, this isn't working for me.
And I admit it's really hard to do because you
feel like you're violating about fifty social norms. But you're
absolutely free to go elsewhere. There are tons of car
dealers around. You don't have to work with that one.
And even though you might have your heart set on
a particular make and model. Guess what they made more
of those. So you know, no car is a one off. Well,
(22:32):
no car that anybody's actually buying is a one off.
So just know that you can walk out and you'll
have other options. The other thing to remember is it's
a business negotiation. It's not personal, right, and the dealer
is treating it as a business negotiation. Most people are
at a little bit of a disadvantage because buying a
car is highly emotional, right, I need this to get
(22:54):
to work, Like I need this, and I like this,
and I want this. It's weird because are essentially appliances
that we tie our identities to or as nobody's like
I love my toaster so much I work on it
on weekends and like, you know, I'm a Black and
Decker Man till I die. Like nobody does that with
their toaster, but they do with their cars, and so
there's some emotionality. I mean, people name their cars. You're
(23:17):
immediately at a disadvantage because a dealer's coming at it
as a business and you're coming at it with some
emotion tied up. So as best as you can channel
your internal mister Spock and go into it as a
business negotiation, which means that before you even get there,
like we talked about, have that loan, know your absolute
ceiling that you can go for in terms of price
and in terms of payment, and then really treat it
(23:39):
like I am a robot and I'm going to negotiate
on this like a robot. And if they aren't giving
me what I need and what I feel like I
should get, I'm going to walk out. And that's totally okay.
So just say, hey, you know what, I appreciate your time.
I don't think we're going to get to resolution here.
If things change, feel free to give me a call,
but I'm going to go someplace else.
Speaker 1 (24:00):
We'll be right back with more grownup stuff how to adult.
After a quick break and we're back with more grownup
stuff how to adults. Is there a best time to
buy a car?
Speaker 2 (24:20):
Yeah, the best time to buy a car was like
three years ago I got get your time machine together,
So I would say the best time to buy a
car other than three years ago is when you're ready
financially and you've worked everything out. But you can occasionally
get deals towards the end of the month because dealers
(24:43):
have incentives you know, bonuses they get if they sell
a certain number of whatevers at the end of the month,
So if they're a couple of cars shy, they're gonna
maybe be willing to have some flexibility there. The time
where you're going to get the biggest discount, though, and
this is awesome, is the week between Christmas and New
Year's Now. To be clear, you're not going to get
like half off or anything like that, but you are
(25:03):
going to get a slightly better deal. And by slightly
I mean maybe you're saved you know, two to three
thousand dollars, I will say, though, especially since you know
twenty twenty, automakers have gotten a lot better at managing
their supply of cars, so it's not like they have
a huge overflow of cars. In fact, in a lot
of cases, if you're looking at a new car, you
may have to wait while the thing's built and gets
(25:23):
to you. But if there's a car that a dealer
is overstocked on and like you're like, hey, my needs
are pretty general and I don't really care what I drive,
that's what you want to target, particularly if it's a
model that's not particularly popular where you live.
Speaker 1 (25:37):
November December is always the time of year where my
dad would buy his convertible. And keep in mind, my
dad lives in Chicago, folks, so not a whole lot
of people in the market for a convertible in November
December in Chicago.
Speaker 3 (25:52):
And that's the thing.
Speaker 2 (25:53):
If you want to get the best deal, swim upstream,
go against the market.
Speaker 1 (25:59):
The fall can be a great time to get a
deal on last year's inventory as next year's latest models
start to arrive at local dealerships. Additionally, if you're not
worried about having the absolute newest model of car, MarketWatch
recommends scoring a deal on previous models around the time
a car maker comes out with major design changes. This
is called the end of car design cycle.
Speaker 3 (26:20):
We've been talking a lot about value, So like we'll
walk in, we'll know the true value of the car
that we're trying to trade in, the true value of
the car that we want to buy. But once we're
like at a dealership, like a lot of other numbers
will kind of be floated in our direction, like MSRP,
invoice price, sticker price, fair purchase price. You know what
are all these numbers? If you could break it down
and like how do they relate to the amount we
(26:42):
will have paid, you know, once we walk off the
lot or drive off hopefully.
Speaker 2 (26:47):
So MSRP is the manufacturer suggested retail price. That is, like,
say you're going to a Chevy dealership. That's how much
Chevy thinks you should pay for that car. The sticker
price is that plus whatever add ons the dealer feels
like they can get away with. And keep in mind,
they might act like these add ons are mandatory, and
some of them will, like if it's a particularly strong
(27:08):
market and they know they're not going to have trouble
selling that car, they will make the mandatory so like
undercarriage coding nitrogen. And then even sometimes like we've seen
dealers put just like a market fee where it's basically
like we're going to charge you ten grand more because
we know we can, so that will get you to
the sticker price. Invoice price is what the dealer paid
for the car. So where you have that negotiation window
(27:30):
is between the sticker price and the invoice price, and
that's where you have the wiggle room. Keeping in mind,
like the dealer is a business. The dealer has overhead.
The dealer needs to make profit, So no, you're not
going to get invoice pricing on a car because that
would be no profit for the dealer. But as close
as you can get to that is going to be
pretty decent. But again, like the current car market, new
(27:52):
or used is pretty constrained. There's a lot of demand
and so you know, again it depends on the model,
depends on your kind of micro market that you're in,
but you're not going to get like close to invoice price.
The best you can get is maybe midway between invoice
and sticker, and in some cases, if it's a super
popular car, congratulations, you're going to pay sticker.
Speaker 3 (28:12):
You mentioned these dealer installed options. Is there any reason
why we should be wary of them.
Speaker 2 (28:18):
They're just up charges of stuff that you don't really need.
They're way for the dealer to like make you feel
good about them charging you more money because they'll be like, oh, yeah, man,
you need nitrogen in your tires.
Speaker 3 (28:28):
No you don't.
Speaker 2 (28:29):
The other thing is, like my favorite question is they're
always like, well, we really recommend the undercarriage coding, and
I'll be like, are you telling me Toyota let this
out of a factory without the correct coding on the undercarriage, right?
And then they'll kind of be like, no, you don't
need it, but they're trying to sell you that stuff,
and that's totally fine, but like what you want to
do is basically say to the dealer, like I don't
need that stuff, So what can you do by cutting
(28:49):
all that stuff out?
Speaker 1 (28:51):
What are the signs that we should just walk away?
Speaker 2 (28:54):
High pressure? If they're like what is it going to
take to get you in this baby today? Like that
kind of thing. If they're like no, no, no, you can't
leave anytime where you're just feeling uncomfortable, like I will
go to a dealership, you know, if we're buying a
car'll go with my husband. They only talk to him congratulations,
you're not getting my business.
Speaker 1 (29:09):
Yeah, that's my stuff. I hate that.
Speaker 2 (29:11):
I can't stand that. And then don't walk in and
say I already have a loan and I already have
you know, a value for my trade in see what
they offer first, and if what they're offering is so
far out of left field, you know they're going to
be trying to take advantage of you. The other thing,
and this kind of goes back with leasing, There is
interest charged on a lease. It's called a money factor,
(29:32):
you have to convert it into a interest rate. But
when they come back with the money factor on a lease,
if you're thinking about leasing, convert it to an interest
rate and make sure it's fair. Because there was one
time I was like, I'm going to lease this car
and I had really good credit and then I converted
the money factor into an interest rate and they were
trying to charge me twenty four percent interest and I was.
Speaker 3 (29:53):
Like, no, thank you good hoe ja.
Speaker 1 (29:56):
Yeah yeah.
Speaker 2 (29:56):
So it's just have that information in your back pocket.
You don't need to share it, but use it as
a barometer of if you're being treated okay, and if
they come in close or under great, you found a
really good dealer. The other thing, if you have friends
or family in an area that have had a good
relationship with a particular dealer new or used cars, especially
a particular salesperson going in and being like, hey, my
(30:18):
friend Mike bought a car from you, said you were
really good to work with. That salesperson then knows that
like hey, they get a significant amount of business from
word of mouth, like that's a good source of leads
for them, so they want to treat you right.
Speaker 3 (30:31):
What is a pre purchase inspection and should we get one.
Speaker 2 (30:36):
A pre purchase inspection is before you buy a car.
It's you taking it to a mechanic that you choose
to have a look see at it, and you know,
see if the mechanic can find any issues that are
currently or that it might be a risk later. Don't
need to do it with a new car. I would
even say you don't need to do it with a
certified pre owned car, although if you really feel like it,
you can. But this is basically you spending you know,
(30:56):
maybe one hundred bucks up front to know if you're
going to have problems down the line. A lot of
places really don't like you to do this, so this
is why, Like if you buy from like a Carvana
or a CarMax and you've got that return period, do
it immediately during the return period. If a place is
willing to let you test drive by yourself, go take
(31:17):
it to the mechanic test drive really quickly. Like have
that appointment set. When you have your test drive appointment.
A lot of times you can't always get it, but
there are things that you can look for even if
you are not a mechanic. So kind of a little
bit of a red flag, but I guess I'm going
to call it an orange flag. For me is if
I'm looking at a used car and the dealer knows it,
(31:39):
I'm going to come test drive it if they've pulled
it around front. And the reason I don't like them
to do that is because I won't be able to
see all the leaks it might have sitting. So if
you're looking at a used car, you don't necessarily want
to give them a heads up. But what you do
want to do is get under that car and see
if anything leaking. The other thing that you really have
(32:02):
to worry about, especially as there's like flooding in California
and we're in like end days types of weather is
like flooded cars. You do not want a flooded car.
Those are actually not that hard to spot. If the
carpeting doesn't match, if it smells musty, if you open
the hood and there's a bunch of like leaves and
debri in the engine bay, or a lot of times,
(32:24):
you know, if you open the cargo area and you
pull a carpet up a little bit like you can
sometimes see a waterline for how deep the car was flooded,
and you want to stay the heck away from flooded cars.
They will never be right. The other thing you can
do is pull a carfax of the car that will
at least catch some of the accidents that have been
you know, if it's been reported to insurance, and then
(32:45):
even ask like if you're out to use car dealership, like, hey,
what's the return period on this? And some places, depending
on the policy, will give you twenty four hours. Great,
take it to the mechanic in that twenty four hours
and make sure there are no issues that are going
to really kind of bust your budget real quick.
Speaker 3 (32:58):
You mentioned certified pre owned. Is that different than used?
Speaker 2 (33:02):
Yes, a certified pre owned car is basically a used
car that the automaker has taken in and inspected. And
usually the certified pre owned cars are cars coming off
of leases, so they tend to be three, you know,
about three years old. They'll be like, we have a
billion point inspection. It just means they're going to be inspected.
And generally why you would want to go for one
(33:23):
of these is it'll have better warranty coverage than just
your plan old, average use car because the dealer or
the car maker is standing behind that car more fully,
but know that you're going to pay more for that
peace of mind. They tend to be more expensive than
used cars.
Speaker 3 (33:37):
So we talked a little bit about extended warranties, and
this is maybe a two part question really like is
it ever a good idea to get one of those?
And also like there are all kinds of things that
are going to be thrown at you, you know, when
you're finally signing the paper, Like, is there a way
to make sure that like we're not getting like scammed
on like closing costs of a car.
Speaker 2 (33:57):
Yeah, So, like the extended warranty of all, if you're
buying a new car, you don't need it because you'll
have the manufacturer warranty. And even on some used cars,
the manufacturer's warranty may be transferable to a certain degree.
So for example, if you're buying a Kia, Kia has
a great ten year, one hundred thousand mile warranty and
I know, I sound like a Kia ad a portion
(34:17):
of that is transferable to the second owner, So oh wow,
look for transferable warranties. That's always good. But if you're
looking at a really old car that's had more than
one owner, you're going to be an extended warranty territory,
and what you want to think about is would I
rather pay this every month or would I rather save
the money for when the surprise repair comes up. So
(34:39):
it kind of depends on your peace of mind or
how you like to manage your money. But know that
not everything's going to be covered under your extended warranty,
so really read that fine print and make sure that
what's likely to go wrong with this car is going
to be covered by this extended warranty. Also look at
how you could void the warranty and then don't do
those things. So in a lot of cases, you know,
(35:01):
if you're not getting regular oil changes, that voids the warranty.
So the closing costs and stuff, if you've come in
with a loan from the bank, you should already know
what those are and you'll have options there as well.
The closing costs are not going to be huge like
they are for like a house, where they're just thousands
of dollars. These loans are so much smaller that you
don't have that. What you might get surprised with are
(35:21):
taxes and registration fees, So you should look up what
the car sales tax in your state is and factor
that into your budget. You can roll that into your loan.
Same with the registration cost. Usually dealers will charge you
like a paperwork fee of like one hundred bucks and
that's them dealing with the DMV, so you don't have
to deal with the DMV. I think it's totally worth it.
I would pay so much money not to deal with
the DMV. And No two, if you're at a dealership,
(35:44):
even if you've brought your own loan, they're going to
have you go in and see the finance person and
it's just going to be part of their process. Be
nice to the finance person. It is their job to
offer you all these things. They can't get out of it.
So don't be like, just don't even offer them because
I'm going to say no because they're going to be
like I have to. So just let them go through
and just be like no thanks, no thanks, no thanks, like,
(36:04):
do as many different no thanks voices as you can,
because they take it a game. Just kind of tolerate
it and then move on and enjoy your new or
new to you car.
Speaker 3 (36:13):
Well, that's wonderful, thank you. So, speaking of the DMV,
are there any things that we need to consider if
we're buying a car, like in a different state than
the one that we live in.
Speaker 1 (36:23):
Yes, so some.
Speaker 2 (36:24):
States will have reciprocal agreements, which means that you'd only
have to pay the sales tax once and the registration
fees once. Other states don't. So, for example, like I
live in the DC area, I can buy from a
Maryland dealer and only pay the Maryland sales tax and
they'll help me register the car in Virginia, which is great.
If I were to go to Florida, it would be
(36:46):
a lot more complicated and I would have to basically
pay to register the car in Florida so I can
drive away with it and then pay to register it
in Virginia. So that can get real expensive, real quick. Generally,
if the states touch each other, they're going to have
those types of like reciprocal agreements, and the dealer will
be able to help you out and you'll save a
little bit of money. But if you want to go
(37:06):
like four or five states away, you should really be
saving a lot on the price of the car to
maybe make up for what you're going to have to
spend in time and registration fees. Once you finally get
at home.
Speaker 3 (37:17):
And then lastly, are there any blind spots we may
have missed or that I love an that you'd like
to leave our listeners with.
Speaker 2 (37:27):
Just I mean, do your research before you go in
and know that you can leave. You don't have to
stay at the dealer, and feel free to walk away
from a deal that just doesn't feel good based on
the research that you've done.
Speaker 1 (37:39):
I love that, Jamie. You mentioned people love their cars
and they name their cars. Does your car have a name?
Speaker 2 (37:45):
My car does have a name. My car is named
Higgins after Higgins from Ted Lasso. I love it so that.
And then my husband's car is named Money Penny, after
the character from James Bond. So yeah, we always name
our cars. I will say we had this one, like
BMW we releasing, and we did not name it because
(38:06):
we were like, this car has no personality and we're
not keeping it. It's not a member of the family.
But all the other cars, it's fun to name your car,
and then you can talk to your car while you're
in your car.
Speaker 1 (38:16):
So yes, yeah, personify your car.
Speaker 3 (38:18):
By asking this question, did you not name your car?
Speaker 1 (38:21):
I think I did have a name for it, but
this is also you're asking me to remember a name
from like twelve years ago.
Speaker 3 (38:26):
Well, I remember my car's name from high school.
Speaker 1 (38:28):
What was yours?
Speaker 3 (38:29):
I was very into the office at the time, and
when I got into the car for the first time,
it had a very jan from the office field. So
the car's name is Jan.
Speaker 1 (38:37):
I do have a friend who just named her white
BMW Blanche because she's like, it's a real Blanche Devereaux
vibe from her.
Speaker 2 (38:44):
Yeah, yeah, a white BMW would have kind of a
Blanche devrodve right, I think. So, yeah, you meet the car,
the car tells you what it's five is exactly.
Speaker 1 (38:52):
This has been so so incredibly helpful, so much information, Jamie,
and we're going to have you come back to talk
to us about car our care as well, so folks
look out because there's more Jamie to come. Thank you
so much, Jamie, Thank you so much for having me.
(39:13):
I want to thank Jamie again for all the information
she has shared with us about car buying. She is
truly a bottomless well of car knowledge, and we are
going to have her join us again later this year
to tell us how to take care of our cars
and what we need to know and do to keep
them in working order. But here's what I've learned from
her today about car buying. There are a few different
ways that you can actually purchase a car. You can
(39:35):
buy it outright in cash, you can finance it with
a loan, or you can lease a car. Even if
you have all the money to buy a car outright
in cash, there may be still some reasons why you
want to take out a car loan. Get all of
your pre approvals for loans out of the way at once.
When they pre approve you for a loan, they do
a hard pull on your credit and that will impact
your credit score. So if you start the process to
(39:56):
get pre approved for one lending institution and then wait
until later to get others, that first credit poll will
impact what lenders see, and if you apply for pre
approval later on, this could change what they offer you
as a result. Getting pre approved does not mean you
have to go with that loan. It's always important to
have it so that you know how it compares to
the loan terms the dealership offers. And remember the finance
(40:20):
person at the dealership has to tell you what they
have to offer. Buying online could be pretty great. You
don't have to wear real pants, and you don't have
to leave your home or talk to real people. But
make sure that you know what you're getting and that
you have time to return the car if it's not
what you expected. Get your car inspected the second you
get it, and take Jamie's recommendations for spotting a flooded
(40:43):
car and avoid them at all costs. Negotiations are just business,
they're not personal. Remove emotions from the deal, and don't
be afraid to walk away. Most importantly, don't let anyone
pressure you into something that you're not comfortable with. That's
all for today's episode, and a wrap on car buying. Okay, Matt,
what's up next?
Speaker 3 (41:01):
Well, Molly, we're in October and with Halloween right around
the corner. There are few things scarier than choosing the
right health insurance plan. So we're going to talk about
how to make sure you've selected the right plan for
you before the window for twenty twenty four closes.
Speaker 1 (41:16):
I find this time of year more stressful than tax
season personally and scarier. I think I want a ppo,
but I really have no idea.
Speaker 3 (41:22):
Not a clue, But we'll find out for sure in
two weeks. On the next episode of Grown Up Stuff,
How do ADUNLT?
Speaker 1 (41:28):
And Remember you might not be graded in life, but
it never hurts to do your homework. This is a
production from Ruby Studios from iHeartMedia.
Speaker 3 (41:36):
Our executive producers are Molly Sosia.
Speaker 1 (41:38):
And Matt Stillo. This episode was engineered by Matt Stillo.
Speaker 3 (41:41):
And written by Molly Sooshia.
Speaker 1 (41:43):
Our fact checker is Kasby Bias.
Speaker 3 (41:45):
With additional editing by Sierra Spreen.
Speaker 1 (41:48):
We want to thank our teammates at Ruby Studios, including
Ethan Fixel, Rachel Swan Krasnov, Amber Smith, Debrah Gerrett, and
Andy Kelly.
So you want to buy a car. You figured out
your budget and which car you want. It makes sense
for your needs. Plus you can afford the monthly payments,
insurance and annual maintenance, and now it's time to get
down to business and actually get those keys in your hand.
But figuring out how to get the best price and
where to direct your research can be overwhelming, and walking
(00:30):
into a dealership can feel a little like you're swimming
in shark infested waters while you're covered in fish guts.
This is a totally normal feeling, though. According to the
results of Capital One's Auto Navigator survey from twenty twenty,
only twenty six percent of participants felt confident shopping for
a car, and only twenty four percent we're sure of
their negotiating abilities in the dealership. It's no wonder given
(00:54):
how complicated buying a car can seem. Even if you've
done your research about which car you want, then they're
figuring out how to finance that car. Should you always
buy it outright if you have the cash, or should
you still take on car payments with a loan. Plus
let's get into car buying online. Please start taking notes,
because this is.
Speaker 2 (01:15):
Stuff.
Speaker 1 (01:18):
What's up my freewheeling joy riding hands at ten and
two friends. Welcome to another episode of Grown Up Stuff
How to Adult, the podcast where we learn the secrets
to growing up and feeling like knowledgeable adults. As always,
this is Molly and I am joined by my co
host on two Wheels, the motorcycling mat Still though, Matt,
we are back here to talk about buying a car
in this pardieu. As the French would say, do you
(01:40):
want to give the grown Up Stuff fam a little
recap on what we talked about last time?
Speaker 3 (01:44):
Totally? In our previous episode, we talked to Jamie Page
Deeden about creating a car buying budget, and she reminded
us to not forget things like insurance, regular maintenance costs,
and gas. She also taught us about some of the
latest safety features in cars today.
Speaker 1 (01:59):
Backup cam standard baby whoo whoo.
Speaker 3 (02:02):
That's right. But there's also lane assist and censors that
can tell you when you're getting sleepy.
Speaker 1 (02:07):
Oh yeah, that was crazy. It scans your eye movements
and tracks how tired you may be. Insane.
Speaker 3 (02:14):
Yeah, and Jamie also dropped some knowledge on hybrid's and
evs and gave us some very useful information on the
average range for these types of cars.
Speaker 1 (02:23):
Right, and honestly, I had no idea there were two
different types of hybrids, so that was a real eye
opener for me. She also had some great tips for
figuring out the reliability of your future car. But we
don't want to tell you everything, So if you haven't
gotten a chance to hear all of these gems, go
back to that first part with Jamie and give it
a listen.
Speaker 3 (02:42):
As a reminder, Jamie spent fifteen years as the executive
editor of the US News and World Reports Best Cars team,
and today she is the editor in chief of Car Talk.
Speaker 1 (02:52):
But Jamie is back again today for another round of
car buying conversations. Jamie, welcome back. Thank you so much
for joining us again for part two of this conversation
on how to buy a car.
Speaker 3 (03:05):
Now.
Speaker 1 (03:06):
I want to cover something that we didn't get a
chance to hit in part one, and I think it's
important to highlight what are the biggest misconceptions, in your opinion,
that people have about buying a car.
Speaker 2 (03:16):
The biggest misconceptions that people have when they're buying a
car actually has very little to do with the car itself.
It's that they have to take the financing the dealer
offers them. Most people do not walk into a dealership
with a load in hand, and that is a huge,
huge mistake because the dealers make money by referring people
(03:38):
and getting people finances, so they get a kickback from
the financing company or bank that they're working with, and
they can get a bigger kickback if they put you
in a higher interest rate. Huh, So they're incentivized to
kind of make you pay way more than you should
for the car over time. So the number one thing
if you don't do anything else when you're buying a car,
(03:59):
go online, get yourself, you know, from a credit union
or an online only bank. Those are the two types
of businesses that tend to have the lowest rates. Go
get yourself your own car loan already in hand. And
then when the dealer's like, ooh, I can take care
of you with eight percent, you can be like, bam,
I got five point five already. Beat that and that
will save you. I mean, people focus so much on
(04:20):
the price of the car or like their monthly payment
that they don't look at the overall cost, and that
overall cost is really driven by your interest rates. So
the lower you can get it, the better you're gonna
do and shop around for the interest rate the same
way you shop around for a car.
Speaker 3 (04:34):
So I've actually heard from some people that dealers will
oftentimes get you the best interest rate. Is that just
completely not true?
Speaker 2 (04:41):
It's not completely not true. But it's better to go
in with another option. So even if the dealer can
beat it, that's great, go with what the dealer's offering,
but just walk in there with approval for a loan
where you know the interest rate and you know about
what your payment's going to be, so that you just
have that other option. If the dealer isn't going to
be able to match it, you'll save money. If the
(05:02):
dealer can beat it, great, you'll save money. But either way,
just make sure you've got another option.
Speaker 3 (05:07):
Right.
Speaker 1 (05:07):
Let's look at when we're buying a new or used car,
cash versus financing with a loan versus leasing. So this
is my very very basic understanding, and I kind of
want to go through that versus see if I'm right
at all, cash you're literally putting it all upfront. Financing
with a loan kind of similar to buying a home.
You're putting that twenty percent down, and then the loan
(05:30):
is covering the rest of the cost. And then you're
paying back that loan with interest depending on what the
interest you've agreed upon. And then leasing a vehicle. I
feel like it's like leasing an apartment. It's never really yours.
You're paying like rent on the car for a period
of time. Are these right? Do I have any of
these accurately?
Speaker 2 (05:48):
First, you're right about buying with cash. You're just handing
over the cash.
Speaker 1 (05:51):
Okay.
Speaker 2 (05:52):
There will be personal finance people who will be like, hey,
if your interest rate on your loan is lower than
the return you could get from investing that cash, then
the loan. But I'm kind of like that's super complicated.
I would just rather pay cash. But I mean, like,
you really have to look at interest rates at the time.
If they're super low, absolutely go ahead and do that.
The benefit of doing that too, is like, all your
(06:13):
cash isn't tied up in a car, sure, so you
maintain some liquidity with the loan. You got it right,
You're paying for the privilege of borrowing money for that car.
You don't have to necessarily put money down. But it's
a good idea and then the loan company makes a
profit by you paying interest to them, and if you
don't make the payments, they're going to come take your car,
So just know that.
Speaker 1 (06:32):
Don't love that.
Speaker 2 (06:33):
And then leasing, it's not quite like leasing an apartment.
Leasing is essentially a loan, but only on a portion
of the value of the car. So let's say you're
looking at a forty thousand dollars car. If you get
a loan, you're financing, and let's say you don't have
a cash but you have a super high monthly income,
so you're going to go ahead and finance the entire thing. Well,
you're financing forty thousand dollars worth of car, and then
(06:57):
you know, you make those payments for five years or
however long, and at the end you own the car
and you can do whatever the heck you want with it.
With a lease, though, you're only leasing a certain portion
of the car's value. So that forty thousand dollars car,
you go into the dealership and you're like, I want
to lease it, and they're like, great, we project that
this car is going to be worth twenty five thousand
(07:19):
dollars in three years if you only put ten thousand
miles a year on it, so you're only financing that
fifteen thousand dollars difference between the forty thousand that the
car is worth today and the twenty five thousand dollars
that they project it will be worth at the end
of the lease. A lot of these rules just don't
take into account the reality of the economy today for
(07:40):
a lot of millennials and Gen zs, which is, we
don't have a lot of cash lying around. Yeah, so
we can't do that, and we do need to shop
on payment. So what this does, because you're only financing
that fifteen thousand dollars over three years, is it makes
the monthly payment a lot lower, and so it's kind
of a way to get into a car at a
more affordable rate. The other thing that I really like
(08:02):
about it is that at the end of the lease,
let's say your lease terms say, all right, this car
is going to be where twenty five thousand dollars at
the end. But let's say like that car is exploded
in popularity, or it's not available, or you know, there's
been production issues, and the car ends up being worth
thirty thousand dollars at the end of the lease, you
get to pocket that five K. And a lot of
(08:23):
people think, you know, when you lease a car, it's
like renting a car. If I rent a car from
the hurts at the airport, I have to take it
back to the hurts of the airport. That's not how
leasing works. You can take that car anywhere and sell
it as long as what you're getting is more than
the payoff amount of the lease. And so that equity
that's built in. If the car is worth more than
what's in the lease, like that equity, that's your money,
(08:45):
and it's great because you can use that to roll
into the next car that you're going to purchase. The
other really great part of it is if the car's worthless.
So let's say the lease says it's worth twenty five
thousand dollars, and at the end of the lease it's
worth twenty you're.
Speaker 1 (08:58):
Not on the hook.
Speaker 2 (08:59):
You just get to walk away, and that's like awesome
because you don't have to worry about it. Now. I
will say, you do have to be careful with leasing,
because if there's a certain number of miles that you're
going to get in the lease, you know, ten to
twelve to maybe fifteen thousand miles a year or what's
most common, and if you go over that, it is
really expensive. So if you get a three year lease
(09:20):
at ten thousand miles a year and you turn it
in with like forty thousand miles on it, they're going
to charge you twenty five cents a mile.
Speaker 1 (09:27):
Ikes or more.
Speaker 3 (09:28):
Oh my god, so yikes on that.
Speaker 2 (09:31):
And the reason that they do that is because that
value at the end of the lease is based on
the mileage that the car is going to have. The
thing to keep in mind, though, is it basically means
you will always have a car payment because you lease
a car and then you go get the next one
and then then the next one, Whereas if you either
finance a car or pay for it with cash, at
a certain point you're going to own that car, and
(09:52):
your monthly cost then drops quite a bit because you
own it, you're no longer making payments on it, and
leasing has kind of over your life span, like if
you do it over and over again, it's going to
end up being more expensive than if you just bought
a car and drove it into the ground. But again,
a lot of people aren't in a position where they
can have these super high monthly payments, super high loans
(10:13):
where they have thousands of dollars to put down. And
so if you absolutely need a car and you can
only afford a certain payment, leasing is a decent way
to get into it.
Speaker 1 (10:23):
So follow up question about the leasing to parallel with
it with leasing an apartment, which I know you said
isn't exact. In an apartment versus buying a home, we're
not responsible for anything that breaks. Now, if we're leasing
a car versus owning a car, does the dealership then
pay for if anything wears down? Or are we on
the hook for those repairs?
Speaker 2 (10:45):
You're on the hook for those repairs. The good news is, though,
because leasing is almost exclusively for new cars, there are
used car leases available. They're terrible, don't do it. But
if you're leasing a new car, the car is only
going to be at maximum three years old. If you
get to three year lease, what's gonna go wrong? You're
gonna be on the hook for maintenance. Although some dealers
might throw in a paid maintenance plan, some of the
(11:07):
manufacturers will also throw in a paid maintenance plan, depending
on what incentives they're offering that day. Right, you're on
the hook for repairs, but the car is only three
years old, so those costs are not going to be
particularly high.
Speaker 1 (11:18):
That makes sense. If you're someone who loves driving the
latest and greatest model of cars, leasing may be worth exploring.
You could switch cars every three years, which is an
average lease term, without needing to take out a loan.
In fact, your monthly lease payments can cost up to
(11:39):
one hundred dollars less compared to the average car loan payment.
That being said, if you're in it for the long
haul and you put a lot of miles on your car,
maybe you're not a car lease kind of person. Kredit
Karma says the average mileage limit on a lease is
between twelve to fifteen thousand a year. If you go over,
you could be charged anywhere from ten to twenty five
cents a mile over that limit. So let's just use
(12:01):
some quick math. If you go over that limit by
just a mere thousand miles, at twenty five cents a mile,
you're paying an extra two hundred dollars. My friends, that's
a night in a decent hotel or a round trip
airfare to New Orleans.
Speaker 3 (12:17):
I've read a little bit about getting pre approved for
a loan is this something that we should consider and
if so, how might we go about starting that process.
Speaker 2 (12:27):
Yeah, you should absolutely do that. Most lenders, when you're
getting pre approved for a loan, what they do is
they give you basically a pre approval certificate. Sounds kind
of weird. In some cases they will even give you
basically a blank check that when you fill it out
and sign it, the loan goes into effect. But you
should be going and shopping around and have that loan
(12:48):
kind of in your back pocket that approval, because that
allows you, then, you know, while you're at the dealership
to just kind of call up and be like, yeah,
I'm going for it. But just because you're preapproved does
not mean that you are necessarily going to use that loan. Now.
A very important thing to do, though, is as you're
comparing kind of loan offers, make sure you do it
all within a two week period because they're going to
(13:10):
do a hard pull on your credit which is going
to knock your score down. So if you go at
the beginning of the month and you get a quote
from one lender, and then you go at the end
of the month and get a quote from another lender,
in that time, your credit score is going to go
down because you had a hard pull at the beginning
of the month, and that's going to get you a
higher rate and just overall less favorable loan terms for
the ones that you do later. So like, set aside
(13:32):
a day and go out and get approved for a
bunch of loans and then take those to the dealership
with you, because again, if the dealer's like, I can
get you eight percent and you're like, I got five
percent right here, let me just call up the bank,
pull the trigger and get the loan going.
Speaker 1 (13:46):
So you mentioned favorable loan terms in your opinion, what
constitutes favorable loan terms.
Speaker 2 (13:53):
Interest rates are so high right now that I feel
like favorable loan terms do not exist. But right now,
with interest rates as high as they are, there are
some promotional loan terms that are around three to four
percent now, like two years ago, those were sky high.
Right now, that's about as good as you can do.
So really look for anywhere between you know, three and five,
(14:15):
maybe even six percent. What you really want to avoid
is there are a lot of predatory dealers out there
that will get you into a car with like twenty
five percent interest, which at that point you might as
well say yeah, especially if you're in the military. They
tend to hang out around military bases. It's messed up,
But like it's going to depend on your credit score,
it's going to depend on your debt to income ratio,
(14:38):
your debt utilization, like all the good stuff that everybody
kind of knows about, but those favorable loan terms, Like
what you really want to look for is to get
the shortest loan that you possibly can with the payments
that you can afford. So you can get your payments
lowered by going for a seven year loan because that
spreads out the payments a lot longer. But you're going
(14:59):
to have a really hard time building equity in the car,
so you're going to be in that upside down situation
like we talked about. But if you can do a loan,
if you can handle the payments for like three years,
you're going to be golden because then you'll have the
car that'll have probably another five to ten years of
life left after that if you maintain it well and
take good care of it, and you'll have that five
(15:21):
to ten years without a car payment. Now, I still
recommend you make a car payment, but make it to yourself,
because guess what, then, when it's time to buy a
car again, you have a huge amount of cash and
you're ready to go.
Speaker 1 (15:36):
As a reminder, being upside down on a car loan
happens when your car is worth less than the value
of your loan. Jamie gave the example last episode of
the depreciation that happens the second you drive your car
off the lot. So let's say you borrowed twenty thousand
dollars to buy your car, and after driving away from
the dealership, it's actual value dropped down to fifteen thousand.
You're now upside down on your loan, and if your
(15:58):
car is totaled before you make up that difference, the
insurance company is only going to cover the value of
your car and not the full amount owed on your loan.
Speaker 3 (16:10):
We've talked a little bit about favorable loan terms and
that people with good credit can expect to see somewhere
between like a three to six percent interest rate and
an interest rate of like fourteen to twenty five percent
is something that it should absolutely be avoided. But it's
got me thinking about those with less than perfect credit,
what range of interest rates might they expect to see?
On a loan.
Speaker 2 (16:31):
Yeah, keeping in mind that I'm not a bank. Seven
to twelve percent. Wow, you can, I think, do a
little bit better. If you live in an area that
has a local credit union, you can generally get better
rates from credit unions, and that credit union is going
to take kind of more of a personal look at
your financial setup, whereas like Bank of America is going
to run you through an algorithm and be like, this
(16:51):
is the best we can do. With a credit union,
they might be able to take a little bit more
of a holistic view of view. So even if your
credit score isn't great, but you have a history of
on time payments, they might be willing to take more.
Speaker 3 (17:03):
Of a risk. That's a great incentive for our audience
to keep, you know, working on bumping up their credit score.
But also it's good to know that there are options
out there for people with a less than perfect credit score.
So in our research for this episode, we found a
survey conducted by Cox's Automotive and Auto Trader that the
digital age has transformed the car buying experience, with eighty
six percent of car shoppers in the US using the
(17:24):
Internet for car research and fifty six percent of car
buyers just saying that they would be open to full
on purchasing a car online, like given the shift in
the emergence of online only businesses like Carvana like Room,
what really are the pros and cons of purchasing a
car completely online versus purchasing one in a dealership.
Speaker 2 (17:43):
So, I mean the pros are you can be really
antisocial and do it without like putting pants on.
Speaker 1 (17:49):
If you hate people and hate pants, we've got a
car situation for you.
Speaker 2 (17:54):
Carvana for people who hate pants. I mean, it's just
way more convenient. The other thing that is a huge
benefit of it is they have nationwide inventory. Oh so,
like if the car that you want is an available
near you, they can bring it to you, whereas you
know your dealer is going to be like sorry, sad trombone.
Most of the online car buying places give you a
(18:15):
return period of like I think it's like five days
or maybe three hundred miles, which is nice because you
haven't had a chance necessarily to test drive that car
or even inspect it. Because right now, you know Carvana
and Room, they're just used cars and you're not going
to be able to get it inspected. So if you're
going to go that route the day they drop that
car off, take it to a mechanic for an inspection
(18:36):
while you're still within that return period. So if it's
a bad car, you can get rid of it. The
advantage of a dealer is that you're going to have
somebody who can generally just walk you through the car
all the features. You're going to be able to test
drive it, and then you're going to have, you know,
a place to go for maintenance if it's a new car.
But generally speaking, you can kind of put your hands
together and combine both of those things with like CarMax,
(19:00):
big use car dealer, but just in general now it's
really nice because you're not confined to the cars that
are just in your area, and you have a really
good view of what those cars are worth, what a
reasonable prices, so you can go. A site that I
really like is car Gurus. It was founded by one
of the guys that founded trip Advisor, and so they
(19:20):
have a huge number of used car listings and then
they've got an algorithm that's based on location and features
and mileage and condition that'll tell you if that price
is a good price or not. So that is one
really really helpful thing. There are a bunch of other
sites that do similar things, or you can just kind
of do your own little piece of analysis and say, okay,
well this seems a little bit over price, considering there's
two more over here. You know, same cars, same mileage,
(19:42):
and there are a couple thousand dollars less. If you're
looking for a new car, dealers hate this one secret.
There's a company called True Car, and you can go
and get a guaranteed price certificate from True Cars so
you don't have to negotiate, which is another nice thing
to have in your back pocket, because if you get
to the dealer and you're like, I'm going to try negotiating,
then after fifteen minutes you're like, this is going terribly
(20:03):
I'm just gonna whip out this price coupon and make
them monitor that. Now you do have to go to
a participating dealer with True Car, but it's an option
if you don't want to negotiate. But really, the best
way to buy a car just kind of depends on you.
If you're somebody who wants to go negotiate at a
dealer and touch everything before you buy it, go do that.
If you're somebody who doesn't want to talk to anybody,
(20:23):
go to Carvana. If you want to have a mix
of the two, go to CarMax.
Speaker 1 (20:28):
In March of twenty twenty one, ABC News reported that
nearly thirty percent of new car sales in twenty twenty
happened online, and the majority of people who bought cars
online they're failing pretty good about it. Based on a
survey conducted in January of twenty twenty two by Progressive,
seventy eight percent of people who bought a car online
in the previous two years said they found the experience
(20:49):
quote highly satisfying, and many experts are predicting the trend
will continue to grow. But if you're not quite ready
to make the leaf online, as Jamie mentioned, CarMax could
be a good in between option. While CarMax has brick
and mortar locations that allow customers to purchase a car
in person, they also have the option of buying online. Plus,
(21:09):
if you decide to shop in person and they don't
have the specific car you want, they can ship it
to you. While most traditional dealerships are limited to selling
you only what they have in stock at their specific location.
Speaker 3 (21:23):
So the last segment that we want to get through
is all just talking about dealerships, because you do have
to be social, and you do have to wear pants,
and you just need a little bit extra pants before
walking in there. So let's say that we found the model,
the exact model of the car that we want to buy.
What are some final considerations to make before walking into
a dealership and what advice you have for the moment
(21:46):
that we do walk in.
Speaker 2 (21:48):
Okay, well, first, I mean, not wearing pants could be
a viable negotiation tact. But the main thing the moment
you walk into a dealership, and I think everybody forgets this,
you're allowed to walk out. They will sit you down
and they will kind of try and tire you out,
but you're allowed to leave. They're not cops, right, You're
allowed to leave at any moment. You can stand up
(22:10):
and say, you know what, this isn't working for me.
And I admit it's really hard to do because you
feel like you're violating about fifty social norms. But you're
absolutely free to go elsewhere. There are tons of car
dealers around. You don't have to work with that one.
And even though you might have your heart set on
a particular make and model. Guess what they made more
of those. So you know, no car is a one off. Well,
(22:32):
no car that anybody's actually buying is a one off.
So just know that you can walk out and you'll
have other options. The other thing to remember is it's
a business negotiation. It's not personal, right, and the dealer
is treating it as a business negotiation. Most people are
at a little bit of a disadvantage because buying a
car is highly emotional, right, I need this to get
(22:54):
to work, Like I need this, and I like this,
and I want this. It's weird because are essentially appliances
that we tie our identities to or as nobody's like
I love my toaster so much I work on it
on weekends and like, you know, I'm a Black and
Decker Man till I die. Like nobody does that with
their toaster, but they do with their cars, and so
there's some emotionality. I mean, people name their cars. You're
(23:17):
immediately at a disadvantage because a dealer's coming at it
as a business and you're coming at it with some
emotion tied up. So as best as you can channel
your internal mister Spock and go into it as a
business negotiation, which means that before you even get there,
like we talked about, have that loan, know your absolute
ceiling that you can go for in terms of price
and in terms of payment, and then really treat it
(23:39):
like I am a robot and I'm going to negotiate
on this like a robot. And if they aren't giving
me what I need and what I feel like I
should get, I'm going to walk out. And that's totally okay.
So just say, hey, you know what, I appreciate your time.
I don't think we're going to get to resolution here.
If things change, feel free to give me a call,
but I'm going to go someplace else.
Speaker 1 (24:00):
We'll be right back with more grownup stuff how to adult.
After a quick break and we're back with more grownup
stuff how to adults. Is there a best time to
buy a car?
Speaker 2 (24:20):
Yeah, the best time to buy a car was like
three years ago I got get your time machine together,
So I would say the best time to buy a
car other than three years ago is when you're ready
financially and you've worked everything out. But you can occasionally
get deals towards the end of the month because dealers
(24:43):
have incentives you know, bonuses they get if they sell
a certain number of whatevers at the end of the month,
So if they're a couple of cars shy, they're gonna
maybe be willing to have some flexibility there. The time
where you're going to get the biggest discount, though, and
this is awesome, is the week between Christmas and New
Year's Now. To be clear, you're not going to get
like half off or anything like that, but you are
(25:03):
going to get a slightly better deal. And by slightly
I mean maybe you're saved you know, two to three
thousand dollars, I will say, though, especially since you know
twenty twenty, automakers have gotten a lot better at managing
their supply of cars, so it's not like they have
a huge overflow of cars. In fact, in a lot
of cases, if you're looking at a new car, you
may have to wait while the thing's built and gets
(25:23):
to you. But if there's a car that a dealer
is overstocked on and like you're like, hey, my needs
are pretty general and I don't really care what I drive,
that's what you want to target, particularly if it's a
model that's not particularly popular where you live.
Speaker 1 (25:37):
November December is always the time of year where my
dad would buy his convertible. And keep in mind, my
dad lives in Chicago, folks, so not a whole lot
of people in the market for a convertible in November
December in Chicago.
Speaker 3 (25:52):
And that's the thing.
Speaker 2 (25:53):
If you want to get the best deal, swim upstream,
go against the market.
Speaker 1 (25:59):
The fall can be a great time to get a
deal on last year's inventory as next year's latest models
start to arrive at local dealerships. Additionally, if you're not
worried about having the absolute newest model of car, MarketWatch
recommends scoring a deal on previous models around the time
a car maker comes out with major design changes. This
is called the end of car design cycle.
Speaker 3 (26:20):
We've been talking a lot about value, So like we'll
walk in, we'll know the true value of the car
that we're trying to trade in, the true value of
the car that we want to buy. But once we're
like at a dealership, like a lot of other numbers
will kind of be floated in our direction, like MSRP,
invoice price, sticker price, fair purchase price. You know what
are all these numbers? If you could break it down
and like how do they relate to the amount we
(26:42):
will have paid, you know, once we walk off the
lot or drive off hopefully.
Speaker 2 (26:47):
So MSRP is the manufacturer suggested retail price. That is, like,
say you're going to a Chevy dealership. That's how much
Chevy thinks you should pay for that car. The sticker
price is that plus whatever add ons the dealer feels
like they can get away with. And keep in mind,
they might act like these add ons are mandatory, and
some of them will, like if it's a particularly strong
(27:08):
market and they know they're not going to have trouble
selling that car, they will make the mandatory so like
undercarriage coding nitrogen. And then even sometimes like we've seen
dealers put just like a market fee where it's basically
like we're going to charge you ten grand more because
we know we can, so that will get you to
the sticker price. Invoice price is what the dealer paid
for the car. So where you have that negotiation window
(27:30):
is between the sticker price and the invoice price, and
that's where you have the wiggle room. Keeping in mind,
like the dealer is a business. The dealer has overhead.
The dealer needs to make profit, So no, you're not
going to get invoice pricing on a car because that
would be no profit for the dealer. But as close
as you can get to that is going to be
pretty decent. But again, like the current car market, new
(27:52):
or used is pretty constrained. There's a lot of demand
and so you know, again it depends on the model,
depends on your kind of micro market that you're in,
but you're not going to get like close to invoice price.
The best you can get is maybe midway between invoice
and sticker, and in some cases, if it's a super
popular car, congratulations, you're going to pay sticker.
Speaker 3 (28:12):
You mentioned these dealer installed options. Is there any reason
why we should be wary of them.
Speaker 2 (28:18):
They're just up charges of stuff that you don't really need.
They're way for the dealer to like make you feel
good about them charging you more money because they'll be like, oh, yeah, man,
you need nitrogen in your tires.
Speaker 3 (28:28):
No you don't.
Speaker 2 (28:29):
The other thing is, like my favorite question is they're
always like, well, we really recommend the undercarriage coding, and
I'll be like, are you telling me Toyota let this
out of a factory without the correct coding on the undercarriage, right?
And then they'll kind of be like, no, you don't
need it, but they're trying to sell you that stuff,
and that's totally fine, but like what you want to
do is basically say to the dealer, like I don't
need that stuff, So what can you do by cutting
(28:49):
all that stuff out?
Speaker 1 (28:51):
What are the signs that we should just walk away?
Speaker 2 (28:54):
High pressure? If they're like what is it going to
take to get you in this baby today? Like that
kind of thing. If they're like no, no, no, you can't
leave anytime where you're just feeling uncomfortable, like I will
go to a dealership, you know, if we're buying a
car'll go with my husband. They only talk to him congratulations,
you're not getting my business.
Speaker 1 (29:09):
Yeah, that's my stuff. I hate that.
Speaker 2 (29:11):
I can't stand that. And then don't walk in and
say I already have a loan and I already have
you know, a value for my trade in see what
they offer first, and if what they're offering is so
far out of left field, you know they're going to
be trying to take advantage of you. The other thing,
and this kind of goes back with leasing, There is
interest charged on a lease. It's called a money factor,
(29:32):
you have to convert it into a interest rate. But
when they come back with the money factor on a lease,
if you're thinking about leasing, convert it to an interest
rate and make sure it's fair. Because there was one
time I was like, I'm going to lease this car
and I had really good credit and then I converted
the money factor into an interest rate and they were
trying to charge me twenty four percent interest and I was.
Speaker 3 (29:53):
Like, no, thank you good hoe ja.
Speaker 1 (29:56):
Yeah yeah.
Speaker 2 (29:56):
So it's just have that information in your back pocket.
You don't need to share it, but use it as
a barometer of if you're being treated okay, and if
they come in close or under great, you found a
really good dealer. The other thing, if you have friends
or family in an area that have had a good
relationship with a particular dealer new or used cars, especially
a particular salesperson going in and being like, hey, my
(30:18):
friend Mike bought a car from you, said you were
really good to work with. That salesperson then knows that
like hey, they get a significant amount of business from
word of mouth, like that's a good source of leads
for them, so they want to treat you right.
Speaker 3 (30:31):
What is a pre purchase inspection and should we get one.
Speaker 2 (30:36):
A pre purchase inspection is before you buy a car.
It's you taking it to a mechanic that you choose
to have a look see at it, and you know,
see if the mechanic can find any issues that are
currently or that it might be a risk later. Don't
need to do it with a new car. I would
even say you don't need to do it with a
certified pre owned car, although if you really feel like it,
you can. But this is basically you spending you know,
(30:56):
maybe one hundred bucks up front to know if you're
going to have problems down the line. A lot of
places really don't like you to do this, so this
is why, Like if you buy from like a Carvana
or a CarMax and you've got that return period, do
it immediately during the return period. If a place is
willing to let you test drive by yourself, go take
(31:17):
it to the mechanic test drive really quickly. Like have
that appointment set. When you have your test drive appointment.
A lot of times you can't always get it, but
there are things that you can look for even if
you are not a mechanic. So kind of a little
bit of a red flag, but I guess I'm going
to call it an orange flag. For me is if
I'm looking at a used car and the dealer knows it,
(31:39):
I'm going to come test drive it if they've pulled
it around front. And the reason I don't like them
to do that is because I won't be able to
see all the leaks it might have sitting. So if
you're looking at a used car, you don't necessarily want
to give them a heads up. But what you do
want to do is get under that car and see
if anything leaking. The other thing that you really have
(32:02):
to worry about, especially as there's like flooding in California
and we're in like end days types of weather is
like flooded cars. You do not want a flooded car.
Those are actually not that hard to spot. If the
carpeting doesn't match, if it smells musty, if you open
the hood and there's a bunch of like leaves and
debri in the engine bay, or a lot of times,
(32:24):
you know, if you open the cargo area and you
pull a carpet up a little bit like you can
sometimes see a waterline for how deep the car was flooded,
and you want to stay the heck away from flooded cars.
They will never be right. The other thing you can
do is pull a carfax of the car that will
at least catch some of the accidents that have been
you know, if it's been reported to insurance, and then
(32:45):
even ask like if you're out to use car dealership, like, hey,
what's the return period on this? And some places, depending
on the policy, will give you twenty four hours. Great,
take it to the mechanic in that twenty four hours
and make sure there are no issues that are going
to really kind of bust your budget real quick.
Speaker 3 (32:58):
You mentioned certified pre owned. Is that different than used?
Speaker 2 (33:02):
Yes, a certified pre owned car is basically a used
car that the automaker has taken in and inspected. And
usually the certified pre owned cars are cars coming off
of leases, so they tend to be three, you know,
about three years old. They'll be like, we have a
billion point inspection. It just means they're going to be inspected.
And generally why you would want to go for one
(33:23):
of these is it'll have better warranty coverage than just
your plan old, average use car because the dealer or
the car maker is standing behind that car more fully,
but know that you're going to pay more for that
peace of mind. They tend to be more expensive than
used cars.
Speaker 3 (33:37):
So we talked a little bit about extended warranties, and
this is maybe a two part question really like is
it ever a good idea to get one of those?
And also like there are all kinds of things that
are going to be thrown at you, you know, when
you're finally signing the paper, Like, is there a way
to make sure that like we're not getting like scammed
on like closing costs of a car.
Speaker 2 (33:57):
Yeah, So, like the extended warranty of all, if you're
buying a new car, you don't need it because you'll
have the manufacturer warranty. And even on some used cars,
the manufacturer's warranty may be transferable to a certain degree.
So for example, if you're buying a Kia, Kia has
a great ten year, one hundred thousand mile warranty and
I know, I sound like a Kia ad a portion
(34:17):
of that is transferable to the second owner, So oh wow,
look for transferable warranties. That's always good. But if you're
looking at a really old car that's had more than
one owner, you're going to be an extended warranty territory,
and what you want to think about is would I
rather pay this every month or would I rather save
the money for when the surprise repair comes up. So
(34:39):
it kind of depends on your peace of mind or
how you like to manage your money. But know that
not everything's going to be covered under your extended warranty,
so really read that fine print and make sure that
what's likely to go wrong with this car is going
to be covered by this extended warranty. Also look at
how you could void the warranty and then don't do
those things. So in a lot of cases, you know,
(35:01):
if you're not getting regular oil changes, that voids the warranty.
So the closing costs and stuff, if you've come in
with a loan from the bank, you should already know
what those are and you'll have options there as well.
The closing costs are not going to be huge like
they are for like a house, where they're just thousands
of dollars. These loans are so much smaller that you
don't have that. What you might get surprised with are
(35:21):
taxes and registration fees, So you should look up what
the car sales tax in your state is and factor
that into your budget. You can roll that into your loan.
Same with the registration cost. Usually dealers will charge you
like a paperwork fee of like one hundred bucks and
that's them dealing with the DMV, so you don't have
to deal with the DMV. I think it's totally worth it.
I would pay so much money not to deal with
the DMV. And No two, if you're at a dealership,
(35:44):
even if you've brought your own loan, they're going to
have you go in and see the finance person and
it's just going to be part of their process. Be
nice to the finance person. It is their job to
offer you all these things. They can't get out of it.
So don't be like, just don't even offer them because
I'm going to say no because they're going to be
like I have to. So just let them go through
and just be like no thanks, no thanks, no thanks, like,
(36:04):
do as many different no thanks voices as you can,
because they take it a game. Just kind of tolerate
it and then move on and enjoy your new or
new to you car.
Speaker 3 (36:13):
Well, that's wonderful, thank you. So, speaking of the DMV,
are there any things that we need to consider if
we're buying a car, like in a different state than
the one that we live in.
Speaker 1 (36:23):
Yes, so some.
Speaker 2 (36:24):
States will have reciprocal agreements, which means that you'd only
have to pay the sales tax once and the registration
fees once. Other states don't. So, for example, like I
live in the DC area, I can buy from a
Maryland dealer and only pay the Maryland sales tax and
they'll help me register the car in Virginia, which is great.
If I were to go to Florida, it would be
(36:46):
a lot more complicated and I would have to basically
pay to register the car in Florida so I can
drive away with it and then pay to register it
in Virginia. So that can get real expensive, real quick. Generally,
if the states touch each other, they're going to have
those types of like reciprocal agreements, and the dealer will
be able to help you out and you'll save a
little bit of money. But if you want to go
(37:06):
like four or five states away, you should really be
saving a lot on the price of the car to
maybe make up for what you're going to have to
spend in time and registration fees. Once you finally get
at home.
Speaker 3 (37:17):
And then lastly, are there any blind spots we may
have missed or that I love an that you'd like
to leave our listeners with.
Speaker 2 (37:27):
Just I mean, do your research before you go in
and know that you can leave. You don't have to
stay at the dealer, and feel free to walk away
from a deal that just doesn't feel good based on
the research that you've done.
Speaker 1 (37:39):
I love that, Jamie. You mentioned people love their cars
and they name their cars. Does your car have a name?
Speaker 2 (37:45):
My car does have a name. My car is named
Higgins after Higgins from Ted Lasso. I love it so that.
And then my husband's car is named Money Penny, after
the character from James Bond. So yeah, we always name
our cars. I will say we had this one, like
BMW we releasing, and we did not name it because
(38:06):
we were like, this car has no personality and we're
not keeping it. It's not a member of the family.
But all the other cars, it's fun to name your car,
and then you can talk to your car while you're
in your car.
Speaker 1 (38:16):
So yes, yeah, personify your car.
Speaker 3 (38:18):
By asking this question, did you not name your car?
Speaker 1 (38:21):
I think I did have a name for it, but
this is also you're asking me to remember a name
from like twelve years ago.
Speaker 3 (38:26):
Well, I remember my car's name from high school.
Speaker 1 (38:28):
What was yours?
Speaker 3 (38:29):
I was very into the office at the time, and
when I got into the car for the first time,
it had a very jan from the office field. So
the car's name is Jan.
Speaker 1 (38:37):
I do have a friend who just named her white
BMW Blanche because she's like, it's a real Blanche Devereaux
vibe from her.
Speaker 2 (38:44):
Yeah, yeah, a white BMW would have kind of a
Blanche devrodve right, I think. So, yeah, you meet the car,
the car tells you what it's five is exactly.
Speaker 1 (38:52):
This has been so so incredibly helpful, so much information, Jamie,
and we're going to have you come back to talk
to us about car our care as well, so folks
look out because there's more Jamie to come. Thank you
so much, Jamie, Thank you so much for having me.
(39:13):
I want to thank Jamie again for all the information
she has shared with us about car buying. She is
truly a bottomless well of car knowledge, and we are
going to have her join us again later this year
to tell us how to take care of our cars
and what we need to know and do to keep
them in working order. But here's what I've learned from
her today about car buying. There are a few different
ways that you can actually purchase a car. You can
(39:35):
buy it outright in cash, you can finance it with
a loan, or you can lease a car. Even if
you have all the money to buy a car outright
in cash, there may be still some reasons why you
want to take out a car loan. Get all of
your pre approvals for loans out of the way at once.
When they pre approve you for a loan, they do
a hard pull on your credit and that will impact
your credit score. So if you start the process to
(39:56):
get pre approved for one lending institution and then wait
until later to get others, that first credit poll will
impact what lenders see, and if you apply for pre
approval later on, this could change what they offer you
as a result. Getting pre approved does not mean you
have to go with that loan. It's always important to
have it so that you know how it compares to
the loan terms the dealership offers. And remember the finance
(40:20):
person at the dealership has to tell you what they
have to offer. Buying online could be pretty great. You
don't have to wear real pants, and you don't have
to leave your home or talk to real people. But
make sure that you know what you're getting and that
you have time to return the car if it's not
what you expected. Get your car inspected the second you
get it, and take Jamie's recommendations for spotting a flooded
(40:43):
car and avoid them at all costs. Negotiations are just business,
they're not personal. Remove emotions from the deal, and don't
be afraid to walk away. Most importantly, don't let anyone
pressure you into something that you're not comfortable with. That's
all for today's episode, and a wrap on car buying. Okay, Matt,
what's up next?
Speaker 3 (41:01):
Well, Molly, we're in October and with Halloween right around
the corner. There are few things scarier than choosing the
right health insurance plan. So we're going to talk about
how to make sure you've selected the right plan for
you before the window for twenty twenty four closes.
Speaker 1 (41:16):
I find this time of year more stressful than tax
season personally and scarier. I think I want a ppo,
but I really have no idea.
Speaker 3 (41:22):
Not a clue, But we'll find out for sure in
two weeks. On the next episode of Grown Up Stuff,
How do ADUNLT?
Speaker 1 (41:28):
And Remember you might not be graded in life, but
it never hurts to do your homework. This is a
production from Ruby Studios from iHeartMedia.
Speaker 3 (41:36):
Our executive producers are Molly Sosia.
Speaker 1 (41:38):
And Matt Stillo. This episode was engineered by Matt Stillo.
Speaker 3 (41:41):
And written by Molly Sooshia.
Speaker 1 (41:43):
Our fact checker is Kasby Bias.
Speaker 3 (41:45):
With additional editing by Sierra Spreen.
Speaker 1 (41:48):
We want to thank our teammates at Ruby Studios, including
Ethan Fixel, Rachel Swan Krasnov, Amber Smith, Debrah Gerrett, and
Andy Kelly.
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