Checklist – buying a car

Here are a few things to take into consideration when buying a car. I’m sure this list can be expanded but this list should prove to be fruitful in your 1st endeavours.

Checklist

General

[  ] Are you shopping at the end of the month? If not go home and come back closer to the end of the month. Dealers need to meet their monthly quotas hence will give you a better deal towards the end of the month to make the sale.
[  ] Research “Kelley Blue Book” to understand a reasonable price of the car you want.
[  ] “YELP” the dealer you plan to visit or have visited. Yelp is a great resource of information about service & product orientated businesses. Yelp is where I also located a fantastic (seriously fantastic) mechanics (Gary & Chris from The Car Doctor) – http://www.yelp.com/biz/the-car-doctor-mountain-view
[ ] Look up the car you are interested in on “Edmunds.com” and check its reliability and consumer reviews.
[  ] Does the vehicle come with at least 50% coverage or 2 years warranty? Make sure you get warranty which fits your risk profile.
[  ] Is the vehicle Pre-Owned Certified? Expect to pay up to $2K more for certified vehicles since this typically includes at least a 100-point inspection of the car by 2 mechanics and a quality guarantee from the dealer.
[  ] If the vehicle is not Certified, have you got it checked by a 3rd party mechanic? See The Car Doctor’s above.
[ ] Does the “CARFAX” and Log book tell an ok history of the vehicles maintenance?

Vehicle inspection

[ ] Inspect the car for dents, dings and scratches before taking final delivery. Any dents or dings tell the dealer to fix under their own cost before you even sign any purchase paperwork.
[  ] Run a magnet on parts of the body you suspect damaged. Where there is bog (material used to cover-up previous accident) the magnet will not stick and your suspicion will be correct.
[  ] Test-drive the car under your normal driving conditions.
[ ] Ask for last service, why whom and what oil was used. Synthetic oils are the go and also protect the engine. Organic oils are only used on new engines to wear them in but to maintain engine quality, more expensive Synthetic oils should be used.
[ ] Check whether all accessories are in working conditions eg. power seats, mirrors, lights, windows, air con etc.
[ ] Under the bonnet look for oil leaks on parts like suspension or shazzy (the body). An oil leak can lead to expensive future service.

Speaking with the Dealer

It’s not what they say it’s how they say it and what their body language speaks. Observe and listen to their context, content is not as important since it only accounts for 20% of the message.

  • Understand the dealer’s primary human mode – best way to communicate with them using the right words based on who they are. See my post inc. tips on my productivity blog here: http://ernestblog.com/visual-auditory-kinestatic
  • Does the dealer cross their arms or step back when you ask a question about the vehicle?
    • Crossing arms are an indicator of hiding something and
    • Stepping back is a strong indicator that they are trying to distance them-self from your question – maybe you hit something which they are trying to hide.
  • Build rapport with the dealer by imitating their body language or tone of voice.
  • Stamp wide feet apart, arms by your side and head high. This sends a positive and strong message that you are strong and in control of decision-making. Never put your hands in your pocket, behind your back or fidget with them in front. Never look down either. Unless you want to send a message of inferiority and get taken for a ride.
  • Read my blog post on how people tell lies here: http://blog.ernestsemerda.com/2010/02/15/telling-lies-how-do-people-lie-and-how-can-they-be-caught/

Have fun!

Remember that this is all just a game and never take anything personal. Enjoy the experience and make the most of it. Good luck with the car hunting!

Ernest

Don’t get ripped off – how to buy a car in America

So I bought a 2nd hand VW Jetta from a dealer. 1st time ever from a dealer let alone one in America. In Australia I always bought cars from private sellers. I don’t believe in buying new cars since cars are a depreciatable liability, not an asset. I believe that if you want a new car you should lease. Better still, if you have a business structure with profits, run it through that.

The good news – cars are cheap in the USA. Dirt cheap. So is petrol, or should I say “gas” as the American’s call it.

My experience

I’ll be upfront about this, I don’t trust dealers. They are nice just to get you to sign that purchase paper work and then forget about you. That’s commission selling. Get used to it. Remember, they are not your friend, your pal, or someone who is on your side. They want to make money. It’s that simple. Keeping this in mind should help you stop from falling into their “nice guy” charm and help you stay focused on your goal, to get a car for as little as possible.

Dealer or Private?

I went with a dealer. I didn’t need to, I never have in my life, so why now? Because I needed to get a loan to build credit history in the USA. I recommend you read my post on building credit history to understand the ins-and-out of this approach. A car loan is by far the quickest way to build credit history.

I could have also gone private but the hassle of connecting the buyer to my bank to get part loan sorted would have been a nightmare. Also it’s far easier to get a loan from a bank if you are buying the car from a dealer.

Dealer it was.

Remember that:

  • The dealer is a person like you but with a different need. You want to get a good car for a bargain price and the dealer wants to sell you a car while maximizing his profits.
  • A good dealer will not waste time with you if you are “playing the game” – the game of haggling. So make sure you know what is a reasonable value of the car you want to purchase and tell him straight where you stand and what you want to offer. Know what you want and ask for it when the time comes.
  • Always go for a test drive. You just never know, the car you may be looking at drives like crap or you do not like how it handles and it’s not worth your time pursuing it any further.
  • If you are not buying on the day of inspection make it clear that you are researching around without any intent to purchase. Leave your business card with the dealer if you feel you may want to connect with them later. Check out my post on your privacy using free online tools so that you can protect your privacy.
  • If the dealer offers you a great deal on a car remember that this great deal is good but there are others out there who can do better. Never buy without sleeping on your decision. Compulsive buying due to fear of loosing on a deal leads to long-term withdrawal and regret as you subconsciously try to align your conscious reasoning with the subconscious decision.

Your accent – they know you are a foreigner

So if you are from Australia (like me) or England, you will stand out like a sore thumb when you speak. The seller will know you are a foreigner. As much as we want to believe it that we live in a perfect world where everyone is treated fairly, you are wrong. Some people will take advantage of you if they can gain something from this interaction. So be prepared, show that you know how the law works in this country, you understand the ins and outs of buying a car and know your car details. All of this comes from research… and this blog is here to help you.

The car – inspect it

So you found the car you want, what next?

  • If you are using a 3rd party dealer get the car inspected by an authorized workshop. Do not opt in for someone the dealer knows. Find your own workshop using YELP.com and pay the $150 to get the inspection done properly. This makes sure you do not buy a lemon. There is a California lemon law which protects buyers from shonky dealers having sold a lemon (bad vehicle).
  • If you are buying through an authorized name dealer like Volkswagen then make sure the car is “Certified Pre-Owned“. This means they dealer has done a 200 point inspection by 2 different mechanics and has certified the car to be in perfect condition – like brand new. Expect to pay $1-2K extra for a certified vehicle.
  • Find out what type of warranty the vehicle comes with. Don’t settle for anything without at least 50% coverage and 100K miles or 2 years. This means you pay 50% to get the vehicle fixed and the rest goes under the warranty.
  • I have crafted a wonderful checklist based on my learning’s from this adventure which I recommend you print and use when making your vehicle purchase. Click here to go to the post where this checklist is located.

Let’s buy it – you got the deal and now what

Here’s how it went down for me considering that I was doing a 50% car loan and 50% down right payment for the vehicle.

  1. If the vehicle inspection came back with minor faults get the dealer to fix them before you make the purchase. Fill out paperwork which specifies what the dealer has to fix at no charge.
  2. Tell the dealer you are going to pay half in cash and half using a loan.
  3. You will pay the 50% by bank cheque. The other half (the loan) will need to come from the bank as a deposit cheque. Make sure you have this pre approved from the bank or at least in the works so that your purchase isn’t delayed.
  4. Fill out all these paperwork:
    1. Paying fee is bullshit. These are the hidden gems dealers use to get extra cash from you. Make sure you speak up and get them to waive it.
  5. Make sure you have purchased vehicle insurance. The dealer will not hand you the keys unless this is done. Read about the common types of vehicle insurance here.

Finally drive away and enjoy your new car!

Online resources

Here is a bunch of great websites which have helped me in my quest to get the “right car”.

Similar to (Australia): http://www.redbook.com.au

Purpose: Great resource for New Cars, Used Cars, Blue Book Values & Car Prices. Use it as a comparison guide to make sure you are not being taken for a ride.

Also check out http://autos.yahoo.com/ and http://sfbay.craigslist.org/ to get an idea about car prices and what’s on the market.

Purpose: Allows you to get a detailed vehicle history report from a nationwide database. All your need is the vehicle VIN number.

However be aware that this is not a full record history. Not all service centers record service history into this nationwide database. If there is no record history, be suspicious and ask questions why. Check the log books and if there is nothing there either you know something isn’t right.

Purpose: Review of a lot of businesses in USA. Great resource to see people’s experience in all business services inc. car dealers. Just don’t forget that majority of people only ever review a business when they have something to complain about or are ecstatic about a service. Nether less, great resource to get an idea.

Check list

I have crafted a wonderful checklist based on my learning’s from this adventure which I recommend you print and use when making your vehicle purchase. Click here to go to the post where this checklist is located.

Most of all, have fun. Remember that a mistake has a companion, learning. Something learnt is worth sharing with the rest of the world. Please use the comments field below to do just that. However it’s always best to learn from others mistakes so you don’t have to make them yourself. This is why this checklist and blog exists, to help you learn from my adventures in Silicon Valley. Have fun!

Ernest

Build credit history superfast – get a car loan

Yes it’s true. If you want to build credit history in America you should consider getting a car loan. There is no better or faster way to building credit history then through a car loan. Here’s why.

Why a car loan?

Remember my last post on building credit history? If not then click here to read about building credit history in America. In a nutshell, getting a car loan is the BEST way to quickly building your credit history. You need to have a listing on your credit history that you are capable of paying off a sustainable large dept, like a car loan. This loan must be no smaller than $5K.

Get a loan from Technology Credit Union (TechCU)

TechCU were the only folks who would even consider giving me a car loan. And remember I came to America with 0 credit history. TechCU caters for technology folks in Silicon Valley with no credit history. The downside is you will be on a higher interest rate – around 15%.

No big American bank will lend you money on good rates because you are a liability, someone without credit history. I have a personal account with Wells Fargo Bank (one of the largest in the US) with plenty of money in it sitting in a special high yield checking & savings account and they they still thought I was a liability when I wanted to get a loan through them. Again, because I had no credit history.

Well Fargo would only give me a “secured loan” – a loan which was backed (locked up) with my own money. This is not good enough for me since:

  • it’s using my money and
  • it is not what the credit bureau considers a “car loan” – not good in building credit history.

Before you can get the loan approved by TechCU they will need from you:

  • Paper work from the dealer on the car you are purchasing inc. it’s Kelley Blue Book value. See my post of purchasing a car from a dealer located here.
  • See certificate of purchased for “car insurance”. Also the dealer won’t let you drive off the lot without one!,
  • See that you are a “software engineer” – basically you need to bring a letter from your company’s HR department showing your income and your position/title of a software engineer. The position/title is important since TechCU is for technology folks only.
  • A copy of your Californian Drivers license. Your International Drivers license will not do. It’s worthless. Read this post on getting your Californian Drivers license. All you need to do is pass the Theory exam to get your temporary drivers license number. But don’t forget to schedule your practical exam since your temporary drivers license expires in 3 months.

Sounds painful? it is! But it pays off in the end.

Links mentioned in this post

TechCU website: http://www.techcu.com/

Building credit history: http://www.theroadtosiliconvalley.com/finance/building-credit-history-america/

Let me know if you found a quicker way to get around this by posting in the comments below.

Ernest