If I had a dollar for every time I was asked that, I would be very, very wealthy.

We can (and do) give many practical tips, but first I want to address the answer at a high level. Let’s first define terms. A “good deal” is best defined as the biggest available difference between a car’s “value” – what it’s worth – and a car’s “price” – what it costs. Let’s look at an example (with fake numbers):

A 2008 Honda Accord with a Base Trim (ex: LX) and no Options (i.e. no leather, navigation, 4×4, etc.)

Value = $15,000
Price = $14,500

A 2008 Honda Accord with a Premium Trim (ex: EX) and Fully Loaded (i.e. has leather, navigation, 4×4, etc.)

Value = $18,000
Price = $16,000

Which is the better “deal”? Though the Accord with the base trim is cheaper, the one with the premium trim is a better deal because the price represents a bigger discount from the value.

Alright, so now to answer the question. The short answer is that you compare the price and value of every car for sale that meets your requirements and the “best deal” is the one with the biggest difference. Sounds simple enough, right? Well, not exactly. There are very few published prices for cars online today. Wait, but I can get hundreds of prices on Autotrader.com and cars.com! True, but the majority of those prices don’t represent the price you could actually pay. Sometimes the price you see online requires you to finance through the dealer (do not do this if it’s required!) or more often, the price online isn’t actually the lowest price the dealer will sell the car to you for. When comparing price and value, which do you want – the advertised asking price or the post-negotiation price? That’s right – the post-negotiation price. This is the reason research alone will never produce the “best deal.” Because research doesn’t get you to post-negotiation prices.

Value is equally hard to discern. Is it Kelley Blue Book, or Edmund’s, or NADA? None of them, unfortunately. They make (valiant) attempts at estimating value, but there simply is no measure out there today dynamic and accurate enough to use for value. However, here’s the good news. Since we’re looking at the discount off the “value,” whether or not the value itself is accurate or not is unimportant, as long as the value is similarly inaccurate for all cars I’m considering. The result is that, for a Honda Civic, the best deal means paying 20% below Kelley Blue Book while on an Acura MDX, the best deal means paying 5% above Kelley Blue Book. Such variation is evidence that a particular measure of value is inaccurate. If a measure of value were accurate, price would equal value on average.

A note on value: unlike cost, value is subjective. Suppose everyone in the world is considering buying one of 2 cars: a 2008 Honda Accord without a sunroof for 19,000 and an identical 2008 Honda Accord with a sunroof for $20,000. Everyone, including you, agrees the one without the sunroof has a value of $20,000. Everyone but you thinks a sunroof is worth $500 (for a total value of $20,500); since you like stargazing from your car on clear nights, the sunroof is worth $1500 to you (for a total value of $21,500). Which car is the best deal you ask? To everyone else, they can get a $1000 discount on the Accord without the sunroof ($20,000 value minus $19,000 price) or a $500 discount on the Accord with the sunroof ($20,500 value minus $20,000 price). Therefore, the best deal for everyone but you is the Accord without the sunroof. You, on the other hand, can get a $1000 discount on the Accord without the sunroof ($20,000 value minus $19,000 price) or a $1500 discount on the Accord with the sunroof ($21,500 value minus $20,000 price). You pick the Accord with the sunroof. Even though you paid more, it was a better deal because of how much you value the sunroof.

So…in conclusion, get as many low, post-negotiation prices as possible and compare them to a consistent baseline like Kelley Blue Book, NADA, or Edmund’s, making value adjustments where you don’t think that baseline adequately adjusts values for super-cool features like a sunroof.

If you’ve made it this far in this post, congratulations. You should have majored in Economics. My wife, who makes fun of me for my “business talk,” would have lost interest long ago.

‘Netted’ Discovered Carsala this morning: http://bit.ly/cUycoK

Ah, the age old problem: You are looking for a car, but you want it to look good with the minimal amount of effort. I have seen and experienced black car ownership and it can reduce a normal person to a neurotic mess. There are actually 2 ways to go about maintaining the look of your car, and when you use them together you can be assured that your vehicle with always look it’s best.

1. Color. White is hands down the cleanest color choice. There is a reason why a vast majority of the fleet vehicles in service today are white: It is low maintenance. A white car hides dirt, grime, water spots and the like better than any other color with the exception of camouflage. 
Typically the darker the hue of paint, the harder it is to keep clean. The scale rises exponentially between gray and black simply because black acts very much like a mirror. It reflects and magnifies everything including smudges, over spray, fingerprints etc. 
If you are set on a gray color (including the popular silver paints), try to find a lighter gray as it will be less maintenance than a dark gray. Nonmetallic cars are easier to keep clean, especially in dusty conditions as they do not sparkle. A metallic car must be kept very clean to get full benefit from the metal flakes in the paint.

2. Upkeep. Every six months have the exterior of your car detailed. You will be surprised at how much less effort you will have to put into your car’s appearance when you have a pro apply a high quality wax and buff it to a shine. Even if it rains it is not uncommon to not have any water spots on a black car provided it was properly cleaned, waxed and polished prior to the rains. Detailing is expensive but worth the expense if you can afford it.

There are a few products available that will help you keep your car looking factory fresh. 3M makes a clear adhesive coating that is applied over clean paint to guard against rock chips and the like. It must be applied by a professional but it is a lot cheaper to replace than getting the car repainted. American Racing offers wheels that have Teflon baked onto the surface of them which almost eliminates brake dust (which is why the front wheels on some cars are much darker than the rear). Meguiars makes a clear plastic polish that helps take small scratches and light oxidation out of clear plastic (i.e. headlamp lenses)

Naturally, all of these products and services cost money and/or time so it is up to you to decide how clean you want your car to be, once you decide on a color, that is.

I just bought my first new car (my dream car!) from a dealer and there are some things that I guess I just didn’t ask in advance. I was wondering what the difference between sticker price and final out of pocket cost is? How do you estimate how much you will really pay? Now I am wondering if I really got a good deal?

Susie G, Colorado Springs, CO

Welcome to the table post negotiation and signing on many, many dotted lines. Don’t beat yourself up! You may have still done yourself proud without even realizing it!

MSRP: Called the Monroney or window sticker is required by law and indicates the manufacturers suggested price including the base price with factory warranty, standard equipment, transportation costs, engine specifications, estimated fuel economy and can only be removed by the purchaser. Sometimes erroneously referred to as Mostly Suckers Really Pay, it is not always the case that you shouldn’t pay full sticker price. There are exceptions!

In the case of recent “hot” cars such as the first released new Camaro, demand will keep sticker price right on the money, if not above sticker. Cars are emotional purchases and demand from drivers needing to have the latest and greatest can temporarily maintain MSRP as the going rate for many months. Waiting until a car isn’t as “hot” can save quite a chunk of change. A new, not “hot” car can generally be had for 7-22% below MSRP.

When financing, it is important that you never negotiate according to what you would like your monthly payments to be. In fact, don’t even mention that you will be financing until you negotiate to a price that you feel comfortable with based on research done prior to walking onto a car lot.

Your final out of pocket pain will be the final price plus sales tax, title transfer fees and the interest on your loan spread over the number of months that you chose. All of them are unavoidable and part of the process.

Don’t stress! Enjoy your new ride and keep in mind that research is always key!

Confidently,

M

A study done in the UK by MoneyExpert.com showed that almost 25% of parents have had to help their adult children with their car debt when they have become delinquent in their payments. The expensive reality of raising a child has now extended beyond childhood, into adulthood and threatens parents who are now in their 60’s to compromise their hard earned savings and ability to maintain their retirement and health care needs. The real irony is that adult children today are beginning to literally spend their own inheritance at the cost of compromising their very alive parents.

Of course all of this starts with the devastating news coming from the financial and mortgage industry of people over-borrowing for their homes or getting into loans for which they were not qualified in a lenient lending market. This crisis is not limited to the housing market: it also quickly became a problem with the way that we buy our cars.

In an article in the LA Times just 2 years ago, at a time when the economy was not yet as mired in foreclosures and repossessions as it has been in 2009, it was ominously pointed out that the amount of people who couldn’t make their car payments for 60 days was up by 20%. Additionally, the average car loans are being paid off over a much longer time period than in the 1980s and 90s. 45% of all car loans are for 6 years or longer. It is common that these longer loans are, in reality, for more than one car because many buyers drive cars for 4 years or less and then trade in that car, debt and all, for newer and more expensive cars. The debt owed on the old loan is rolled into the new loan and the cycle begins to spiral from there with some consumers these days paying for 3 loans or more in a single car loans and owing, in some cases, $30,000 in debt on a single car worth far less. This is especially true with car owners who were forced in the last months of recession to downgrade to a less expensive and more fuel efficient model while trying to lose a large monthly payment.

These statistics may begin to uncover a inevitable time bomb for the spoiled babies of the Baby Boomers but a similarly frightening reality is beginning to reveal how this affects the parents that raised these consumers who over expected so much for themselves!

So what is the solution for protecting our Gen X  dollars and, as importantly, our parent’s money? We should take a ticket from their book: our parents drove their cars for much longer after they were paid off and took on much shorter loans. It is may be common today to get financing on a car for 6-8 years but our parents usually had 3-4 year loans thus reducing the amount that they were paying in heavy interest. Additionally, new cars are still very expensive these days so foregoing a need to have a brand-spanking new car and instead negotiating a car that is 2 years old at least (so has lost the majority of it’s depreciation) is realistic for long term goals and financial stability.

Buying smart not only protects your hard earned money but the savings of your parents.

VIN Locations on a Car via checkmyvin.com

My mother emailed me and told me that I need to cover the VIN number in my car window because if I don’t, thieves will steal my car! How can they steal my car just by being able to see the little tag that every car has inside?  -

Laura C., Bakersfield, CA
Dear Bewildered in Bakersfield,

Don’t you just love those Fwd: Fwd: Fwd: emails that our mothers all seem to think we just have to have? As with any of these, approaching it with a bit of skepticism is always a good first move.

The 17 digit VIN could, in theory, be used by a thief if they copied the VIN, created fake registration and identification for themselves, went into a dealership and had them create a new key. That is not as simple as it sounds! There have only been a few cases of this ever happening and they were stealing the VINs from used car lots where the cars would be sitting still for some time.

Covering you VIN may not only be a futile exercise but also illegal. Several states have laws regarding the VIN being visible at all times and never obscured. Also, that little plate is not the only place where you can find your VIN. Manufacturers now put it many places including on the engine and inside door panel to dissuade thieves from being able to hide the identity of stolen cars.

My suggestion is that you ask your mother to stop forwarding you these urban legends and feel confident that your car will not end up in a chop house.

Teen Driving Week at Carsala: Part One

Image from Wired.com

Teen driving now has a fresh young face from the NASCAR world to help promote a program designed to teach safety to teens.

Colin Braun, 20-year old NASCAR Camping World Truck Series driver has teamed up with Ford Driving Skills for Life (DSFL) to promote the importance of safe driving to teens around the country.

Mile for mile, teenagers are involved in three times as many fatal crashes as all other drivers. Ford Motor Company has a wonderful program called Driving Skill for Life, through which teens are able to improve their skills in four key areas that are critical factors in more than 60 percent of teen vehicle crashes: Hazard Recognition, Vehicle Handling, Space Management, and Speed Management.

Braun, now in his second year driving the No. 6 Con-way Freight Ford F-150 for Roush Fenway Racing, knows the importance of safe driving on and off the track. As part of the yearlong partnership, Braun will participate in DSFL hands-on training events and various nationwide teen safe-driving initiatives.

“I am pleased to be a part of the Ford Driving Skills For Life program. Having grown up racing all my life, I learned early on there is a time and place for driving fast, but public roads are not it.” said Braun. “I think teenagers are more likely to listen to a message coming from someone closer to their own age, so I hope my involvement will make a difference teaching young drivers how to be safer on the road.”

Throughout the year visitors to www.DrivingSkillsforLife.com will have a chance to view Braun’s blog dedicated to safe driving tips, videos, photos and updates from his race season.

The reasons for buying a used car keep piling on top of each other as if they’re trying to protect us from whatever is at the bottom of pile.  Well, something came out of the pile and it could make you sick… literally.  The highly coveted new car smell turns out to be an unpleasant concoction of chemicals such as arsenic, toluene, and formaldehyde that comes from the outgassing of materials used to make cars  - things you would never use at home to freshen up the smell of your bathroom.

Europe seems to be more progressive in this area, but Europe is working on an entirely different aspect – allergies to common materials.  Removing materials such as latex, chrome, and nickel is great for the allergy sensitive people, but why isn’t arsenic in this list?  Probably because we don’t talk about “arsenic allergies.”  After all, it’s a poison so I guess were all technically allergic to it. Right?

What about Toyota?  They are a progressive car manufacturer and have their environmentally friendly image to preserve.  Bill Kwong, Toyota’s Product Communications Manager, says they “strive” to meet Japans voluntary vehicle volatile organic chemical (VOC) standards set by the Japan Automobile Manufacturers Association by 2011.  It feels like lip service to me, but I will dedicate a blog to praising Toyota if they prove me wrong.

Max Gates, Chrysler’s Safety and Regulatory Communications Spokesperson, says the organizations that independently test cars are using, “scare tactics,” and making claims with, “no data to support any claims of risk.” Wow.  Where do I start?  First, it’s widely acknowledges by the car industry that chemicals gasses such as arsenic, toluene, and formaldehyde are in new cars.  Second, science has shown that these chemicals are harmful to our health.  Third, places like the Ecology Center have found new cars to be the, “most universally contaminated environment that we spend (our time) in.”  Does Chrysler want somebody sit in a car until they get sick to prove that it’s harmful?  Better yet, why doesn’t Chrysler spend $100K on an independent study and put this to rest ?  Lip service, lip service, lip service.

Used cars end up being a great way to reduce your exposure to the harmful chemicals in new cars.  Outgassing, a process where materials release toxic gas, is highest when the materials are new and go down significantly over time.  Buying a two year told car could be a very smart decision if you’re as concerned about these gasses as me.

Don’t be too pessimistic here.  Car manufacturers are really trying to remove these harmful gasses from new cars.  However, with car manufacturers across the globe having a hard time surviving, I’m betting that returning to profitability and developing new fuel efficient cars is a much, much, higher priority than removing chemicals from cars – especially since that most people don’t realize the smell is harmful.  Until I start seeing “Chemical Free” labels on new cars, I’ll stick to buying used cars and get my great deal through Carsala.

So you’re interested in buying a fuel efficient car, but you don’t have $25 grand to throw down on a new Toyota Prius?  You probably also noticed that leasing is dead and great loans can be hard to find.  There’s good news for you.  First, buy a used car and if you’re not sure why, check out my Top 10 Reasons for Buying a Used Car.  Second, you don’t’ have to buy a hybrid to get really good gas mileage.  It’s a myth and it’s propagated by our local, state, and federal governments that do things like give out subsidies for hybrid vehicles or use taxpayer money to help car manufacturers develop hybrid technology.  What’s really important is fuel efficiency – hybrid or not.

To generate this list, Google Trends was used to figure out which high fuel efficiency cars are searched for the most frequently on the web.  Here are the results:

There are a few surprising things about this list:

• 7 out of 10 are foreign made
• Toyota snagged 3 spots on this top 10 list
• Chevrolet nabbed 2 spots on the list (who knew?)
• Chevrolet Volt would be #10, but it’s not in production until 2010
• The Geo Metro and the Geo Tracker came close to making it on this list even though they aren’t in production any longer
• Dodge, Hyundai, Isuzu, Kia, Mazda, Pontiac, Saturn, Scion, Subaru, and Volkswagen should all have something on this list, but none of their cars came even close due to either a low search volume or the complete lack of a high fuel efficiency car

Now that you’ve seen the list, go out and get the high gas mileage car of your choice and make sure you buy one that’s two years old so that you’re getting the best deal, being environmentally friendly, and saving a TON of money using Carsala!

When I’m not writing a post, I am often working to keep my neighborhood a great place to live.  Good schools, safe streets, non-invasive businesses, and minimal traffic are all important.

The problem with traffic is that there really aren’t that many good options.  Stop signs and speed bumps slow people down, but that also means increased noise from cars speeding up and slowing down.  You really can’t win…. UNTIL NOW.

Enjoy the following clip about how to slow down neighborhood traffic and be sure to let me know when you implement this creative solution in your own city!