The government is back in business which means so is the IRS! Looks like you’ll have to do that tax return after all.
Tax season is also car buying season. The annual refund, the largest chunk of cash some people see during the year, is often planned for a down payment on new wheels. I was an ASE certified technician before I was ordained. I like helping people with their cars and I really hate it when unscrupulous dealers and technicians take advantage of my friends. So, here are a few tips on lowering your cost of transportation.
Financial guru Larry Burkette said, “The cheapest car you will ever own is the one you’re driving right now.” I’ve seen the exception, but the exceptions prove the rule.
The costs of owning a car will continue to rise. Borrowing money to finance a new car over many years will cost much more than the average repair bills for the same car if you keep it five to ten years after it is paid off. I’ve driven Clifford the Big Red Dodge for eleven years and 100,000 miles and, even though I no longer perform all repairs myself, he pays me to drive him now.
Cash is the best way to buy. Driving isn’t free, so why kiss off all that interest on a loan? Make car payments to yourself, even after you pay off the one you’re driving now. In five years you will be able to afford a nicer used car. If you can’t pay cash, borrow smart. Home equity loans usually have better interest rates than car loans. Military and Credit Unions are also good bets. Shop the lenders and remember most used car lots that provide their own financing make more money loaning money than they do selling cars. The interest rates are exorbitant. You don’t have to pay them if you’re willing to shop.
Most private sellers have migrated to Craigslist but watch for scammers there. My two favorite sites are Autolist, which has a very usable smartphone app, and Auto Trader.
Tap the net for reliability ratings. Consumer reports.org offers a one-month subscription to its auto ratings web-site. Their reliability ratings are the best and most objective in the business. Study results for engine, transmission, brakes, and air conditioning as these are the most expensive repair items. The higher the rating, the less the car will cost to own in the long run. Also, the higher the mechanical reliability, the higher mileage car you can purchase. A ten-year-old car with 110,000 miles on the clock can cost 25% less than a six-year-old car with 90,000 miles on it, and the difference in quality and reliability is negligible. Older cars are also cheaper to insure and incur lower taxes.
Look for ‘One-Owners.’ When buying from a dealer check the CARFAX and look for one owner cars with no damage history and clean titles that come from low corrosion, low flood probability parts of the country.
The best used cars come from the best owners. A guy who bought it new and had all the maintenance done as per ‘the book’ is rare, but he is the best because he can substantiate its history. Older sellers are usually better because they drive less and can afford to take care of their cars.
Talk to the owner. The seller’s character is as much a part of the deal as the new tires he just installed. Take someone along who is a good judge of character if you aren’t. You aren’t just buying a car; you’re buying a maintenance history. After I’ve picked a make and model I shop for the guy who’s been taking care of it for me for the past six or eight years.
Finally, have it inspected by a competent technician. Have him provide a list of potential problems and costs. If he has any serious reservations, walk away from the deal. Also, use him for regular oil changes and ask him to keep an eye on critical systems. He will save you money and increase reliability by doing required maintenance that can be budgeted and scheduled, rather than waiting for an expensive breakdown.
You can save thousands of dollars per year on the costs of driving. You don’t have to be a mechanic, and you don’t have to drive a ‘junker’ to do it. All it takes is a little homework and a little discipline and you can enjoy a great car as well as a higher standard of living.