(The following is a transcription from a video Linda and I recorded. Please excuse any typos or errors.)
So, we just bought a minivan. I can’t believe I’m smiling saying that. My wife and I kind of swore off ever having a minivan. But now, we are really happy about it.
It’s pretty cool. Once you have little kids, we have three of them now, it’s really nice having some of the conveniences of a minivan.
I got to use my kind of method and my system for buying a car that is reliable for a good price. And, I want to talk through a little bit of how we did that.
Basically, it’s my five-step process that I follow whenever we buy a car, and it has served us well so far.
If you’re like my wife Linda, who’s not the kind that thinks through this car buying stuff, this is also why I’m sharing these tips with you. This strategy is really helpful when you are buying a car. We created a video on this subject that you can watch, here:
1. Buy A Car That’s 2-4 Years Old
New cars are nice in some ways, but the amount of money that you lose to depreciation of those first couple of years is more than you think.
Think about having two different buckets that you’re carrying water in. One of them has one little hole that’s letting some water out, and the other one has like five holes that are like fist-size holes and the water is just draining out really, really fast. The new car is that bucket that has all these holes and you’re just losing money in the total value of the car really, really quickly.
That’s why it’s so nice to buy a car that is a bit older because it loses money at a much lower rate of speed. So if you have to own something that is going to be losing money, which pretty much every car that we purchase is going to be losing money, it might as well be losing money at a slower pace.
Linda is the kind of girl that wants a new car. But, I brainwashed her into believing that my strategy is a good idea. However, she has found that most of the used cars we’ve bought, do feel really nice and new.
If you get a well taken care of four-year-old car, like we did, it still looks amazing. It looks fantastic on the outside. There was one or two little stains on the inside that we wish we would’ve gotten fixed, but it’s fantastic as a minivan can look from the outside.
That’s the goal: looking for a car that is in that two to four-year-old range window. Going older isn’t a bad idea, it just depends on how reliable of transportation that you need to have it in terms of all this.
If it were just up to me, and I was by myself, I’d be buying an even older vehicle than that to minimize that depreciation. But a 2-4 year old car is the sweet spot for us and it’s a generally accepted range to be in to minimize depreciation while having a newer, nicer car.
2. Sign Up For Consumer Reports
Visit consumerreports.org and pay for one month of their online service. This will be the best money that you spend when you are buying a car. What’s cool about this site is that they’re an independent research firm who researches cars and their reliability ratings and all that stuff.
It’s just a wealth of information to help you find a car that is reliable, that’s going to last and doesn’t have problems. And then they’ll find the ones that have problems. You want to avoid the ones that are problematic.
If you just buy a car by it’s looks, and then you check out Consumer Reports and you’re like, “This thing could be breaking down on me quite often,” it just kind of takes the appeal away. That $70,000 Range Rover, it looks really nice while it’s moving, but on the side of the highway, it doesn’t look too cool anymore.
I mean, and even if it doesn’t break down on the side of the highway, just the inconvenience of having a lot of things that need to be fixed over and over, even if you have a warranty and all that stuff, just makes it maybe not worth it.
What you’ll find, and this is changing a little bit now, but generally speaking, Asian cars (particularly Japanese cars) are very reliable cars. They make a great product that lasts a long time. Pretty much the last 13 years, we’ve owned Hondas, and they’ve been nothing but really amazing for us.
We found other cars too, but Hondas have really treated us well. In compared to some of the other cars I’ve owned, it’s just like night and day. I owned all American cars growing up, and I love buying an American car. I’m an American, I love doing that, but the reality is, well it’s a global market now.
20 miles away from me is a huge Nissan factory where they’re building Nissans. That’s not an American company, but they manufacture them right down the street. So, it’s a very different thing that used to be in terms of having a nationalist kind of thing with the cars that you’re buying.
So, once I go to Consumer Reports, I’ll have some cars in mind that I’m thinking about purchasing and I’ll run them through and look at their reliability ratings. I’m looking at the ratings for that car, but specifically also for the varying car years that I’m looking at.
In our case, we just bought a Honda Odyssey. It’s a 2015, which had much better ratings than the 2016 and the 2014, in terms of reliability. So, they did something different in that year, or they were manufactured in different place or something, that made that year vehicle a better buy than the year after and before. So, those are things you want to keep in mind as you’re kind of going through. It’s not just the car itself, but also the year that the vehicle was made.
3. Edmunds Total Cost To Own
Be sure to look at Edmunds Total Cost to Own Number. If you’ve heard of Edmunds, they’re a big car information website. They have this number that they calculated for pretty much every car where they tell you the Total Cost To Own the car over a five year period.
So, that includes things like gas mileage, that includes things like car insurance, that includes things like reliability and how many repairs are needed. All the stuff they rolled up into one big number, which they call “Total Cost To Own.”
This has been really interesting because when we bought our Honda Fit, probably 12 years ago, the Total Cost To Own was awesome. It was one of our first cars in our marriage. The Honda Fit is a tiny little car with great gas mileage. It had a really low Total Cost To Own number. Meanwhile, there were other cars in that class that might’ve even been cheaper cars, maybe a couple thousand dollars cheaper to buy, but actually were considerably more expensive with their Total Cost To Own over the five year period. Maybe because of gas mileage, maybe because of repairs or whatever. Their Total Cost To Own just was not as good as the Honda Fit.
Edmunds Total Cost To Own is a good number to look at it and consider in your car buying process. It’ll give you a good idea of how much you’re costs are going to be over the five-year period for everything involved with this car purchase.
4. Identify the Trim Level
You want to identify the Trim Level of the car you want to buy. So in our case, we just bought a Honda Odyssey, and there’s seven different Trim Levels of different things that they have… and bells and whistles and whatever. We figured out what our non-negotiables were, what we wanted in this vehicle, and we found out which Trim Level we needed to have in order to have that.
This is really good information to have because depending on what the Trim Level is, you might be spending $10,000 difference between these two to buy. Essentially, a lot of things you don’t care about. If it’s a Trim Level package with “junk” that you just don’t need. So, find out what that is and find out what the lowest level Trim Level is that gets you all the things that you want, and that’s going to make searching for the specific vehicle just a lot easier as you’re going through different websites.
Like Autotrader (or something similar) searching for used cars, you’ll be able to search for Trim Level as well, and that’ll really pull down your price of what you’re spending. It will also save you the time and the hassle of getting to look at a car and realizing it doesn’t have stuff that you actually wanted in there.
In which, we’ve done that a couple of times. We actually drove 100 or 200 hundred miles to buy our Honda Pilot. It was the top trim level, and I mistakenly assumed that because it was a top trim level, that it included four-wheel drive. We absolutely wanted four-wheel drive, and we got all the way there and realized – it didn’t have it. Even though it was the Touring package, it didn’t have four-wheel drive. That was a bummer. So, do your homework before you drive really far away to find a car.
5. Get a CarFax or AutoCheck
CarFax and AutoCheck are two kind of different companies that will give you a history about the car, and this is really, really important. So when you’re going through and looking at different cars, and basically for me, I’m looking for a car that hasn’t had any accidents. That’s the ideal, and sometimes that’s hard to find it.
If it’s a super minor accident, I might let it slide, but if it’s been in a pretty bad collision, it just messes a lot of stuff up on the inside and I just don’t feel like taking chances.
I would rather have a car with no accidents, all things being considered. I also like a car with one owner. You have one person who’s owned a car for five years or for four years like that, it feels a whole lot better than one that’s been turned over three different times.
Then the other thing is, if it’s been dealer serviced the entire time and you have records of maintenance. That’s gold because you have people who are the best experts had taken care of that car by doing the service work. That’s just really, really good. Rather than getting the report and seeing that there are no oil changes reported in the last 50,000 miles. It’s like maybe the owner did the oil changes themselves. I do them myself, but I would much rather have that in writing and on the record.
So, those are the things that I’m looking for with a car’s history. And, there’s a variety of the things you can consider when looking at these reports, but these are two different ways to get very specific information on the exact car that you’re looking at, because it’s based off a VIN number for that actual car.
Bonus: Try It Before You Buy It
More and more companies are offering a seven day try before you buy it kind of guarantee, which is really nice. So in our case, we didn’t use this kind of offering, but a company like CarMax and I think Carvana might do this as well.
I think there’s a few more places where you can buy a car from and for any reason at all, you don’t like it, you can return it, get your money back, no questions asked. So, obviously make sure the company you’re doing that with, that’s what their policy is. But in our case, it worked out fine without having a try it before you buy it period.
We ended up buying from a dealer and it just wasn’t the best experience. It was actually a pretty bad experience. But the car itself is fine. It’s not like after four days we wanted to return it. But what’s nice about having a policy like this, is you have the option of doing just that…return it.
In the trial period you can also take the car to a mechanic two days after you bought it. Have them check it over and make sure everything looks good. Somebody who knows more about cars than you do, will have more insight.
When there’s an option to try it before you buy it, it also provides a level of comfort knowing that you have seven days (or whatever time frame specified) to return the car. That’s something that I am always looking for. Every car we buy going forward, I’m going to be looking for something like this, just for that little insurance policy.
Tip: Do Not Buy Emotionally
I want to add, be really careful not to buy emotionally. It’s really, really difficult to do. You can really save yourself a lot of hassle, a lot of heartache, really.
And not to mention, if you’re dealing with any sort of shady car dealer, they’re banking on the fact that you are buying that car emotionally. It won’t be a good situation. Work and muster up every piece of patience that you have to do your research, take your time, and don’t be in a rush.
All these things are just providing information for you to make a good decision. The more information you have, the better decision you’re going to be able to make. And you’re going to be in a better position in negotiating, just having this information and knowing what you actually want.
Tip: Be Patient
Be patient. The car will come out, it will become available. In today’s search and research, if you don’t see exactly what you want, that’s okay. Or, if there’s only one available but it’s from a shady dealer, just wait. You’re going to find the car, just be patient.
So, those are our car buying tips that have saved us thousands. What would you add to this list? I’d love to hear. List your car buying tips in the comment section below.
All right, that’s all for now. Be blessed, be a blessing.
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