If you already know what car you want, then go and buy it because there has never been a better time to buy a car!  If you don’t know what car you want, then get ready to test drive a few cars.  Test driving a car is much more important for finding the car that is right for you, rather than checking out a car to make sure it’s in good mechanical condition.  Besides, if you follow my advice, you’ll have a warranty and it will have already been inspected by a professional.

I’m a car nut, so test driving a car is like going to a movie for me.  It’s fun and comfortable.  For most people, keeping track of all the things you should consider when driving a car is hard.  To help you out, here’s a list of considerations you won’t want to forget AND (drum roll please) I attached a checklist to this post that you can print out and take with you when you’re on a test drive.  It doesn’t get better than this.

Always remember

• Take your time and don’t rush this important trial.
• Be in command by knowing and asking for what you want.
• It is better to test drive a car that is not “warmed up.”
• Bring a friend/passenger that can sit in the back and judge rear seat comfort.
• Require that you drive on a route of your choosing so you can fully test the car.

Before you get in the car

• Doors and Trunk: Open and close both doors and trunk because this gives you a feel for overall car quality.
• Cargo Space: Is the trunk big enough for you and all your passengers going on a trip?

In (and out of) the car, before you even turn the car engine on

• Getting In and Out: Is it easy to get in and out of the car? Can you get children or elderly people in and out of the car too?
• Seat: Make sure the seat and seat belt are comfortable.
• Pedal Position: Are the pedals in the right location for your body type. If not, are they adjustable?
• Gauges and Controls: Can you easily see them? If not, can you adjust the steering wheel and seat to make them easily readable?
• Cupholders: Where are they and they do they interfere with other car features?
• Interior Space: Is there enough leg room, and storage for your glasses, mints, iPod, purse, or whatever else you usually have?

During the drive

• Suspension: Test it on curvy roads bumpy roads, hills, U-turns, speed bumps, and freeways. Pay attention to car feeling like it’s swaying or drifting at higher speeds and bouncing at lower speeds.
• Acceleration: Does the car accelerate and shift well on hills or onto a freeway?
• Braking: Brake hard and let go of the steering wheel during braking. Does the car brake easily and does braking not interfere with steering?
• Steering: How much play is in the steering? Play is when you can turn the steering wheel, but the car doesn’t change direction.
• Visibility: Change lanes on city streets and on the highway to check overall visibility
• Climate Control: Air conditioners usually work pretty quickly but heaters can take a while. Start the car when it is cold, turn the heater on full, and see how long it takes for warm air to come out.
• Listen, Listen, Listen: During your drive, listen for outside noise and rattles. The amount of outside noise can never be improved and rattles are a sign of poor quality.
• Make Mistakes: Leave the lights on, or the windows rolled down when you turn the car off and get out. How has the design of the car help you when you do these common things?

After the drive

• Take a second drive if you feel like you need more time
• Drive other cars and compare!

Here’s the checklist again and remember to share you test driving techniques or write a comment about your test drive!

It’s time for your brain to come off that long extended holiday vacation and start thinking about what your car is really costing you.

Here’s one to think about - the actual cost or “sticker price” of a car has very little to do with how much that car will cost you.

Americans are challenged by finance (I’m not excluded).  Houses, and cars are all big investments, but do you sit down and calculate the real cost of ownership (COO) based on the purchase price, interest costs, insurance, maintenance, taxes, and whatever else adds to these ballooning expenses?  Based on the number of foreclosed houses and repossessed cars, I’m guessing a lot of people don’t do this.  To help you out, below is a guideline for helping you to estimate costs and here a quick graph of car costs:

Depreciation:

This accounts for approximately 50% of the COO.  To calculate depreciation, check out the residual value tool from Cars.com.  You might be shocked when you see that most of the depreciation happens in the first two years.  Remember that you can decide to save some money if you buy a car that is two years old rather than new off a car lot.

Fuel:

This cost is highly dependent on what car you buy and how much you drive, but in general this is about 25% of the COO.  Use this calculation to determine your fuel costs: (mile driven per year) ÷ (car miles per gallon) × (gas cost per gallon).  Check out my Gas Savings Calculator if you want to do a smash-up job of figuring out your true gas costs.

Interest:

Your interest costs on a car loan are usually about 10% or your total COO, but vary depending on your credit score, existing loans, and other seemingly esoteric criteria.  Don’t get caught up in interest compounding questions or the difference between and APR or APY.  Just multiply your loan interest rate times the loan amount to estimate your cost.  Interest rates on new cars are about 7%.

Insurance:

Just like your credit score and loan costs, insurance costs are idiosyncratic.  Insurance costs are another 10% of your total COO.  Don’t, don’t, don’t forget to call you insurance company to find out your insurance costs before buying a car.  NOT doing this could cost you over a thousand dollars per year because your insurance cost is partly based on how other people drive the same car - not you.

Maintenance & Repair:

You’re probably going to be surprised to find out that this cost is only about 5% of the COO.  Modern cars don’t break down that much and they are usually under warranty if they do break down.  The catch here is that maintenance and repair require your time, and that’s not in this calculation.  If you’re like me and hate spending money to repair cars and go to dealers, you may consider a Certified Pre-owned car like me.

Other Stuff:

There’s other stuff I’m not including because it’s relatively minor, but you may want to consider if you really want to do a great COO calculation.  Taxes and registration costs can add up over time.  Probably the most overlooked cost is the opportunity “cost” of an expensive car.  If you buy a $30,000 car instead of a $40,000 car, then you have $10,000 left over to invest and actually make money.  However, if you’re going to spend all your money no matter what your car costs, it’s probably best to leave this out.

Happy calculating!

There are a lot of reasons why people don’t like walking into car dealer.  My earlier post about things dealers won’t tell you is only the frosting on the cake.  Let’s assume that car dealers are not going to change their sales tactics any time soon.  So the big question is, what else can dealers do to make car buying a better experience?  Here’s the answer:

It is mind boggling that with the clarity of the evidence supporting this, dealers aren’t hiring women as fast as possible.  Women account for 65% of new car purchases and 53% of used car purchases.  That’s about 30 MILLION new and used vehicles ever year.  Futhermore, 39% of women prefer to deal with a woman in the car show room yet only 3% of car salespeople are women!

If I make the generous assumption that women salespeople only help women, then about 36%, or about 10 million car purchases, or 20% of the entire market had to deal with a man when they really wanted to deal with a woman.  Talk about an opportunity poking you in the eye.

Understanding why this is important is critical too.  The stories of women going into dealerships and not being taken seriously because they’re not with a man, or being treated like a second rate incompetent customer are too numerous to count.  The only way to change the mindset and culture of car salespeople is to do exactly what I claimed earlier, hire more women.  We also know that dealers employ approximately 1.1 million people in the US.  If I broadly assume that a third of those people are in sales, I can be more specific in my recommendation:

For the men that don’t understand what women experience or simply want to marginally know what it feels like to be dismissed because your spouse isn’t with you, try going to a neighborhood playground in the middle of the week (I’m the primary caregiver for my one and three year old daughters so I have a lot of experience here).  You’ll instantly realize that you don’t fit in and the women are reluctant to talk with you because you’re not with your wife and you’re not a woman.  It’s that simple.

For the women out there, I won’t regurgitate all the obvious advice such as go to a dealer prepared and with your research complete.  Instead, I’ll leave women readers with this thought - you have a choice who you talk to at a dealership.  Call ahead of time and ask for a female car salesperson on the phone.  Talk with her for a couple minutes and if you like her, then go visit.

When you’re done test driving and ready to buy a car, you can use my favorite car buying approach: buy used, and use Carsala to buy your car because you’ll get a better deal and won’t have to negotiate with a dealer at all.

Do you have car sales stories you want to share?  Leave a comment and tell others about how car dealers do or do not treat women fairly.  The unfortunate truth:

In the used car market, being picky about color is more expensive than air conditioning, an automatic transmission, or leather seats.  Who knew?  Well, now you know and you can save a ton of money by knowing this too.

Since Carsala recently gave me the keys to their amazing price quoting tool, I have been playing around with car prices based on different options.  White and silver are the most popular colors in used cars and each of these colors comprises about 15-20% of any type of car.  This means that if I’m shopping for a used car and decide I only want silver, then for every 100 cars on the market I am only interested in 15 to 20 of them.  That limits my choices and limits the discount I’ll get when I go to buy a car.

Here’s a chart with examples of the premium you will pay if you’re picky about color:

To generate the above chart, I calculated savings off of Blue Book value with a single color compared to not having a color preference.  I looked at cars within 100 miles of where I live because I figured that is about how far an average person would drive for a really good deal on a car.  For savings in dollar value, I assumed that all the used cars cost $20,000 even though many of these cars can be bought for much less than this price - this assured the savings values made sense relative to each other.

If you do choose to buy a car using Carsala, they can quote using a combination of colors.  So if you like any color except red for example, they can quote it this way too.  In these types of cases, color may not impact price or savings, but its’ great to know that if you are being really selective about color, it could cost you well over two thousand dollars.

Leave some comments below about what colors you like/love/hate (and why).  Here’s a chart of the most popular colors for 2008.  Remember that if there are fewer cars on the market of the color you want, then the more you’ll pay if you insist of having that specific color.

Miscellaneous used car facts are rarely of any practical use, but are a lot of fun when you start to ponder the implications of what each factoid means.  Best of all, your friends will be impressed when you know these facts and have already given them some thought!  Consider this for example:

• Automatic transmissions outnumber manual 10 to 1 in the market for used vehicles

If this number was measured 25 years ago, I am sure the number would have been much different - probably leaning towards more manual (stick shift) transmissions than automatic transmissions.  Does this means manual transmissions will soon be one of those, “I remember when…,” things?  Sports cars, and I mean really fast ones, are even starting to use automatic transmission because some automatic transmissions are faster than their manual counterparts.  I think the writing is on the wall for manual transmissions.

Here is a collection of other random and fun facts for you to ponder by yourself or with your friends:

1.       Three out of four automotive transactions in the U.S. involve previously owned vehicles.

2.       The average vehicle will likely have three owners in its lifetime.

3.       Industry experts believe one of every 25 air bags that have been deployed have not been properly replaced. They’re also the most stolen item from a vehicle (having surpassed radios). AOL Autos: Best resale value cars

4.       About half the cars that are flood damaged end up back on the road. As far as Hurricane Katrina is concerned, estimates are that about 200,000 vehicles were dried out and resold.

5.       The most frequently searched price range for a used vehicle is under $5,000.

6.       Consumers lose as much as $4 billion a year due to odometer fraud, with the average rollback being 15,000 miles.

7.       There are more used Silverado pickup trucks for sale than any other model (nearly 120,000 throughout the U.S.)

8.       Texas has more used vehicles than any other state (more than 220,000); Houston alone has more than 32,000 on the market at any given time.

9.       Chevrolet tops the list of most-available brands in the U.S. (with about 450,000 available), followed by Ford (425,000). There are “only” about 280,000 Toyotas on the market at any given time.

10.   Silver is the most available color in the used vehicle market — more than 447,000 vehicles, followed by black (429,000), white (409,000), and red (321,000). Blue (309,000) and gray (277,000) are also aplenty. The color you’re least likely to find? Pink.

11.   Age does appear to matter, at least when it comes to a used vehicle. Nearly half those listed at any one time (about 1.5 million) are model years 2007-2008.

12.   Six cylinder vehicles are the most popular on the used car market, accounting for nearly a third of the total available (and roughly the combined total of both four cylinder and eight cylinder powered vehicles).

13.   The least likely number of engine cylinders? The 23 vehicles that were listed as being equipped with a 16-cylinder motor, among them a 2006 Bentley Continental Flying Spur (just $122,000) and a 1938 Cadillac ($195,000).

14.   Nearly half the used vehicles on the market come with air conditioning.

This list was originally published here (http://www.cnn.com/2008/LIVING/wayoflife/09/19/aa.used.car.fun.facts/index.html).  Share some of your own random and fun used (or new) car auto facts.

Before I get into how the leasing industry has self-destructed without any help from car buyers, I want to throw this thought out…  The #1 reason people lease cars is: they don’t understand auto financing.  STOP, STOP, STOP  - don’t be offended - I’m not saying if you leased a car you’re dumb.  The terms of leases are confusing, and the math required to understand, calculate, and compare auto buying options is perplexing.  Here’s a quick “do you know” test.  If you get one wrong, then please, please, please, read on.

• Do you know…
  • the difference between an APR (Annual Percentage Rate) and an APY (Annual Percentage Yield) is compounding and, when converted, APRs are higher than APYs?
  • to convert from a Lease Money Factor to an APR, you need to multiply by 2400?
  • how to convert all payments and residual car values into a single present value/cost?

This is not simple stuff.  I created a pretty complex Microsoft Excel spreadsheet for comparing auto financing options.  I can’t find an analysis like this anywhere, so I’m sharing my analysis with you.

I’m going to jump to the conclusion so you can see, in numbers, why leasing is a really bad option. I pretended I was buying a Honda Accord.  Check this out:

In case you try creating this yourself, the “Used Car” is two years old, the credit score for loans/leases is 680 (the national average), residual values are from Cars.com, a 5% interest rate was used to bring all numbers to a “Present Value”, and lease/loan terms were taken from LeaseCompare.com.

People that like leasing will vehemently claim, “you are wrong, you are wrong,” as shown in a great exchange on an Oprah Winfrey show. However, the arguments for leasing a car are poor.  My personal favorite is that, “you can lease more car than you can afford to buy.”  Huh?  Please lease this car that is more than you can afford.  Enough said.

There are other reasons why leasing is dead.  Since the global credit crunch started, credit companies have had a very hard time finding money to loan to consumers.  GM’s financial services recently posted a $717 million loss.  Chrysler is “repackaging” it’s financial products.  A significant reason for these problems is that past lease terms were unrealistic for the lenders (consumers are the borrowers).  For example, lenders often believed cars would be worth more at the end of lease than was realistic.

Lease companies are now changing the terms of new leases to ensure that they can make money.  The possibility of foreign banks taking on leases is highly unrealistic because foreign banks are no more likely to give out money for bad leases than an American company.  Great, even good, deals on leases are over.  Leasing is dead.

A final word about my analysis…  I changed the rates, the length of the contracts, and the down payments.  No matter what configuration you try, leasing for consumers is always a bad option.  Don’t be tricked into a lease.  Instead, buy a used car and save a lot of good old fashioned money.

Leave some comments and thoughts about leasing (or not).  If there’s demand, I’ll put together a nice Excel spreadsheet that readers can use to compare auto financing options.