Sunday, January 30, 2011

Topic Ten: "The $3k Cash Car" Versus Financing $6k

So you have your tax check or your daughter turned 16 and you think $3k is a good amount for their first car.  You are right on all fronts, however, unfortunately what $3k gets you today you do not want to be in unless you find what I call "the magic bean".  By that I mean every once in awhile you find on Craigslist an unused old persons car that they don't want anymore and you drive away happy.  Most of the time though for $3k you are buying $2k worth of repairs and lost peace of mind.

We are satifsying many families now with cars around $5495 where they put down the $3 or $4k and instead get a car with less miles (sometimes under 100k miles) and sometimes less than 10 years old.  Payments are $300 a month and don't last more than a year or year and a half.

So whether it's for you or your new driver getting to high school after school events or college, this may be a better option for you in the long run.. They are all AS IS and you will be doing maintenance on them (and would want to) and most likely want to knock off a couple of things along the way like fixing the annoying electric window but that's cheaper than a $5k engine, a $3k transmission or a $1500 cooling system or $1000 radiator replacement.

So hunt for the magic bean but also come by and see what we have on the lot and you might find the magic bean is actually on my lot!

Sunday, January 9, 2011

Topic Nine: Buying New Versus Used Cars

Lots of people ask me if they should buy new with low interest rates right now.  If you have $40k or can handle another $40k debt and prefer no risk, no hassle for a couple of years except oil changes or have a high visibility job, then have at it with the new. 

If you want to keep your credit score high, reduce long  term obligations for whatever reason and have lower payments then consider used. The interest rate is higher but a $10,000 car will cost you less than a $40k car. 

For value, the sweet spot is around 2-4 years old - someone took the hit on the first depreciation (probably around 40% of the value of  the vehicle has eroded) but you still have a nice looking, high use value vehicle. 

Go older and the value to you of getting to work is higher than any payment you might have on the used car.  At 9995 Motors I am hunting now for ten year old low mileage vehicles for ultimate driving value.  I call it the magic bean - sometimes you can still find it and it's perfect for getting to work or that new driving son or daughter.  I keep the prices below $9995 so you can buy for cash with your tax check or keep the payments around $300 a month and get it paid off in under two years.

You will fix a used car - regular maintenance, things wear out, and there will be things you personnally just want to do - could be a better stereo so you can customize your ride but you will still have saved money.

Vehicles differ as well - in general the fun, cool ones you want probably will need more care than the boring a to b car.  Just go in with eyes wide open, be honest with yourself and browse online or on the lot.

Ultimatley, it's fun to plan for your next car - come by and talk to us at 9995 Motors or send us an e-mail at and let's discuss what you need and what you want!

Sunday, January 2, 2011

Topic Eight: How I Structure A Deal In 5 Easy Steps

You need a car and you need to make payments.  You have iffy credit and don't want your credit checked or the loan on your credit report.  At 9995 Motors we totally get it.  At some dealerships you'll get the Spanish Inquisition but we try to be minimally intrusive but also find out if you can make your payments.

In general, we need around $1500 down, ususally to pay off what's left of our floorplan loan on the car.  Then we try to keep your payments around $300 a month so that you can get to ownership as fast as possible.  We also try to make your car paid off in under 24 months so you get your equity and can get on with your life.  I also try to keep your interest rate under 20% unlike most credit cards.  That rate seems high but let's face it, dealer financing is risky with 25% of notes becoming repos.  We need a couple of references for you, your place of work, your drivers license, etc. but that's about it.  We als deal in cars under $9995 hence the loan balance will not be $25k.

How does this compare to other dealers?  Other dealers will mazimize profits by stretching your payment for as many months as possible.  They will also charge you 26% interest and who knows how much for the actual car.  Some will even do $500 down to hook you and get as many people on notes as possible.  If you can't pull together $1000 you probably won't have enough for comprehensive insurance (dealer is on insurance as loss payee in case of accident as they still own the car for now), let alone maintenance and repairs and gas.  If you are late, they repo the car and resell it.  I have done repos before but try very hard to keep you in the vehicle.  Wait a few weeks, get to $1000 or so together and then come see us.

If this sounds like what you need then come by and see us and we'll treat you with respect.