Buying a car

 

By lex, on June 23rd, 2004

Son Number One, as I believe I may have mentioned, has earned a four-year scholarship to a rather expensive private university, courtesy of the US Navy. Along with making his pop pretty proud of him, he’s saved the old man quite a bundle of your tax payer’s dollars.

So yesterday, we bought him a new car.

Caution: relatively boring family tale follows…

Still here? Your choice.

——————-

Well, the car was not precisely new. It was new, to him.

It was actually one year old, with nearly 4000 miles on it. A corporately owned vehicle, which the corporation had apparently tired of owning.

And it was the latest (last?) opportunity to show SNO a little bit of how the world works.

The car he had been driving was a legacy: My old, 1993 Nissan Pathfinder. He had inherited it (squatter’s rights) when he turned sixteen, and I was on deployment. Having seen the other side of 115,000 miles, the Pathfinder was starting to get a little long in the tooth, not to mention the fact that it lacked some of the safety improvements (ABS and air bags come to mind) which have come along since it left the factory line.

For me, the perfect “new” car, is one that’s only very slightly used – new enough to have at least a year or two of factory warranty left on it, old enough to have paid that first “drive off the lot” assessment, that comes with a title. Anything seriously wrong with the car at roll-off should become apparent in the first six months, a year at the worst – providing of course, that you’re not buying a vehicle with a known reliability record. And an untitled car will lose thousands of dollars of value the instant you drive it off the lot.

He’d grown up driving a low-end SUV, and a low-end SUV was what he wanted to drive. (Anyone who wants to use the comments box to rage against gas-guzzling SUV’s and non-renewable natural resources is pretty much wasting their time – that’s what people drive in North County Coastal, and I’ll stop when everyone else does – I’ve only got three kids, and none of them are expendable.)

We test drove the Toyota 4Runner, which I thought he’d like, as an upgrade – but no – he preferred the Pathfinder. Good news, they cost less. When we got on to the Nissan lot, he test drove an XTerra – a vehicle I’ve always admired, but thought was a bit too “young” for me – I’m not the target audience. We liked it, but we walked away, and I passed on to him Lex’s Rule Number 1 of car shopping:

“Never buy on the first day.”

It might be just the car you’ve always wanted, but you can’t know for sure if the price is right (and fits your budget) until you’ve stewed on it for a bit, and done your research. Which for me, happens here. Anybody who pays Blue Book is nuts. That’s my opinion, anyway. So we did our due diligence, and discovered that the car was probably about $500 overpriced. Fair enough – canvass the market. No comparable vehicle was for sale, and $500 is not too much of a premium.

It also had a bitchin’ stereo.

Went back a few days later to seal the deal. One last test drive, and we were ready to close.

And here’s where he got interested, and I remembered that now matter how mature he may seem, he is in many ways a babe in the woods. He’s never seen a business transaction, so he watched rapt as the salesman and I did our little dance. I could almost see the wheels turning in his head, and the mental notes being taken. Whenever the salesman would shake his head and sigh, and offer to go back to his sales manager to discuss my ridiculously low bid, we’d have few moments to share whispered philosophy.

Which boils down essentially to this:

The car dealer sells cars for a living. He does it every day, if he’s any good. We buy a car every 5-7 years. Advantage: Salesman

Knowledge is power. It’s relatively easy to gain knowledge these days (don’t you love the information age?) but you have to follow through. Advantage: Neutral. He knows what the dealership spent on the vehicle. He knows what he can afford to take as profit. He doesn’t know what you’re prepared to spend. But if you’re going to deal, he has to believe you’re a serious buyer.

The car dealer has something you want: The car. But –

You have something he wants: Your money. Your. Money. He also wants to be nice to you so you’ll come back and get your car maintained at his dealership, maybe send some word of mouth his way. He really wants you to finance your vehicle through his company’s finance department. And he’d also love to sell you an extended maintenance warranty.

Advantage? You. You can buy a car anywhere, on any day. He has only you, in front of him, right now. Yesterday is history to the salesman. Tomorrow is theoretical. He is entirely in the moment. You can get money elsewhere. You can talk about the warranty, when the time comes.

He will try to bond with you, make it personal. You will probably never see him again. He’s just trying to make a living. A fair price will allow him to do so. So it goes.

The finance department tells you that you’ve got pretty good credit. Not perfect, but pretty good. They can’t give you that bottom dollar rate the salesman talked about, because you had that one Macy’s card go 30 days overdue. You’ll have to pay a little more. But it’s OK, your credit union will float the loan for a half percent less, on a used car. You’ll just deal with them. Unless they can match that rate? Because you really want to help them out, here.

“Let’s just see what we can do.”

Due diligence.

So anyway, we eventually struck upon a price that seemed fair to both of us. The sales manager concurred. We shook hands.

That’s a psychological threshold to the salesman – you’ve shaken hands, and the deal is sealed. He knows that you won’t back out now. And here’s where the pressure begins again.

How about that extended warranty? Seven Years, $19.00 per month. Bumper to bumper (excluding brake pads and oil changes). Sounds cheap, doesn’t it?

Except… That’s $1500 dollars up front (with interest on the loan), for seven years of coverage (including rental car!) against the chance that something might break down several years from now. The first two years of which, I pointed out, are covered by the factory warranty. He pushed it hard. I listened politely.

Eventually I declined.

Because I’ve got to figure, if he wants to sell it so badly, it means the company underwriting the insurance has to realize that they’re going to make money on the deal in the long run. Oh, maybe not on me, but on all of us. It’s all about the odds. I’ve never bought an extended warranty, and never regretted it. The old Pathfinder has new tires (not covered), new timing belts ($100), new brake pads ($120) and new shocks ($300) in the last eight years we’ve owned it. All of which, had it been in money market accounts, would have been earning me money, rather than the insurance company (or the dealer with his kickback). And I reminded Son Number One – it was our money we were talking about.

The salesman was clearly unhappy – he tried hard to be persuasive. He showed me some pretty fuzzy math. Rather than call him mendacious or deceptive, I chose to wear the mantle of stubbornness (it comes pretty easy to me, Eric – are you surprised?). The sales manager came over and got into the gig. Our man was up for an award, I was hurting his chances.

No dice. Appreciate your input, you’re wasting time for both of us. My mind’s made up.

——————–

So we satisfied both of our goals, my own and the salesman’s. I bought a car I wanted, at a price I thought was fair. The kiddo got a new ride (air bags and ABS!) and I got a chance to teach the young man about the value of capital, who has it, who wants it and the friction in between.

A good day, all in all.

So long as it doesn’t fall apart, two years from now…

 

Advertisements

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s