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This FAQ thread is narrowly focused on BUYING, SELLING, and FINANCING cars and trucks - not on insurance, repair or maintenance issues. Welcome!


Extended Warranties: purchase linked to buyer incentives?

California-Only meeting place to buy or sell your car private party
Honda Civic Lease - is it negotiable?
Costco Car Buying Service and car buying discussion thread
Car Buying web sites
Car Buying Advice (Accord, C230, Z car)
Is there a car buying primer or FAQ? I am overwhelmed
Continuation of Car Buying Primer or FAQ thread
How much did you pay for your NEW car THREAD
How cheap will they go on a new car?? Help a 1stimer
New car: go out of state or even out of country?
BUYING A CAR FROM eBay: HOW SAFE?
Investing in cars: what to look for?
Buying your next car in Canada to save $$$?
Has anybody bought a car from SATURN before?
Considering buying a new focus zx3

Going to sell my car. Is it best just to sell or give to charity?
Sell Used Car - Bill of Sale
used car valuation
How do I get clear title on a used car?
How much can a computer diagnostic tell you about a used car?

Automotive Quagmire: Toyota Sienna lease expiration
Finance a car or pay by cash?
Need to get rid of my car, advice please
Toyota Sienna lease buyout
Finance a car or pay by cash?
New car loan and refinancing @ 3.75% upa to 60 months in SF Bay Area
Can you use other companies car financing on different car??
Buying a house and a car.... need help advice
Car loans and FICO score
FICO, 0% Abuse, and Cars
Credit card advance to pay off car loan?
Question about paying off a car loan
I can no longer afford my car payments
financing a car?
Auto car loan refinance?
Car brand with the highest residual value?
Buying a car using 0% APR Credit Card vs. 0% APR Manufacturer financing
Honda wants to change financing 5 days after we drove off with car
Car Extended Warranty: Worth it?
New/Used Car Advice
Quickest way of building credit to finance a car?
Buying a car: cash vs. finance
Financing a car
Legal Way to Avoid Use Taxes on a Car?
Mitsubishi Dealer Financing Problem
How to Get Out of a Car Loan
Auto Loan with 550 credit score?

Best Hot Deal on Leased Car? Jaguar $299
How does registering a car as Commercial Vehicle affect resale?
Car refinancing: prepayment penalty on old loan
Buying New Toyota Echo from Last Model Year?
BMW banged up: options for "dumping" the car?

UPDATED LINKS 10/21/2003:
Get reports to see how much profit dealer actually makes!
carsdirect.com discussion
Automobile Forums
Honda Pilot pricing
General advice
Hot '03 Mazda Miata C, 5 spd for $17,228.00
Chevrolet Cavalier deals
Car Dealer Sales Scams FAQ

As time permits - digging up relevant threads is a time-consuming process - I will add more relevant links. Please PM me if you know of relevant links to add here.


Member Summary
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razorweb (Mar. 24, 2005 @ 1:13p) |

WOW. very helpful. Thanks OP<img src="i/expressions/face-icon-small-shocked.gif" border=0>

jtclin (Jun. 07, 2005 @ 6:15p) |

Thanks for taking the time to compile this in one place

Tardy007 (Aug. 08, 2005 @ 4:29p) |

Thanks for visiting FatWallet.com. Join for free to remove this ad.

great idea SeattleNative!

you can make 50 of these FAQ and people will still post a new thread wanting someone to do all the work for them and tell them how do run their lives cuz they are too lazy to find out the info.

Glad someone did this, will post links later.

Wow, great post SeattleNative...it took a lot of work to do all of that. Let's hope people actually read it before posting.

these will have to be stickied or will have to be linked directly in a sticky for them to have any effect

how do i buy a car? whats the best method? please help!


help me obiwan youre my only hope.

packersrule said:

<< you can make 50 of these FAQ and people will still post a new thread wanting someone to do all the work for them and tell them how do run their lives cuz they are too lazy to find out the info. >>



Very True. Look at the post above this one... lol

Mshen quipped:

<< how do i buy a car? whats the best method? please help!....help me obiwan youre my only hope >>

C'est dommage!<img src="i/expressions/face-icon-small-happy.gif"border=0>

Myth 465 observed:

<< these will have to be stickied or will have to be linked directly in a sticky for them to have any effect >>

How can the FAQ threads be "stickied"? It appears we only have one stickied topic here to date.

Among the used-car discussion topics which are worth discussing are:

1. Competent, thorough inspection of a used car before purchase - how to find a good inspection service or mechanic.

2. How to verify that Seller has a valid title, and that there are no unknown liens or encumbrances.

3. How to verify a vehicle's title history, checking for red flags such as insurance claims history, altered or laundered registration and title.

4. How to evaluate used-car-price data sources including Edmunds, Kelley Blue Book, NADA Price Guides and other guides.

5. How to finance a used car purchase intelligently - WITHOUT getting "in the bucket" owing more than the vehicle's realistic fair-market disposal value.

6. How to make an informed decision between "BUYING NEW", "BUYING NEAR-NEW", and "BUYING USED".

7. Understanding the limitations of car manufacturers' "CERTIFIED PRE-OWNED" programs, and what they actually DO and DO NOT guarantee to the car buyer.

I hope to see some lively discussion on these topics. SN

Car buying and financing is one of the key discussion points here. What new questions do you have on this topic?

I'm particularly interested in your experiences with:

1. Negotiating the terms of automotive leases (down payment, mileage allowance, residual value);

2. Balloon-payment purchase loans (GMAC "SmartLease", DaimlerChrysler Premier Purchase Plan, et al.)

In the threadShould I buy a 98 Toyota Avalon w/salvaged title for $5000?, ptstudent asked:

<< This car has 68K miles and is in great condition but has a salvaged title. With a clean title this car sells for 10 - 12K. I don't know very much about salvaged titles but I probably won't keep the car very long and am worried about trying to sell it later. Hope a new thread on this ok... thanks for the input in advance!! >>

IMHO you should only buy this car if you are plan to keep it for a long time - it will have very poor resale value.

Empty Wallet responded:

<< There is a reason why DMV gives a car a "salvage" title!! Everything looks and runs great but there is something terrible hidden inside..you just don't know because the body shop mechanic did a great job of covering them up! If you decide to buy this car, forget about being able to sell it..no one will buy it! >>

rvtips responded:

<< Buy it only if you plan to keep it forever,VERY hard to sell with salvaged title!! >>

pato observed:

<< Those online guides like Edmunds won't provide any appraisals on branded cars-you would likely need to get an independent appraisal. >>

crazytree wryly cautioned:

<< go ahead and buy it..and take the extra money and put it in the bank..when you get in an accident and the car crumples like a soda can..you can take the money you saved to buy a really nice electric wheelchair. >>

roamerr pointed out:

<< Only buy salvaged title if you know the reason and the person that did the repairs.Too risky otherwise. >>


Sexecutioner asked Can You Lease a Used Car?.

Yes. However, I would be slightly cautious about paying a premium for a "Certified Pre-Owned" vehicle.

Last year Consumer Reports documented how several "Certified Pre-Owned" vehicle owners (i.e. Mercedes-Benz, Jeep, and other luxury makes) had been victims of "washed" titles and odometer fraud. The article cited the extraordinary amount of fraud involving accident-damaged luxury cars, where the vehicle titles had been transferred between states and "washed". At least one CU customer of a Mercedes-Benz "Certified Pre-Owned" vehicle discovered that his 2-year-old car (for which he paid around $45,000) had been horribly demolished in a prior accident. Eventually the M-B dealer took back the vehicle, but CU discovered that the car's VIN was again registered as it had been sold again to another unsuspecting customer under the "Certified Pre-Owned" branding.

Other replies:
Boilerfan wrote:

<< You can lease a used car. Check out your local yellow pages for auto leasing companies and talk to some dealerships to find the best programs in your area. Do all the math though, often leasing rates when calculated as an APR are much higher than you could finance it for. If all you care about is monthly payment however,lease may offer you the best option. >>

Woodie 1 observed:

<< Any dealer that wants to can lease a new or used car to you . They just have to have someone who will buy the car and rent it back to you. Some don't want the bother, others welcome the business. >>

Alcibiades quipped:

<< Get a Z >>

Zender noted:

<< I leased two used cars when I was in my early twenties and couldn't afford a down-payment. They were both leased through leasing companies though (as Boilerfan suggests) and not through conventional car dealers. >>

Crazytree observed:

<< I tried to lease a used car but the payments were actually higher than the purchase payments... if you believe that. >>

Sexecutioner responded:

<< my best friend just got a z, and let me tell you... those cars are sweeeeeet. but i don't want to cramp his style....
i am just looking into the s2000, this isn't definite... but i appreciate your help....is it usually not worth it to lease a used car? do they give you different rates? or do they estimate the figures differently than they would a new car with no depreciation?
>>

Yoslov replied:

<< Why not assume someones current lease. Try either of these sites www.swapalease.com or www.leasetrader.com. Both sites have current lease holders who are trying to get out of their current leases and sometimes pay big incentives for someone to assume their lease. Good Luck on the new ride.Leasetrader link Swap a Lease Link >>

PingPingFuu added:

<< You have to pay for swapalease
I tried to look at some things, site looks nice but I dont want to pay for something I wont use.
>>



Beware of Balloon-payment car loans - see
Mitsubishi's Diamond Advantage Program?
Text

Another aspect of automotive finance loans which borrowers need to pay attention to is "interest calculation" and "loan amortization".

Some auto-dealership finance plans use the old-fashioned "Rule of 78" amortization method. In a Rule of 78 loan, the interest for the entire period of the loan (i.e. a a 60 month loan) is calculated as a total finance charge and deducted in full from the early payments of the loan. On an amortization table, this would mean that your first year or more of payments would entirely be allocated to INTEREST, not to PRINCIPAL.

Among the drawbacks of a Rule of 78 loan (from a consumer perspective):

1. During the critical first few months of a loan, the repayment scheme means the borrower does NOT pay down ANY principal on the loan. This compounds the common problem of borrowers being "in the bucket" where they owe more on the vehicle loan than its fair-market disposal value.

2. The lender's likelihood of earning ALL their interest up-front is greater than with a standard simple-interest installment loan.

If borrower refinances the vehicle after one year at a lower interest rate - or sells the vehicle and pays off the loan - borrower actually loses a huge amount of pre-paid interest, since the first year or so of payments were almost entirely allocated towards prepayment of loan interest rather than computed on a simple-interest basis on the loan's remaining dollar balance and term.

3. Lenders do not necessarily offer the borrower a "better deal" on loan terms and conditions than on a standard loan, and lenders often do not clearly explain to the borrower how the "fine print" of this kind of loan stacks the deck against the borrower building equity.

Millions of American car buyers have had Rule of 78 loans over the years and not realized it, particularly if they faithfully paid off the loan until maturity. However, these loans prolong the length of time the typical car buyer is "in the bucket". It provides higher profits and a higher guaranteed interest yield for the lender, with no corresponding benefit for the borrower.

So the Rule of 78 sums up the interest in total before the loan ends ?

Quick Explanation of Rule of 78
Rule of 78: Watch Out for This Loan Trick

<< For a borrower looking to end an auto loan early, there isn't a worse way a lender could calculate your payoff amount. The Rule of 78s formula packs extra interest charges into the early months of a loan. Using Rule of 78s, a lender typically collects three-quarters of a loan's interest in the first half of a loan term. >>

Explanation of the Rule of 78s

<< Outside of banking circles, the Rule of 78's is little understood, even though it is commonly applied to many consumer and business loans. For the borrower, it tends to have a pernicious effect in the nature of a hidden prepayment penalty. The borrower's disadvantage is heightened by the fact that the operation of the Rule of 78's is often referred to as a "Rebate of the Finance Charge." Any consumer who heard the word "rebate" is always tempted to say, "Where do I sign?" >>

What Is the Rule of 78s?

<< In Mississippi and other states, it is a method of figuring your cost and refund of credit insurance and/or finance charges on a precomputed credit transaction. A "precomputed" account is one which the account balance includes the finance charge and each month the full payment is subtracted from the balance. If the account pays off before maturity, a rebate of the unearned finance charge is given based on a method called "the Rule of 78s." >>

Rule of 78s: What May Happen When You Pay Off a Loan Early


Do you get paid for this?

elhumano: no.

To everyone: If you find more threads related to this FAQ, post them or PM me so we can include them and make this a superb car-buyer's resource.

Thanks, Seattle! This is AWESOME!! Here's a couple recent threads: buying a car....carsdirect? and Automobile Forums. Again, thanks for what you're doing!<img src="i/expressions/face-icon-small-happy.gif"border=0>

Uhhh. Another thought: Dang it! Dang it! Dang it! I wish I had this KNOWLEDGE before! I am upside down and in the bucket (terminology I learned from you or links in this thread). Anyway, I have a situation similar to a couple I read about but am looking for confirmation or other risks to consider. I am $3-$4,000 upside down on my 2002 car, thanks to that evil Rule of 78. I CAN continue making the payments, but don't want to because I'd like to save more money and also get a different (less expensive) car "down the road." I HAVE a beater that I can drive for now that meets my basic needs. So, if I can borrow the $4,000 on my VISA for 4.99% life of loan... or even the entire $20,000 owed (My car loan is 7%)... Does it make sense to pay the loan off with the VISA, get the title, sell car, then pay down the remaining ($3-4,000) on the VISA? I don't really want any of the cheap low interest new car alternatives. I'd rather get out of debt then buy a gently used car of my choice. Thanks in advance for any advice!

Good Job. Thanks

Here's another one: How to get the best deal for a Honda Pilot.<img src="i/expressions/face-icon-small-smile.gif"border=0>

And another: Whats the best way to get a deal on a car?.

(SIGH)... Where are you Seattle? Still could use an answer to my question above, but am trying NOT to start other threads like you asked... Anyway, here's another: Is anyone in the market to buy a car? Get reports to see how much profit dealer actually makes!



I'm updating the FAQ to include additional topics. This is one of the most exciting FW Finance topics, since acquiring and operating a motor vehicle is one of the biggest financial choices we make.

Thanks for the enthusiastic responses - SN <img src="i/expressions/face-icon-small-cool.gif"border=0>

RETOOFERAB said:

<< Hot '03 Mazda Miata C, 5 spd for $17,228.00

GET 40% OFF a brand-new 2004 Cavalier, YMMV
>>



that cavalier post is not a valid deal....the $4000 rebate does not apply to the model in the thread, so its not just YMMV, its not possible at all.

SIS has an excellent point: oftentimes, auto makers' cash incentives do not apply to certain trim lines (i.e. the base model or a limited-edition model).

For those of you who browse newspaper ads to find promotional-priced "Ad Cars", where dealerships offer 1 to 5 cars at an extremely deep discount off MSRP, be very careful to use a magnifying glass for the following restrictive discounts, which you MAY NOT be eligible for:

* "College Grad Rebate", typically $400 to $1000, is restricted to persons earning a degree in the past six months. The rebate isn't offered if you graduated in '84 or '97, sorry.

* "Military Rebate", typically $750, is restricted to persons with a military affiliation. Sometimes this includes retired or reserves, but read the fine print.

* "Lease Loyalty Rebate" typically $500 to $1000, is restricted to persons with a current (same-brand) lease vehicle being traded in.

*"Owner Loyalty Rebate", typically $500 to $1000, is restricted to persons who currently own a same-brand vehicle, sometimes requiring a trade-in but not always.

*"FMCC/GMAC Finance Rebate" (i.e. "FDAA Rebate", typically $500 to $1000, is restricted to car buyers who will finance their purchase through the car manufacturer's captive financing subsidiary. You might not get as low of a rate as you would through a credit union.

SUCKISSTAPLES said:

<< that cavalier post is not a valid deal....the $4000 rebate does not apply to the model in the thread, so its not just YMMV, its not possible at all. >>



...still, there's some good discussion in there. Thread title not to be confused with an ad.<img src="i/expressions/face-icon-small-smile.gif"border=0>

Now that you financial wizards are back, any response to my initial question a few posts up in this thread? I am guessing after reading more of your suggestions, that I could open a new cc with 0% balance transfers and do what I asked about. But any direct answer would be appreciated. Thanks in advance! <img src="i/expressions/face-icon-small-happy.gif"border=0>



<< roamerr pointed out: only buy salvaged title if you know the reason and the person that did the repairs.Too risky otherwise. >>


A friend of mine once bought back his own vehicle. His car was wrecked and the insurance company totalled it and gave him a check. He bought the car from the salvage yard, got the salvage title and had the repairs done himself. I can't remember the figures, but he got the car back on the road for MUCH less than the settlement, and he drove it for years.

I just had this locked thread refer me here

Speculation: An approach to negotiating the best car price

The moderator seemed overzealous.

No offense SeattleNative, but I really hate your threads.

elhumano said:

<<

No offense SeattleNative, but I really hate your threads.
>>



If you explain why it would probably help create better posts rather than to simply state your dissatisfaction. SN has done probably the best (and hardest) work in this forum to create the FAQ threads and find all relevant threads to put in one place.

Sorry, I should have been more clear. The thread I was reading was quite a good one, and by shunting discussion here, the mod makes you think that you will find the same discussion already having begun. Instead, I didn't. In place of what I was expecting was masses of info about cars in general (which is fine), yet no opportunity to discuss the locked thread!

Please excuse me a bit for jumping the gun, but it is late out here!

Retooferab asked:

<< So, if I can borrow the $4,000 on my VISA for 4.99% life of loan... or even the entire $20,000 owed (My car loan is 7%)... Does it make sense to pay the loan off with the VISA, get the title, sell car, then pay down the remaining ($3-4,000) on the VISA? I don't really want any of the cheap low interest new car alternatives. I'd rather get out of debt then buy a gently used car of my choice. >>

If your intention is to get rid of the car and pay off the balance owing using your VISA, and drive an interim "beater car", using an ultra-low-rate VISA does make some sense. You are asking the right questions.

One idea might be: once you've paid off your car using the VISA, don't use that VISA account for any other purchases. That way you are focused on paying down the balance of your former car loan, and not co-mingling the same account with other purchases.

What do other FW'ers think about Retooferab's idea of paying off his "in the bucket" car using his low-rate VISA, getting the title, selling it, and then using his low-rate VISA to pay off the deficiency (i.e. $4,000) rather than stay locked into steep car payments?

Elhumano:
Fatwallet's key moderator "locks up" message threads which are inactive for a certain period of time (90 days?). Perhaps several of us should e-mail our "Chief Mucky-Muck" about having the capacity to reopen those archived threads.

My intention in creating this FAQ was to gather, in one place, links to as many auto/car buying threads (and some external links) as possible. This was part of an effort, by several of us at FW, to improve the quality of discussions - people could see if some of their common, frequent questions had already been answered in prior discussions.

Your feedback is welcome. Perhaps our moderators might also be a bit gentler in guiding people to check the FAQ threads before posting. Sometimes someone has new information or ideas relating to an old thread topic, and the relevant old thread has been "archived".

elhumano said:

<< I just had this locked thread refer me here

Speculation: An approach to negotiating the best car price

The moderator seemed overzealous.

No offense SeattleNative, but I really hate your threads.
>>

"After further review..." I unlocked the thread and still pointed users here for more info. You can always alert moderators yourself and state your case. They are reasonable people, but it's late over here sometimes too, and more information can be helpful.<img src="i/expressions/face-icon-small-smile.gif"border=0>

Skipping 7 Messages...
Thanks for taking the time to compile this in one place



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