The car has 25,486 miles on it, but seems almost new. A used Hyundai and Kia comes with the remainder of the 5 year / 60,000 mile bumper-to-bumper warranty. Almost all other used cars (Toyota, Honda, Ford, etc.) come with the remainder of a 3 year / 36,000 mile warranty. On new cars, you would get those respective bumper-to-bumper warranties, plus a powertrain warranty (10 yrs / 100k miles for Hyundai & Kia, 5 yrs / 60k miles for almost all others) that doesn't transfer to subsequent owners. The powertrain warranty only covers if something goes wrong with the engine, driveshafts, etc..
If you're willing to, I highly recommend considering used cars. Cars depreciate very quickly. As soon as you've driven a new car off the lot, you've lost thousands of dollars in value. In the first year, new cars lose about 20% of their value. So you could save 20% just by buying a year-old car! After two years the average depreciation is about a THIRD of the original price of the car. I saved close to 40% by buying a used Sonata vs a new Sonata. In addition, taxes, registration, and insurance is more expensive for a new car versus a used car. Most financial planners will recommend that you buy a car that's 2-3 years old. At first I was looking for a car 3-5 years old, but I realized that I wanted to have some time left on the manufacturer's warranty, just in case. Going out to 5 years narrows your selection to Certified Pre-Owned vehicles, which is okay although you do incur a premium.
If you'd rather stick with new cars, then I totally understand, especially for girls. No one wants the hassle of his / her car breaking down, but it's much less likely that a car breaking down will leave a guy in an unsafe situation than it will for a girl, so a used car is generally less of a big deal for guys. I'm hoping that I've hedged my bets and that my car will both be significant savings and little to no hassle. We'll see! *Knock on wood!*
If you are willing to look at used cars, I highly recommend Wholesale Direct Auto Sales. They're a low volume, low cost dealer that works part-time out of an industrial lot southeast of the airport. It's by appointment only if you'd like to look at one of their cars. They will also go to the lot if you'd like to send a mechanic to check over one of their cars.
Vince Oddo
Wholesale Direct Auto Sales
4340 E Superior Ave
Phoenix, AZ 85040
480-229-9615
azauto@yahoo.com
http://heat21.com/
It's much easier to look at their cars on cars.com since you can filter for what you want:
http://www.cars.com/for-sale/
In particular, the burgundy 2011 Kia Forte EX with 19,382 miles seems to be a killer deal. It's a great looking car with a very cool interior. The Kelly Blue Book value for the car is $16,628, but it's selling for $12,500. You'd get the remainder of the 5 yr / 60k mile manufacturer bumper-to-bumper warranty. This is the other car that I was seriously considering.
If you're willing to look for a used car, then I highly recommend cars.com (my favorite because you can limit your search to a much broader set of permutations of brands, sources, price ranges, age, etc.) and autotrader.com (filters only allow searching for three makes at a time, but more private sellers list on AutoTrader). Use Kelly Blue Book (kbb.com), edmunds.com, or nadaguides.com to see how much a car is worth. For the iPhone, the NADA app seems to be the quickest / easiest for pricing a used car.
Some other things that you'll want to keep in mind:
There's no sales tax on private sale (so from a regular person rather than a dealer), which can save you easily $1,000. I would only do this with cars with a good amount of warranty left, though.
I was shocked when Wholesale Direct Auto Sales charged me a $199 documentation / processing fee. He assured me that most dealers run $400-600. I've called five dealers (used and new), and they ran $390-500. I'm sure the $600 dealerships are luxury places like BMW or Lexus. I didn't bother calling them.
Figure in tax (9.3% in Phoenix, so $1,111.35 on my car), and registration (almost $300 in my case, but much higher on new cars — I shared a Google spreadsheet with you so you could calculate it for your own car). All in this added $1,640.35 to the $11,950 that I was expecting to pay for the car. The $13,950.35 number caused a great deal of sticker shock.
If you're going to get financing, then it's generally cheapest to get pre-approved somewhere, rather than using the dealer's car loans. You can check rates and find lenders at bankrate.com . As with any loan, the interest incurred means that you'll be paying more than you would have if you had paid in full up-front. Limit yourself to the shortest, smallest loan possible, with a maximum term of three years (otherwise, you're definitely buying more car than you can afford). You're going into debt for a depreciating asset, which only makes sense because it allows you to get to work.
As you consider brand, absolutely check to see where they rank on Consumer Reports reliability ratings. I'll send you another email about that.
Based on reliability and very subjective personal preference, this is the order that I used when looking at car brands:
- Honda (king of reliability — excluding luxury brands — ever since Toyota slid)
- (Toyota: used only; my parents have had so many bad experiences with getting their Toyotas serviced that if I were going to buy a new car, I wouldn't get a Toyota)
- Hyundai (best value & warranty: 5yr / 60k miles; 10yr / 100k mile powertrain)
- Kia (tied best value & warranty)
- Mazda
- (Scion: used only; Toyota's flashier brand)
- Ford (the only American manufacturer with high reliability ratings, and also the only American manufacturer who didn't need a bailout this recession; dropped this past year in reliability ratings due to the use of Microsoft's mySync software, not due to any mechanical issues)
If you read the reviews for a lot of the Hyundais and Kias (for example on KBB.com), then you'll notice that the reviewers rave about how many more features you get while still paying less than what you would for the competing Honda, Toyota, or Ford. In the past you've lost a little of that value more quickly because of steeper depreciation rates for Hyundais and Kias, but the resale values for Hyundai and Kia have improved significantly in the last couple of years — in part because they've finally realized that looks do matter, but most likely because they've been relentlessly improving value.
I ended up getting a Hyundai because of how significant the savings were for this particular car : ).
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