Does Everyone Really Drive a USED Car?
Author: Mike Cody
Everybody drives a used car. For over 10 years now, I have been airing this statement over the local airways, and I am always amazed by the response it receives. For the most part, it has always been a positive response (thank heavens or I might not be in business anymore). But on one occasion when it first aired, a local lady called me and expressed her dissatisfaction with my statement. She informed me that she had just bought a brand new luxury vehicle at a cost of $50,000. That it was and still is a new car. I apologized for offending her, but if she doubted what I claimed, she should go back to the new car dealer and ask what they would offer her to buy it back. Long story short, the dealer told her that since the car had already been registered in her name as a sold vehicle, it was no longer new and, therefore, had a value of $35,000. Needless to say, she called and apologized to me!
The long and short of it is this: with the economy the way it is, most people are looking for any way possible to save money. If you can afford to lose 30-60 percent of a new car’s value in the first two-three years, go ahead and do it. But if $5,000 to $40,000 means something to you, then be smart and consider a good quality used (pre-owned) car!
Some simple car buying advice:
• Do your homework. The information age has overtaken us; everything you need to know is just a click away. Car shoppers spend an average of eight hours on the Internet and less than one hour at the dealership. Research is key. Have an idea of what type of vehicle you want and what you want to spend. Take that info and search away. Sites such as consumer reports, Edmunds, Auto Trader and Car Critic can offer insight into reliability, resale value, cost of repairs, gas mileage, etc.
• Determine what you can afford. Are you paying cash or will you need to finance? If it is cash, you already know how much you have to spend. If you are financing, do yourself a favor and get a personal credit report. Websites for this would be Equifax, Transunion or Experian. All are bank-approved reports. It will cost a small fee, but it is invaluable to know your credit history and, most important, your beacon score. That score will determine the cost of interest you will be charged by the bank. The better the score, the lower the interest rate. The typical interest rate charged with a good beacon score can fluctuate between 3-7 percent. Factors such as down payment and year of vehicle play into this as well. Typically a $10,000 loan with a 60-month term will be approximately $200/month. For every additional $5,000, the payment will increase about $100/month.
• Consider the lifecycle of the vehicle. If you purchase a car that is three years old with 45,000 miles and you would typically drive 30,000 or more a year, you may not want to finance it for 60 months. Cars typically have a good lifecycle up to 150,000 miles if maintained properly. Be smart. It is your loan and your credit that will suffer if anything pops up that you cannot afford.
Here’s what I learned my first day of college 32 years ago: “If you think education is expensive, try ignorance.” Be a smart buyer and educate yourself. You will be glad you did.
Please remember to support our local economy by purchasing locally. And don’t forget to go to the Concours d’Elegance; these automobiles are truly pieces of art. Thanks for reading, and remember: “Everybody drives a used car.”
Mike Cody is the founder of Lowcountry Motors, located at 1 Bluffton Rd. For more information, call (843) 815-5100 or visit lowcountrymotors.com.