Category Archives: Cars

How To Buy a Good Used Car for Under $5,000

I friend recently wanted to buy a new car, and went to several used car lots; one in particular was called J.D. Byrider. They (in 2013) had a nice used 2005 Chevy Cobalt listed for $14,000, when it was advertised other places for $4,500 – $5,500.  The car was triple over-priced because they sell cars to people with really bad credit, who don’t have much money.  Usually lots like this sell to people who don’t have much car knowledge, and they are only looking for a monthly payment that they think they can afford.

I really hate it when people take advantage of vulnerable people. To help people not be vulnerable was why I decided to write this blog. Also, Dave Ramsey always recomends that people who are trying to get out of debt, accumulate savings, and be smart with their money to buy a good used car in the range of $5,000.  Here are the 12 important things to consider when buying a used car.

  • Save $5,000. If you need a car now, will soon, or are selling a car with a high payment, you must scrimp and save up $5,000 first, that way you won’t have to borrow and you will not have a monthly payment.  Do whatever you have to do; work an extra job, sell stuff, watch every penny, and use tax refunds or bonuses.
  • Which car to buy?  First you must decide which car is the best in terms of being dependable and low cost to own.  The best car that fits this bill is about a 10-year old Toyota Camry or Honda Accord with less than 150,000 miles. Typically these are the most dependable mid-size cars that have ever been made. Camry’s are boring, so that helps to keep the price down, however they are big enough to haul four people and they have a decent size trunk. Plus they are plentiful, since more of them  have been sold than other other car. They are a little larger than a small car, so that helps with safety.  Gas mileage is good too, not great, but not terrible either. Only buy the 4 cylinder models because they get better gas mileage, and some Accord 6 cylinders had bad transmissions from that era.
  • Which car not to buy? Stay away from SUVs because they get terrible gas mileage, cost more to purchase and the maintenance is higher than other cars. Many low income people can’t even afford to put new tires on them because they cost 2 to 3 times more per tire than small to mid size car tires. Secondly stay away from any car made in Europe, because they cost a lot more to repair, and stay away from most luxury brands for the same reason. Some low income and people in poverty are attracted to SUVs, luxury and European makes, but a neighbor of mine bought a Jaguar for a pretty good price, but it sits unused because she can’t afford the repairs to get it going again. I blogged about this before.
  • Take a big brother.  Don’t have a big brother, then maybe a father, mom, sister or friend, anyone that knows more about cars than you do. Take them with you to look at the car you are considering.
  • Buy from a private owner.  When you buy from an owner, you are not faced with the dealer trying to make a big profit from the car. Secondly, you can hear the story about repairs, wrecks and maintenance and use your judgment about whether the person is being honest with you.  If the car is a one owner, that is even the better. Craigslist and the paper are typical places to find private owners, but take someone with you, for safety purposes. Ask your friends and relatives if they are planning to sell their cars. Be patient, I checked Cragislist almost every day for 6 weeks before I found the right car.
  • Look for little bar code stickers. If the car has been wrecked they will not be on the inside of all doors, trunks and hood- look for these, they are a telltale sign of the car being wrecked.
  • Thoroughly examine the car. Take it for a test drive, look under it, open all the doors, sunroof, and trunk as well as the all important engine compartment.  Listen for funny sounds, such as squeaks, rattles, and rubbing noises.  Take it for a test drive, without the radio on and the windows open and closed so that you can hear different sounds.  Sniff for smells on the inside (water damage?), and on the outside and engine compartment for burning: oil, transmission fluid and radiator fluid.  When you drive it see if there are any funky vibrations, transmission slippage/shifting, braking, suspension, or acceleration issues. Have someone stand behind the car when you start it or accelerate, and make note of any tail pipe emissions or unusual smells. Crawl underneath it looking for overspray from body work, or anything abnormal. Look at the dip stick for the oil and transmission fluid for clarity and other signs such as liquids that should not be there. Same goes for the radiator fluid, and check out the overflow tank to see if it is dry (radiator leak somewhere?).  Ask them where they usually park it and look for leaks on the ground. The mechanic will do all of this and more, but you could save time first by doing these checks.
  • Ask about maintenance. I don’t care as much about mileage as I do if the car has been maintained regularly. Ask how often the oil has been changed and other regular tasks like the transmission fluid changed.  Also, pay particular attention to the timing belt. This belt and the water pump are usually changed after 80,000 miles (check the owner’s manual) and costs about $400 – $600 to do. Knowing this will help you negotiate a lower price.
  • Research. Look at the service records, order a CarFax report, and hire a mechanic to go over the car before you purchase. Obtain private seller cost estimate from Kelly Blue Book @ www.kbb.com and Edmunds @ www.edmunds.com.
  • Plan to spend $250 – $1,000 when you purchase it. When I buy a used car, I find it usually needs some things. I bought a Camry recently, and it needed tires, a new headlight, windshield (it had a crack), couple of exhaust pieces, and replaced a filthy air filter. However the timing belt and water pump replacement, transmission service, and serpentine belts and water hoses had been replaced. By the time I paid for taxes and repairs, I had spent an additional $1,000, but it didn’t bother me, since I found a one owner Camry with 159,000 miles for only $3,000. It is probably a good idea to replace windshield wipers and detail it out, you might find little things that need to be fixed- ours needed a simple low cost repair to one of the seat belts.
  • Pray about it.  Don’t let your emotions get the best of you, so pray for wisdom, the Holy Spirit may tell you to look elsewhere.
  • Maintenance.  You must pay closer attention to older cars with high mileage and make sure it is well maintained so that your new old car provides you with inexpensive transportation for many years to come.  Check out the owners manual, and establish regular intervals for transmission servicing, timing belt replacement, radiator flushing, air filter replacement, belts and hoses, tire rotation, and oil changes (to mention the most common ones).  I recomend oil changes every 3,000 – 4,000 miles (maximum), even though cars these days recommend much higher intervals, since oils have gotten better. I find inexpensive oil change coupons for only $20 (versus $40 to $50 at regular cost) at Sears, through Groupon, ValPak, quick-lube places and some dealers several times a year. That is even cheaper than doing it myself. If you go to a quick-lube place, even though they inspect the car, I find those mechanics not always competent on more advanced things, so make sure a good mechanic also checks your car out from time-to-time, especially brakes, tires, and suspension parts.

Long-Term Car Loan Insanity

It has been reported that 7- and 8-year car loans are becoming the norm. This isn’t surprising, when you consider that the cost for a new mid-size family car, mini-van, hybrid, or small SUV can easily be $25,000, and it is not uncommon that if nice features are added they can easily cost $30,000 – $35,000. Full size models with a lot of features, or more luxury brands can kick the cost to above $40,000.

Many people look at the monthly payment, and they buy based on what they think they can afford. However, I find that most people don’t do a budget (nor live by one) before making a final decision based on monthly payment amount.

Before purchasing, it is not uncommon for new car purchasers to:

  • Fail to calculate what their real budget is: They often think they can afford something but in reality there isn’t enough room in their budget for the new car payment.
  • Fail to calculate the overall cost of buying a car: The cost includes final purchase price, which includes title and other dealer fees they add on. Secondly, most states have a sales tax.  Assuming someone purchases a $27,000 car, pays 6% sales tax and $500 in other fees: The purchase price is $29,120. This doesn’t include rebates or dealer discounts.
  • Fail to know how much total interest they will pay: Using this example, lets assume they put $2,000 down; they will borrow $27,000 at an assumed interest rate of 5% (this will depend upon credit rating and arrangements the car dealer has with lenders), and they will finance it for 7 years. The total interest paid on the loan would be $5,055.
  • Fail to know how much they will be upside down when they drive their car off of the lot:  That new car will depreciate about 10%. That new car purchased for $27,000 will now only be worth about $24,300, even though they owe the bank $27,000.
  • Forever upside down: Especially with a long-term car loan, because of the interest you owe, the car’s depreciation, and a small down-payment, you most likely will owe more than the car is worth for the entire term of the car. If you run into financial problems, such as becoming unemployed or underemployed, and you run out of savings, you might not be able to sell the car if you owe more that it is worth. So now you have a car you can’t afford, and it will be difficult to sell it! Hello repo-man.
  • Fail to calculate the impact to their financial net worth: On their balance sheet, on the asset side they can add the car’s value of $24,000; however, on the debit side, they have a $27,000 debt plus $5,055 in interest, for a total liability of more than $32,000. So their net worth has decreased by $8,000 ($32,000 – $24,000).
  • Fail to consider fuel and maintenance cost:  Some people are really savvy buying high MPG and hybrid vehicles; however, many people don’t compare that at all to other models, nor do they compare it to their current car, and they buy a car that is more thirsty on gas.
  • Fail to consider that debt is bondage. It is actually feeling like you are a slave to the lender. Proverbs 22:7
  • Debt is betting on the future.  It assumes that you can afford the payment for a long term, even though your employment, health, and overall financial situation and economy could worsen. It is spending tomorrow’s income before you even have it. It is taking many things for granted, including the Lord’s blessings.

Those who are really economically minded buy used cars with cash or short-term loans. They also calculate the total cost of ownership: purchase price and cost, interest, fuel, insurance and maintenance. Short-term loans have higher payment, making them not as affordable for many car-buying consumers. This tempts many people to lease instead of buying. Most financial experts though, like Dave Ramsey, recommend not leasing–Dave calls leases car-fleeces. Some very well healed people lease cars, and they get a new lease every few years, but for those on a tight budget, working hard to minimize debt and build wealth, if they have to borrow, short-term loans are the way to go (with large down-payment). Patiently buying good used cars with cash and maintaining them well is usually the best way to go financially.

Car Power Plants Reviewed: Electric, Hybrid, Gasoline and Others

Have you thought about buying an all-electric vehicle, or hybrid with the costs of gasoline being so high. Maybe you are ecologically minded, and think electric power is better for the environment. Before you run out and buy an alternative fuel car, I thought it would be good to cover the advantages and disadvantages of the various types of engine systems that power cars.

Within the next 10 – 20 years it is quite possible that all-electric plug-in vehicles will be the majority of cars being purchased, yet today they represent less than 5% of new-car buys. Hybrids are really popular today, and plug-in hybrids are gaining in popularity, but if you are confused by all of the options read on.

  • Traditional gasoline powered, internal combustion engine. Within the last 30 years this reliable power has gotten very efficient, light weight and low polluting. The improvement in engine technologies have been aided with lower weight chassis to expand the miles per gallon of all trucks, cars and SUV. Contrary to conventional wisdom, and media criticism, gasoline engine vehicles use a very efficient power plant.  I’ve read articles about the science of them, and they convert power from fuel very efficiently considering all the things they do. In addition they are low in maintenance, accelerate quickly and can go nearly everywhere. Their biggest advantage over any all-electric vehicle is that they can go for hundreds of miles before needing a fill up. The worst SUV may still get less than 15 miles per gallon, but the best subcompact may obtain MPG ratings in the high 40’s. The world wide supply of oil seems to be adequate to meet the demand for the balance of this century, however the ecological and political issues surrounding its use, exploration, extraction and its increasing costs make gasoline and diesel power problematic for some.
  • Diesel powered engines also have come a long way in the last dozen years. They don’t pollute nearly as much as they used to, accelerate faster than the diesel powered cars of the 70’s and 80’s. They have tons of torque, which is very helpful if towing or trucks carrying a lot of weight.  Diesel powered cars get better gas mileage than their gasoline brethren, however since most diesel powered cars cost more than equivalent gasoline models and the price at the pump of diesel costs about fifty cents more per gallon, it may take 5 years or more to recoup the additional cost. Some maintenance is less for diesel cars, but it seems diesel is best for those putting very high mileage on their cars every year, and keeping them for a very long time, such as 10 years or more.
  • Natural Gas powered vehicles are on the road today, but mainly Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG) power fleets of city vehicles. Natural gas costs less than gasoline, doesn’t get as good miles per gallon, however unlike diesel, the increased cost of the vehicle and the less MPG is more quickly offset by the reduced price of natural gas.  There are not many CNG or LNG fueling stations in the U.S. to make this a viable alternative for most people. The supply of gas in the U.S. seems to be strong, however the controversy over fracking puts gas in question whether it will be the fuel answer in the coming years.
  • Hybrid powered cars and SUV’s are a blend of internal combustion and electric engines, using sophisticated systems for the efficient balance between both plants, and some extract energy from braking. In my mind there are two types of hybrids; one I call dedicated hybrids, for these the entire vehicle design and construction was built to highlight the advantages of these mated technologies, like the Toyota Prius or Ford C-Max. The second type takes an existing platform, such as a Toyota Camry or Ford Escape and swaps in the hybrid components- I call these modified hybrids.  Clearly the price of  modified hybrids can be several thousands of dollars more than the non-modified version of the same model, again like diesel, the increases costs of modified takes many years to recoup, making them a bad deal in my opinion.  The dedicated hybrids get a lot better gas mileage than the modified, because they were designed around that technology from the ground up. Dedicated hybrids still cost more when you compare cars of similar internal space and trunk size, such as if someone were considering a Toyota Corolla verses a Prius, but if someone usually purchases a car in the price range of a Prius, they are attracted by great gas mileage and well thought out design that makes their smaller space seem roomier and with hatch back’s great use of space. Prius owners love them. The other draw backs besides space and price, are the price of battery replacements if owned for a very long time. I am not a fan of modified hybrids, but like the dedicated hybrids a lot, especially if you can a great deal on one.
  • All Electric Plug-In vehicles are wonderful because you never have to buy gasoline. If you have a convetional car getting 25 miles per gallon, you can easily spend $200 or more per month on fuel, depending on the length of your commute.  The cost to recharge plug-ins are about $3, so if you drive it 28 days per month, and have to give it a full charge, your electric bill will go up by $84, maybe more if you recharge it twice a day, maybe less if you recharge it every other day, or only need partial charges. Individual buyers will need to calculate the costs for themselves. The drawbacks are they all run $30,000 – $40,000 or more for most all electrics, more than double that for a Fisker or Tesla. The Federal government provides $2,500 – $7,500 in tax credits, which helps to make them more affordable. Plug-ins are very small- not good for those wanting more space or safety of large cars. The biggest draw-back of plug-ins is their range. Most can only go 60 to 100 miles per charge, so unless there is a charging station where you are going, plug-ins are best for shorter commutes and around town driving, making them a good thing to consider if you have a second vehicle used for longer trips.  Plug-ins may not be good for apartment dwellers and condo owners who are not able to find an easy place to recharge them. One last thought- within the last several years we have had several multi-day power outages. During such times, my local coffee shop didn’t mind my camping out there to recharge my phone and laptop, but I think they would draw the line with an extension cord out to the curb. Not having a reliable gasoline powered car available could be problematic for  some.
  • Hybrid Plug-ins combine the long range and efficient capabilities of dedicated hybrids to achieve all electric use for low cost shorter trips, yet gasoline power for acceleration and longer trips. The Chevy Volt, Toyota Prius Plug-In, and Ford C-Max Energi provide these types of power plants. These cars don’t have quite have the range in all electric mode as the all electric plug-ins, since they have more weight to carry with the gasoline engine and heavy fuel on board. Expect a range in the neighborhood of 11 to 50 miles depending upon the model, for electric-only mode. However when using the combination of gas and electric, the range will be as far as many cars with just gasoline engines, and some much farther. Hybrid plug-ins seem to offer the best of both worlds, however the costs can be high for these models even after tax credits, usually making the increased cost of the purchase of the vehicle in excess of the energy saved.

Conclusion: If someone is considering the purchase of a car, I think it would be best to decide what they want in a car, such as performance, space, safety, purchase price and reliability first. Once they have arrived at that, then consider what cars are available in that price range.  If one the non gasoline-only cars fall into consideration, then calculate the fuel savings and overall features for what you are looking for- always doing the math to decide if the increased costs of the hybrid will be offset by the fuel savings. In other words don’t just look for efficiency and forget safety and price, in the end you might not be happy with the performance.

Time to Check Your Car’s Battery

Fall always seems to be the best time for me check my car’s battery. You might want to also, if you don’t want to get stuck somewhere without a good battery. This is especially true for folks driving through not-so-safe neighborhoods now that it is getting dark much earlier, or up north in our cold Winters. Most auto parts stores will check it for free. For about a week our 1998 Windstar Van’s battery was showing signs of weakness.

Finally yesterday, the battery went out- it just didn’t quite have enough juice to start it without a jump start. After my wife checked Quicken, we  determined that we bought the previous battery from Auto Zone 5 years ago. We quickly ruled out that we did not have any warranty left after that long, on a 60 month battery. While I called for prices of batteries from Auto Zone, O’Reilly’s and Advanced Auto Parts- chain part stores in our area, she went through the inventory of coupons. The only one she found actually came in the mail the same day, $20 off purchases of $100 or more at Advanced Auto Parts.

Since the Van is 14 years old, and over 150,000 miles on it, I just wanted the lowest cost battery. Calling Auto Zone, O’Reilly and Advanced the base battery was rated for 60 months but had a 2 year warranty. O’Reilly and Auto Zone tied at 99.99, and Advanced was $101.99. For a couple of bucks, I bought battery terminal grease and terminal fabric washers- both to help minimize corrosion you sometimes get since the batteries have highly corrosive sulfuric acid. After taxes, those extras and the $20 off coupon, my bill came to $90.34. That cost included a $12 credit for giving my battery to Advanced to recycle.

Had I not traded in the battery, what they call the battery’s ‘core,’ then the cost would have been $12 more. They call it the core, since the core part of the battery that is recycled is the battery’s lead core. The plastic and liquid chemicals are probably recycled too, but the lead has commercial value. You can get $10 – $15 for most batteries,  so if you have any old batteries laying around the garage from cars, lawn mowers, boats, RV’s or other equipment you can sell them for cash. Advanced Auto Parts will only give you a $5 gift card for old ones, but the local Interstate Battery store gave me $12 last Spring for an old big Marine battery I had for a sump pump back-up system- shop around.

I was a little surprised by the battery’s cost. Gone are the days I remember when you could purchase a battery for $35 – $75 for most cars, now almost all decent batteries cost near or over $100. Low-cost or cheap batteries are a thing of the past.

The manager of the Advanced Auto Parts, Brent was very polite, and installed it for free in the company’s parking lot. He tested the old and new battery to make sure one was bad and the new one was good, since they sometimes come from the factory bad. I didn’t have to get my hands dirty, or fumble around popping in a new battery in the dark.

While you are checking your battery, you might want to also check the windshield washer fluid and wipers.

14 Ways to Save Gas

Gasoline prices have trickled down in the last few weeks. However, they are still about double what they were 4 years ago, making it important to get the most possible mileage out of each gallon of gas. Some of these tips come from “20 ways to save gas this summer” Popular Mechanics 7/2012 magazine. Here are are some of their top suggestions and a few of my own.

  1. Right turn only route: The other night on the way to a small group meeting, I took a different route to the meeting from the one I took back to our home, and my wife wondered why. The reason is that I like right turns better. No, I’m not OCD–well okay, I am some, but I am also impatient. I know I can make more right turns on red and spend less time at traffic lights. This increases fuel economy 3% according to the article.
  2. Avoid traffic: Sitting in traffic for long stretches of time consumes a lot of fuel, so take a less congested route if it isn’t too far out of the way. Many people have GPS navigation systems; they are very helpful to people who aren’t street savvy, since they can help you find alternate routes.
  3. Avoid high ethanol fuels: Although most gasoline has some ethanol today, avoid the high E fuels since they have less energy, causing reduced mileage–15% ethanol has 30% less energy.
  4. Inflate tires: Putting them at their proper level makes them wear better and produces better mileage. Low air increases rolling resistance, which is bad for gas mileage.
  5. Tuneups, oil changes and air filters: These simple maintenance items keep the car’s engine running more efficiently. Follow your owner’s manual and visually inspect the items too.
  6. Eco versus sports tires: Sporty tires are designed primarily for handling, so if you don’t mind a little less cornering ability at higher speeds, look for tires that are designed for high gas mileage
  7. Close the tailgate if you have a pickup: This seems to go against logic–you would think without the tailgate open, air would flow more freely over the back. However, research indicates that most trucks get better mileage with the tailgate up. The flow of air reacts differently coming off the big front area, and it creates strange air currents if the gate is left down, as air flows towards the back of the truck. Or maybe this is just propaganda the truck makers put out because they want you to see the manufacturer’s name advertised across the closed tailgate.
  8. Empty trunk: Store tools, golf bags and other rarely used items in your home. Why pay to haul them around if the items are seldom needed?
  9. Windows up/windows down:  At lower speeds during the warmer months, shut the AC off and open windows to save gas. However, at higher speeds, the open windows create drag. Crank the windows closed, and turn the AC on.
  10. Driving the farthest distance first: Hot engines get better gas mileage, so if you are running a lot of errands, head to the farthest one away first, then work your way home. If we are grocery shopping, we take blue ice and a big freezer bag (Costco sells a huge rugged one) to keep perishables fresh.
  11. Avoid short trips:  Package errands together so you aren’t planning so many short trips. This is better for your car too, since short distances leave water condensation in exhaust systems, leading to rust.
  12. Remove van seats. Carrying around an extra hundred pounds or more costs gas. If you have an older van, the seats are probably easy to remove. However, if the kids are grown and you seldom take passengers, store the seats in the garage or basement. Watch your back, they can be heavy and clumsy. Ask a neighbor to help you carry them. Most of the newer van’s seats retract into the floor and probably are not removable.
  13. Coast to traffic lights in gear: This uses less fuel than shifting into neutral. Don’t be overly annoying about doing this since it can induce road rage. But if it’s obvious that the light ahead is red–you can see cars are piled up and opposing traffic is in the intersection–chances are you can coast.
  14. Accelerate a little faster: This is the biggest shocker to me.  Popular mechanics proved in several tests that if you accelerate at double your car’s fastest time to 60, then you are most efficient. The wives of slow frugal drivers can rejoice!  If your car can hit 60 in 7 or 8 seconds, then take about 15 seconds to get up to speed. However, if getting on the highway, let-r-rip; put the cell phone down, floor the baby, and check your mirrors, and glance over your shoulder to make sure no one is in your blind spot. Now you have a good excuse to grab a stop watch and find a lonely stretch of road to check your car’s 0 – 60 time. Have fun!

14 Most Fuel Efficient Cars

When you buy a car, what is most important to you: purchase price, cost of ownership (regular maintenance, repairs, insurance, MPG, depreciation), utility, performance (how fast and how well it handles), safety, image or the green factor?  Maybe you consider them all, but some prioritize the list differently. Strangely, many people do little research; they wander into a dealership and are talked into buying a car by a salesperson.

For those people very concerned about cost of ownership, miles per gallon makes up most of the annual costs. Kiplinger recently published its list of the most fuel efficient cars for 2012. Fuel efficiency is very important for many people’s budgets since gasoline can cost them several thousand dollars per year, so this article is worth checking out. However, in my opinion, Kiplinger’s list isn’t all that helpful, since it just rates them by class, but it serves as a useful reminder when a person is considering different car categories.

Kiplinger’s highest MPG rated cars for:

  • Cars under $20,000: the Scion IQ: 36 city, highway 37. This is a tiny car, and there are bigger ones with close to the same MPG rating
  • Cars $25,000 – $20,000: the Toyota Prius 2. city 51, highway 48
  • Cars $25,000 – $30,000: the Mitsubishi i-MiEV ES, city 126, highway 99 all electric limited range
  • Cars $30,000 – $40,000: the Nissan Leaf, city 106, highway 92, all electric limited range
  • Cars $40,000 – $50,000: Audi 2.0T Premium, city 25, highway 33
  • Cars $50,000 and up: Infinity M35h, city 27, highway 32
  • Sport cars $50,000: BMW Z4 sDrive28i, city 22, highway 34
  • Small Crossovers: $31,000 Ford Escape Hybrid, city 34, highway 31
  • Midsize and large Crossovers:, $46,000 Lexus RX 450h, city 28, highway 32
  • Truck Based SUVs: Cadillac Escalade, Hybrid (TE), $75,000, city 20, highway 23,
  • Chevrolet Tahoe Hybrid and the GMC Yukon: rated the same as the Escalade, since they are are similar to it, but they cost $20,000+ less
  • Minivans: Honda Odyssey LX, $29,000, city 18, highway 27
  • Wagons: Toyota Prius V Two, $27,000, city 44, highway 40

When I have purchased new cars I relied on comparisons published by various automobile magazines, such as Road & Track and Motor-Trend. These two regularly compare models and you can see side-by-side price, utility (e.g., trunk size), performance, image and green factors. My local library has back issues, and I can easily find the comparisons by first doing a quick Internet search.

What do you do if you want to compare safety beyond braking ability, anti-lock brakes and number of airbags? Then you have to go the Insurance Institute for Highway Safety or IIHS. You can also look at cars reviewed by U.S. Department of Transportation at SaferCar.org. Some rely on acceleration for accident avoidance, and some magazines publish lane change and cornering ability–good to check out for clues about how easy it might roll over or lose control when you have to react quickly.

What about the other factors of cost of ownership besides miles per gallon, and regular maintenance costs? Consumer Reports magazine is the only place I know to check out those costs. For that you will need to subscribe to their magazine, or go online and get access to their records, but it might be worth the cost. Also, be sure to call your insurance agent to get an estimate for the car you are considering.

Those are the logical reasons; however, humans are not very logical Spock-like creatures. We are very emotional and image driven, so a lot of people are attracted by the brand image that shows they are frugal, well-off or classy. Many men buy a car for the sporty image, or the tough look of masculinity.  Sometimes we bypass looking at these things, and we buy a particular brand we like, one that we feel offers the things we want, or a brand that has been good to us in the past. Brand loyalty has always been important to car manufacturers. Avoid emotional decisions, as they can be costly sometimes. I’ve written about used cars to avoid in prior articles. To get the best deal, do your research first.

How much car we can afford is also a critical factor. But does that mean we should buy the most car we can afford, even if it is a very expensive luxury class vehicle?  That is a great question, I think. Since we are Christians, we have a responsibility to be good stewards over the money God gives us, and over the planet’s natural resources consumed to produce and run a particular vehicle. Before purchasing, we can examine our emotions and motives, pray for direction and wisdom, and seek the counsel of others, including our spouses and our professional financial advisers. Only after doing these things, can we make a clear headed and responsible decision.

What do you think are the most important things to consider when purchasing a car, a motorcycle, a truck or an SUV?

Annual Cost of Gasoline

With gasoline hitting or exceeding $4 per gallon in many parts of the country, it is important to consider your annual cost of gas when purchasing a new or used car. In 2009 gas was less than $2 per gallon, and it seems that we have gotten used to the current costs. With the price of groceries and healthcare steeply increasing over the past several years, the average American’s budget is really being stretched. Throw on a doubling of gas prices, and there is little room for many extras, making vehicle purchase decisions that much more important.

The chart below illustrates that it is easy to spend thousands of dollars each year on gas; however, it might not seem that big a deal to some people. But if you add it up for 5 years, the difference in cost between a full-sized SUV averaging 15 miles per gallon and a small or medium-sized one averaging 25 mpg is $5,333. Upgrading from a sedan averaging 25 miles per gallon to an ultra-efficient hybrid averaging 50 miles per gallon could save $4,000.

Many people react to this and wonder if they should buy a hybrid to get better gas mileage. However, the cost of the hybrid model sometimes is more than the gasoline cost savings. Anyone considering purchasing a hybrid should factor in expected savings based on the yearly mileage, as well as the additional cost to purchase the hybrid vehicle. Caution, don’t totally rely on the published MPG ratings on the sticker. Consider the number of miles you drive on the highway and in the city, and then take a conservative approach by rounding down that number by at least 10%.

Using some of this methodology may help you make important calculations when considering a new car purchase. In a couple of prior blogs I mentioned used cars to avoid and an evaluation of the potential cost savings of a newer, more fuel efficient car with monthly payments. If you are in the market for a car, these articles might also be good to read.

 

Should I Buy a SAAB?

A few days ago in a question and answer automobile section of the Wall Street Journal, a reader asked if it was okay to buy a SAAB. If you don’t already know, the Swedish automobile manufacturer filed for bankruptcy about a year ago. No one has yet to step up to the plate to buy them and start manufacturing cars and parts again.

I think it is terrible advice that Jonathan Swift gave to recommend that was okay to buy a SAAB. I usually like his car reviews and Q and A columns, but this time I think his advice is erroneous. On one hand I imagine you can get a great deal on them, since some might want to sell them in case parts become hard-to-find. However looking around the internet I found some people who are not able to find parts they need. After market parts manufacturers will continue to make many of the regular serviceable parts for a while, such as alternators and brake parts, but if no one buys and revives the brand it is a gamble, in the long-term.

Many people today are struggling through the recession with debt and depleted savings, so purchasing a car that has higher incidents and costs of repairs compared to the average would be better off buying another brand, one they are certain they will be able to find parts for. There are many cars that fit the description of higher incidents and costs of repairs, especially for used ones, and I blogged about it earlier this year– these are the used cars that I would avoid. Cars cost a lot of the average person’s budget, when you consider loan or lease costs, purchase price, gas, oil changes, tires, insurance and regular maintenance. Why compound their expense by getting a really nice envious car, when it might make you go broke.

I know a lot of modest income people buy these really nice cars like Land Rovers and Mercedes, but sometimes the repairs puts them, or keeps them in poverty. Buyer beware.

Buy a Car to Save Money?

Does it make sense to buy a new used car that gets great mileage, compared to keeping an old heap, thinking that the gas savings will outweigh the cost of borrowing?

Suppose an old family van isn’t needed anymore since the kids are out on their own. It could be tempting to consider alternatives, for example, there is the opportunity to buy a great used car; a Honda CIVIC from a friend for $5,000. A loan will be necessary since debt reduction has been the goal instead of saving for future needs, so will the gas savings be larger than the loan?

The new car in question is a 2001 2 door CIVIC, 106,000 miles, in excellent condition, and can get nearly 40 miles per gallon, since it has the high-efficiency engine and constant velocity transmission.

The van in question is a 1998 Ford Windstar with 165,000 miles on it, and it averages about 17 miles per gallon with its 3.0 engine.

A $5,000 loan at 7% for 36 months has a monthly payment of $154.39. The van gets driven about 700 miles per month, with a monthly fuel consumption of 41 gallons  for $144.11 per month at $3.50 per gallon  (700/17×3.50).  The Honda’s Fuel cost at 35 miles per gallon would be $70 per month (700/35×3.50).

The net result is that since gas savings would be $74.11 per month and the car payment is $154.39, then to purchase the car by borrowing the buyer would be about $80 in the hole.

I have not calculated the residual values of the vehicles, nor have I considered the maintenance cost.  On one hand the Honda should be inexpensive to maintain since it is excellent condition and has new tires. However it requires timing belt replacement every 80,000 miles and other regular service that is unknown. The van is in good shape mechanically, but it could die any day or need a major repair, but either way its useful life is probably less than two years.

The only way it would make sense to make the change is if the van needed major service today, or if gas went to almost $8 per gallon, or there is a substantial increased the amount of miles driven.

Since the gas savings doesn’t exceed the car payment, it makes sense to save the difference, buy a car later, and pray for the van to continue to hum along without major repairs.

Car Headlight Restorer a Great Value

I’m a car guy, and since I like to keep my car nice it has always driven me crazy that the xenon headlight lense covers were no longer crystal clear, but yellow and brown. They didn’t shine as bright either, since the aged plastic filtered the light.

I drive a 1999 Toyota vehicle with over 285,000 miles on it, I don’t have a name for it, but I do call it my baby, and it still looks great. I believe it is smart financially to maintain a car well for a long time and extract as many miles out it as possible. When I keep it clean I seem to appreciate it and treat it better too. Funny, I swear it drives better right after it has been washed I’m not kidding, I’m thinking that ‘my baby’ has a soul and just appreciates being treated right.

No matter how well I cleaned this car, since the headlight lenses looked so bad, it just never looked clean. I’ve tried some headlight restorer products over the years, but none of them worked well so I was skeptical. While at the auto parts store picking up a headlight bulb for my wife’s van, I got into a discussion about the various products for restoring headlights. It seems the manufacturers have gotten much better- great idea since so many cars have the clear lenses over their xenon or halogen bulbs. In the old days, cars only had ‘sealed beam’ headlights and the whole unit was one big light bulb that had the headlight lense built in.

The sales person recommended several products, but he said the auto detailer guys would mainly buy the 3M kits, so that is what I tried, and the results were amazing, restoring the finish to 90% show room luster. This is the after picture, I wish I had a before picture to show you, but it was very dirty looking.

Not only am I glad that the car looks a lot better, I will be able to see a lot better at night, and during rain, snow and fog. I bought my car for 9,300 in 2005, and have had very little maintenance and repairs and the $25 was a good investment, and I plan to keep it for many more years. I am grateful for the great 3m product, and it was easy to use. The kit consisted of an electric drill bit attachment, three different grits of sand paper, and a buffer and rubbing compound. I followed the directions and it worked great. The hour and half process just consists of removing a slight layer of plastic and polishing it clean. Now my wife wants me to do her car. Guess what I am going to do this Saturday morning?

Device Saves Car Repair Expense

Does the little check engine light on your dashboard light up?  It may be telling you vital information about your car, that if not attended to right away could result in a significant repair. On the other hand it may indicate something really simple such as a loose gas cap. How do you normally tell what it means? You take your car to the repair shop or automotive dealer, fork out $50 – $100 so that they can tell you what is wrong. You may still need to do this, but not always.

My ’99 Lexus that I purchased used for almost half the Blue Book retail, has almost 300,000 miles on it now, and sometimes the little light goes on, and then for no reason goes off. This has been an incredibly low-cost car to maintain, but this has been maddening. Several years ago I was told it was oxygen sensors, then catalytic converter. After replacing two of each, the little light was reset. A few weeks later the light came back on, and I was told it was a different sensor. I had this checked by about 3 different mechanics over a year to two, and got mixed answers very frustrating.

My daughter and wife’s cars has had similar check engine lights pop on, as have friends and relatives of many makes and models, often with similar results as mine. For a while I just ignored the light, and then it would go out. This was very disconcerting to me, as I am trying to get many more miles out of my car, and not really knowing if a serious problem was occurring.

I didn’t want to have to pay a mechanic every time the light comes on our cars, so I recently purchased at NAPA a car repair computer code reader, or diagnostic code scanner. It is really easy to use: I just plug it into a computer plug located in my dash-board just below my steering wheel. It reads the codes, the website tells me what the codes indicate, the part that is needed and how much it will cost for me to repair it if a mechanic installs it, and where to order the part if I want to order it. If I decide to take a chance and do nothing I can reset the code and the light goes out.

This might be risky, because mechanics will tell you it is sometimes not this simple, and their experience might make the difference to correctly diagnose and repair. This is true, but for some codes they can come on when something is not really necessary to be repaired. For example, only on  a few hot days of the year, a light comes on for my idle sensor and anti-skid control, and a few cooler days later I can reset it, and the light never comes back on. Perhaps this is caused by heat and humidity. If I am concerned, I call the dealer or mechanic, and they are more than happy to discuss the problem with me. If I am treated fairly, and need a repair, I will take it to them. I did this last summer when I needed regular transmission and differential service which they did surprisingly for a very competitive price.

This is handy device that helps me to evaluate my options, and reset that annoying light when a repair isn’t needed, and save me time and money.

Is a car lease a fleece?

Dave Ramsey says that no one should ever lease a car, he calls car leases fleeces, is it true, is this fair, should no one really ever lease a car, and is it always a rip off? Basically a lease is the purchase of the car’s value that you will be using.

Dave’s overall recommendations are to minimize transportation costs, because we often see people  making bad (expensive) decisions in this area of personal finances. It is not unusually for us to see people buying cars that they normally couldn’t afford, with large payments that they are stuck with. At best this just is a hurdle to accumulate sufficient wealth for things like retirement, or at worst people end up in poverty. I know this to be true for myself, and for the 100’s of people who I have counseled or had in class over the last few years. I believe Dave’s point of perspective comes from similar experiences as mine, plus he is communicating to millions of people, for this wide audience he wants to keep his message simple, and it makes sense: Buy good used cars cheap, drive them a long time, learn personal financial management, don’t borrow to buy deprecating assets, pay off debt, save and pay cash for things that are needed, such as your next used car. Eventually when your house is well in order as defined by no debt, a lot of savings and funded retirement, then sure go buy a new car now that you can afford.

I think this is sound wisdom, that most people should heed.  However, I am car guy, and I love cars, is this from a mathematical standpoint always true?  Is this information fair to the auto industry, vehicle dealers, sales people and finance companies?

Keep in mind, whether you lease, borrow, or buy outright, there are always costs of ownership. That is where the devil is in the details. The cost of ownership can be computed to dollars or cents per mile, or for the total number of years of ownership.  The calculation should include: 1) purchase price (including financing), or lease payments 2) gasoline usage (this is huge and often underestimated by the SUV crowd) 3) maintenance 4) insurance 5) opportunity cost, or the lost interest on the money if you saved or invested it instead of putting it into car payments or a lump sum purchase 6) depreciation or the value the car is worth at the end of ownership when you sell it or trade it in.

This is a difficult calculation for most people to do, however in a few hours, with a calculator, note paper, and a few different websites, I think you could come close estimating at least 1 through 5 above. I recommend using the Total Cost of Ownership TCO at www.edmunds to only estimate the repairs, maintenance, gasoline, insurance and depreciation of used versus new for the same make and model. Use the auto finance calculators at www.dinkytown.com to estimate the total costs of financing. Comparing say 8 years of ownership: new cars will have an advantage of lower repairs and maintenance costs, and higher residual value. Used cars will have the advantage of lower insurance, and no, lower or shorter finance payments. If you follow the advice of many good articles of how to purchase a good used car, and you find a good one, most of time your TCO will be much less for used versus new. If the difference is small for your analysis, and you will own it for a long time, then a new car might be the wise decision. If you want to then look at comparing leasing, then compute the costs to lease three cars for your comparison, since you will have to lease that many for the same ownership period as your purchase. The advantage will probably be to own instead of leasing.

Do I ever like leasing?  Sometimes, but usually only if there is absolutely no money down, the payment is a super low deal probably offered by the manufacturer to move a back log of inventory, and after doing a good analysis like here. However buyers need to be very cautious, become sometimes their emotions get the best of them, and they are tempted by that really nice up market vehicle, and before they know it they have a high payment.  Lastly, it might make sense too to lease or purchase new sometimes, if you can get a low-cost high gas mileage car, with low maintenance versus keeping the a low gallons per mile car with constant repairs, but only again if you do the analysis above. Be extremely careful leasing, watch your mileage limit and talk to many advisors before doing it, because after the car is delivered it is almost impossible to get out the deal later and you will be stuck with payments for the duration.

How I shop for tires

Are you thinking about buying new tires before the hard winter weather hits?  Have you looked at them lately, do they look bald?  The old rule of thumb is to stick a penny in the tread and if the tread doesn’t go above Abe’s head then it is time, even if close you are ready. Tires are important, having bad ones can be dangerous. That is why I purchased 2 full sets of tires for our cars recently.

Tires are an expensive investment, one that you will be stuck with for several years, so it makes sense to spend some time researching before you purchase.  When I begin the search process, I first decide on the type of tire that best fits my needs such as driving style (e.g., sport, off-road, and general passenger) and is a match for my particular vehicle. The next thing I consider is if I want the tire to handle really well in the rain, since some tires from most manufacturers will have a tire or two designed specifically for excellent handling in wet conditions. Once I have decided on those areas for example general passenger use, and excellent (not just good) wet handling, then I have narrowed down my tire choices from 100’s to less than dozen, if I stick with only known major manufactures, that have been around a long time. Surprisingly, there are many new manufacturers of tires in the US market these days, I avoid the names I have never heard of.

With my shortened list of  tires I now compare mileage rating, which is the amount of miles the manufacturer projects you will get from a tire. If the tire wears out before, then I usually get that pro-rated towards your next tire purchase from the same manufacturer. The higher the mileage rating the more expensive the tire, so it is at this point that I can narrow my search to the lowest price, or the highest mileage for the amount of money I want to spend.  At this point I may have narrowed my search down to 2 – 5 choices, hopefully.

With this information I go to a few different tire retailer websites that have capabilities to compare the tires I am interested in. There will be various factors for me to compare, from noise to handling. If you get Consumer Reports, or your library has back issues, that can be a good resource too.  If you have a relationship with a good tire shop, talk to a well-trained expert about your findings and what he or she recommends, but avoid pressure to buy on the spot. I also look for an expert that wants to help educate me, and not talk down to me.

This has taken probably an hour or so, and for me I will know what 1 or 2 tires I want. I then call 4 different shops and ask for a full price quote including mounting, balancing, new valve stems, alignment and taxes. I don’t want the quotes confused by any other add-ons like road hazard warranty.  Most shops I talked to said that I can call them back because they will match the lowest price. I write down the names of each person I speak to, and call the nicest and lowest one back. By now we are on a first name basis, and tell them if they can knock off 10% of the tire’s cost, then we have a deal, if not I tell then I call one of the others, and may call them back. I may only get 5% off, but I am not interested in a price match, but ammunition to negotiate the lowest cost. This is exactly what I did when I purchased 4 Michelins and saved about $30, off of the lowest quote, and a lot more than if I just bought them at the first place I drove to. I choose Michelins because the last set lasted 105,000 miles, and in my research they were the best in what I was looking for.

By the way, lately I have noticed NTB advertising buy one get one free. When I called them they informed me the deal required “With purchase of a premium tire installation package and one year precision vehicle alignment program!”  This made their net cost well over $100 more than the best quote I got. I’m not a fan of this promotion.

This is what I do when I buy tires, it helps me to not only save money, but get a good tire fit for my vehicle, and performs up to my expectations.

Bad used car buys

Many people, particularly those wanting to drive a really nice car or wanting to appear successful are sometimes tempted to buy used luxury brand cars. If you don’t have a large savings account, or mechanical abilities to fix cars (or a good friend who does), never buy a used BMW, Mercedes, Jaguar, Audi, Saab, Porsche, Land Rover and Volvo or practically anything else from Europe.

These are great cars to drive but they will break down, and their repairs can cost you thousands. They may be made better, but once they clear the warranty, or go over 100,000 miles as many people’s cars have today, you will have costly repairs that you can’t afford. I have known, or talked to many low-income or ‘just okay financially’ people with broken down cars by the side of the road or beside me in the waiting room at the repair shop needing a $2,500 steering rack for their 5-year-old Audi, or a $1,500 strange gear shifter repair for the Saab. If you have a lot of money to spare, or only drive it short distances to work, maybe buy that well maintained BMW convertible for the weekend jaunts to the country.

Lastly it has been my experience to also stay away from used VWs and Chryslers too. VW keeps rolling out new wonderful automobiles, highly rated by automotive magazines, but I hear all the time about their poor repair record. Last time I researched the Chrysler/Dodge name brand, they led the industry in recalls, and based on my friends and my parent’s experience with the two they have owned and maintained better than any car owner, and have low miles, although they are great cars, they seem to me to have needed a lot more repairs than my used import with 280,000 miles. I’ve known a few people who have had good luck with these brands, but they seem to be the exception, therefore before you buy any car, talk to a seasoned trusted mechanic, you know the one with gray hair, the look of wisdom in his eyes, and who seems to always have a red mechanics rag in his back pocket, they will tell you what cars from all makes to stay away from, and which one’s to consider.

The Prophet Isaiah & Dreaming About New Cars

I enjoy reading guys like Isaiah; seems they had no fear of what other people thought when they made their pronouncements. Recently I stumbled upon…

Isaiah 44: 13 – 17  The carpenter measures with a line and makes an outline with a marker; he roughs it out with chisels and marks it with compasses. He shapes it in human form, human form in all its glory, that it may dwell in a shrine. He cut down cedars, or perhaps took a cypress or oak. He let it grow among the trees of the forest, or planted a pine, and the rain made it grow. It is used as fuel for burning; some of it he takes and warms himself, he kindles a fire and bakes bread. But he also fashions a god and worships it; he makes an idol and bows down to it. Half of the wood he burns in the fire; over it he prepares his meal, he roasts his meat and eats his fill. He also warms himself and says, “Ah! I am warm; I see the fire.” From the rest he makes a god, his idol; he bows down to it and worships. He prays to it and says, “Save me! You are my god!”

How clever he writes here about a guy who is not content with his warmth and a nice meal from his labors of the day. Me too, given this cold winter. I enjoy a great meal and a warm house and yet I want more; did I hear someone say cabin fever? Yet he had extra material so it seems, and instead of using it for others, tithing it, or even storing it for another cold night, he worshiped it as if it had some type of power to save him. How bizarre, we don’t do that today! Or do we?

I’m reminded… fascinated to catch the Barrett-Jackson car auctions on Cable TV, the wonderful cars, the prices; wow, I melt! Then I look at the audience and the folks bowing down to it all.

I am a car guy. I enjoy looking at them and driving them, though it seems as if I am less attracted to the glitter than I once was. Car and Driver magazine called me today to renew. I haven’t subscribed for 5 years and I’m not about to today. This is the time of year when new cars and trucks are being glorified and car shows come to town; like a little kid I sometimes get excited. Why should I pore over that, and get excited about new models, and be tempted to go into debt? I’ll keep driving my ’99 car with 270,000 miles on it. Lord, keep it rolling, please.