Saturday, November 22, 2008

Why a used car makes so much sense

So you're in the market to buy a car. You've done your research and decided you want a small sedan with automatic that gets 30mpg in mixed driving and won't cost you more than $350 a month for 5 years. After checking out all the reviews and specifications and prices on various websites like Edmund's and Vehix and MSN Cars, you've decided on a brand new Toyota Corolla LE sedan.

WHOA! Why are you spending so much money that you haven't even MADE yet? What if you get laid off in a few months? What if you take a pay cut, or have hospital expenses for some reason? Your nice shiny new car will get repossessed from you and you won't be able to go anywhere!

Let's break this down. The new 2009 Corolla and the 2003-2008 Corolla are VERY similar. You could buy a used 2003 Corolla LE with the same ABS, airbags, power windows and locks, cruise control, CD stereo, and everything else, for a THIRD of the cost of a new one! $18000 car or $6000 car. The 2009 model might cost more than $350 a month at FIVE years, and you might have to go SIX years to stay in budget.
You could have the 2003 model paid off in TWO years at $350 a month even if you put very little down! And you'll still have the same reliable Toyota. Change the headlights and taillights if you want something different. Warranty? Who needs a warranty on a Corolla? Aren't you supposed to weld the hood shut on those and have the oil sucked out the bottom and refilled by a tube? Like in the commercials?

Wednesday, November 12, 2008

How To Spot Scams

When you're searching for a cheap car, there are people out there in the world who want to take advantage of you. These generally fall into three classes.

1) Curbstoners

These guys buy and sell cars for a living, but are not licensed dealers. They will buy cars from people, leave the titles open (as in not sign their name to them, but instead have you sign where they should have), avoid paying sales taxes, insurance, or surety bond cost, and generally don't sell nicer cars. They won't let you take extended test drives, they won't allow mechanical inspections, and they are operating above the law, so what gives them the need to be honest about the car? They're breaking the law already, why not say it's a one-0wner that granny owned and only drove to church and a grocery store on Sundays?

2) Foreign Scammers

You'll be browsing through car ads on CL and see a late model car for a third of what it's worth. You live in Texas, but the car pictures have palm trees in the background. The guy might claim some sob story about how he tried to import it into Schnozzbekistan but their emissions requirements were too strict and he has to ship it back and sell it. Or he's in the Army and needs to sell his car while he is overseas. Or whatever. Either way, it's a scam. If you follow through with it, you will lose any money you send the scammer and you will NOT get a car in return. If it sounds too good to be true, it probably isn't.

3) Title Fraud

I'm selling this for my brother-in-law while he's in prison. FRAUD. My wife and I are getting divorced so I have to sell this right away before she gets it. FRAUD. Oh, getting a bonded title is EASY. FRAUD. If the title isn't in their name, RUN AWAY. If the title already has markings on it where it shouldn't, RUN AWAY. If it looks like someone erased a signature, RUN AWAY. If they "lost" the title but will get you another one in a few weeks, RUN AWAY. If they offer you only a Bill of Sale, RUN AWAY, unless you know what you're doing.

Monday, November 10, 2008

Where Do You Find Cheap Cars?

Cheap cars are everywhere. They might not be prominently displayed, or even say that they are for sale. You have to know where to look. Thumbing through an Auto Trader magazine or your local newspaper is probably not the best place to find your cheap car. There are other publications and websites you can check out to find the cheap cars in your area, or you might just have to wander around town and see what you can find.


eBay Motors - Used to be a great place to pick up a $100-$500 car in running condition. Not so much anymore, although I did buy my last car there for $355 and it does run and drive. I'm waiting to put more money into it until springtime. It needs battery cables, a battery, and some little bits like a reflector and a parking brake ratchet mechanism to pass inspection. You can still find driveable cars cheap, especially if you live in a large metropolitan area like Chicago or New York.

Craigslist - This is the place to go for finding cheap cars online. I have purchased no less than five cars on Craigslist in the past few years for well under $1000. All of them were fine to me. If you don't have a local Craigslist for your town, search the next nearest few towns and you'll find something. I also find that limiting search by price eliminates listings that have NO price, in which case you might miss something good.

AutoTrader - You won't find much for less than $1500 on AutoTrader because it costs money to put an ad up. But the cars are there sometimes. Doesn't take long to do a search, so go for it.


I'll keep this nonspecific because there are literally THOUSANDS of car auctions around the country. To find local car auctions, keep in mind there are three kinds of auctions where you'll find cars.

Government Surplus Auctions - To find these, DO NOT go out on the internet and search for them. All you'll find are scam websites looking to take money from you and then give you an outdated list of auction companies and vehicle lists from five years ago. Just call your local police department, sheriff's department, school district, water utility, or whatever, and ASK THEM how they dispose of their surplus vehicles. They will likely either give you a date-time-location, or refer you to an auctioneer who they do business with, who can then give you details on upcoming auction sales.

Abandoned/Impounded Auctions - These are my personal favorites. It's almost like a grab bag (or a box of chocolates). You never know what you're going to get. Most of the time, the tow company or police department knows NO history on the cars they are selling. They might run, they might not. They might have keys, they might not. The car might not even be complete. But once you've been to a few of these you'll start picking good cars. I always look for cars that were forfeited by people who were arrested, or cars from DUI/DWI arrests. These are most likely to have keys and be in running condition (how else did they get pulled over?) and ready to drive. If you see a car at an impound auction and want to know more about it, the best bet before the auction starts is to talk to the tow truck drivers. They brought it in, they should know more about the situation. The best way to find out about these is to either check the Public Notices in the newspaper classifieds, or call each towing company and police department in your area directly.

Estate Sales and Bankruptcy Auctions - Again, you will want to contact individual auction companies here. That or check your newspaper for upcoming auctions. You might find a cherry garage queen type car, or a well-worn farm truck, or something that has been sitting in pieces for a decade or more. But it might well be worth it. These are usually held in mornings, at the residence or business location, and during the week, so make sure you can get time off work for them if you simply have to go.

Wandering Around Town

You might be able to find a good deal by just LOOKING for cars which look like no one is driving them, or have for sale signs on them, or are just begging you to ask about them. Good places to find these might be at small strip malls and shopping centers, repair, body, and transmission shops, or possibly in your own neighbor's garages and back yards.

Shopping Areas - Signs warning of towing are up but no one seems to care, because there are 12 cars for sale at your local Stuff Mart. Go check them out. Make a ridiculous low offer. You might get a great deal!

Auto-Related Repair Shops - You can get some terrific deals with mechanic's liens. Stop by a large transmission shop in your area and ask if they have any cars for sale. People might buy a car and find it needs transmission work, drop it off at a shop, and then get shocked at the $1500-$2500 bill to get it back! They abandon the car, the shop owner files for a lien, and then he gets to sell the car to cover his investment in fixing it. You can easily find $4000 cars for $2000 at these places. Regular mechanical repair shops, body shops, even brake shops can have these deals. If the same car is sitting on the side of the shop for more than a week or two, it's likely the owner just left it there and it will be for sale soon if not already!

Just Wherever Around Town - So the crazy guy in town who always walks around holding a stuffed lion lives three blocks over from you. He walks everywhere, and his Buick Regal sits in the driveway collecting sap and dust for months at a time. Strike up a conversation, see if he wants to sell it. You might see a Chrysler Sebring sitting at the local bakery for three months without moving. Maybe the owner works there and the car wouldn't start one day after work. He might even pay YOU to take it away so his boss doesn't get upset over it being there for so long. Pay attention when you drive around, your next car might be that Pontiac Bonneville sitting behind four feet of weeds waiting for you!

Sunday, November 9, 2008

Why Hybrids Aren't Cost-Effective

Total Cost Of Ownership. I shouldn't have to say much more than that. Sure, a new Prius or Civic Hybrid will save you money on gas. You'll get 40-50mpg and be the envy of all your green neighbors. But you just spent $25,000 to $30,000 for the privilege! And some years from now you'll have a battery pack to replace which may cost more than the car will be worth by then!

You can save a lot of gas money at the pump by buying one of the older cars that get incredible gas mileage. In many cases you won't even have to give up automatic transmission, air conditioing, or even full-size comfort. I put a few examples below, and I will try to make this a regular feature, profiling a new little-known gas saver each week.

1) 2000-2005 Chevrolet Impala

This is not an old car, nor is it a small one. But with the 3.4 liter V-6 engine, overdrive automatic transmission, and a tall final drive ratio, it can easily get the EPA rated 32mpg or more on the highway. According to the EPA's website,, some Impala owners get 35-37mpg in 80-100% highway driving. City mileage was rated at only 20mpg but many owners report 23-26mpg in town. You get 6-passenger full-size comfort, a huge trunk, and GM reliability. I'm currrently trying to find one for my wife. Private owners are selling them for $3,000 to $6,000 and you can even find low mileage GM Certified 2005 models for under $10,000.

2) 1993-1996 Dodge and Plymouth Colt, Eagle Summit, and Mitsubishi Mirage

These cars were sold under many names, but they are all the same basic car. With the 1.5 liter 4-cylinder engine and 5-speed manual transmission, they were rated at the time by the EPA to get 32mpg city and 40mpg highway. You could get these as 2-door coupes, 4-door sedans, or wagons. The wagons typically used a larger 1.8 liter engine which was optional on the coupes and sedans. Some models even had a large 2.4 liter engine instead. The larger wagons had 3 rows of seating and could still get 24-28mpg in mixed driving. In what else can you seat 7 people and still get mid-20s for mileage? Maybe a Highlander Hybrid, but why spend $30,000 or more for one of those when you can find a mint Mitsubishi Expo microvan for well under $3,000? Automatic were available at a small mileage penalty as well.

3) 1996-2002 Saturn S-Series

Two generations are covered here and no matter what engine, transmission or bodystyle you pick, you'll get at least 25mpg in town and 35mpg on the highway. SOHC engines with manuals typically see closer to 40mpg highway. You can choose from 3-door coupes (with a small side door on the passenger side to ease access to the rear seat), 4-door sedans, or 5-door station wagons. Right hand drive versions of the wagon were made for rural mail delivery as well. Older Saturns are an even better pick if you really want to save money, but avoid the first year 1991 models as they were significantly less reliable. Saturns are also a great choice in states where salt is used for snow control as most of the Saturn body panels are made of a plastic polymer and can't rust!

That's three lines of cars that offer incredible mileage without giving up a huge chunk of your wallet. I'll have many more to come soon, including Hondas, Nissans, and Toyotas for you foreign car lovers. Some of you may remember the Civic VX, Sentra SE-R, and Tercel EZ, and I'll get to all those soon!

When you HAVE to have a nice car

If you're in sales, visit clients, or have to transport important people around, you can't exactly show up in a 1993 Plymouth Acclaim with peeling paint and a dented right fender. No one wants to see that (which is why we park our beaters far away from the front door where we work), so there are times when a nice car is needed. You might have different expectations of what is a "nice" car. Some of you might want what looks like a newer car. Some of you want a prestigious nameplate or brand. And some of you just feel bigger is better. I have solutions for all of you without spending many thousands of dollars, the typical down payment on a flashy new or newer car.

If you want a specific new car but don't want to spend $25,000 to get it, start looking at used models of the same car. You can save more than half of the cost of a new one by looking at a 2 to 3 year old version of it. Take for example a new Dodge Charger sedan. If you were to buy one new, let's say it's the SXT with the 3.5 engine, leather, and 18" wheels, you'd spend about $26,000 plus taxes, fees, and interest. You can start looking at used 2006 Charger SXT's. A used 2006 model can be had for about HALF price. Many are listed here in the Dallas area with 20-40K miles for $12,995 and $13,995. I found one on CL for $9,995 with 82,000 miles. Save by buying used, works every time!

Let's say you want a newer looking car but can't afford more than a few thousand, you can go with lesser known cars. You may have your eye on a nice Lincoln MKZ which is over $30,000 new, but you have your champagne taste conflicting with your beer budget. Look for a 1998-2002 Lincoln Continental. They are smooth, silky, comfortable, and offer a lot of luxury for a low price. 1998 models are easily under $5,000 while the final 2002 models don't often sell for more than about $8,000. If foreign models are more your taste, try out a 2000-2003 Nissan Maxima, a 1997-2003 BMW 5-Series, or a 1998-2003 Jaguar XJ. All for the most part under $10,000 and all look remarkable similar to other new cars.

Need a beautiful name but can't afford a beautiful (to the salesman) price? Again, you'll want to look at used models of the ones you want. A 2003-2008 Navigator will cost you much less than a new one. Modern looking S-Class Mercedes W220 sedans came out in 1999 and will cost a fraction of the new W221 model. There are so many luxury models that came out years ago but are still viable transportation today. Just because you want a luxury name doesn't mean you have to spend as much as you would on a house to get a nice car.

And then there is my favorite category, classic cars. Your neighbor may have done a full frame-off restoration of his '57 Chevy Bel Air 2-door hardtop and spent $68,000 getting all the bits together. You can still make him feel silly by picking up an older, worn, amateur restoration of a similar model. A 2-door hardtop Bel Air in decent daily driver condition can be bought for less than $20,000 easily. I found one in Colorado, was restored in the 90s and looks showroom new from 20 feet away, for $16,000. A 4-door sedan or a wagon would be even more useful for a daily commute and can be had for less than half of that. Even better, spend $3,000 and restore it yourself on the cheap, making it beautiful and functional with a newer 350 TBI engine and overdrive automatic from a 90s pickup, and you'll enjoy a classic ride and 20-25mpg!

There are lots of ways to get something nice without spending a nice amount of money. Stay tuned and I'll show you more ways to save on cars whether you want them to look nice or not!

Chevrolet Corsica - Designed To Be A Beater

In the early 1980s, General Motors was enjoying nice profits. They had introduced downsized full-size cars in 1977 (LeSabre, Electra, Impala, Caprice, Delta 88, 98 Regency, Catalina, Bonneville, Parisienne) which quickly became best-sellers. They brought out downsized mid-size cars in 1978 (Century, Regal, Malibu, Monte Carlo, Cutlass, LeMans, Grand Prix) which also quickly became best-sellers. In late 1979, they introduced the new compact front-wheel-drive X-cars (Skylark, Citation, Omega, Phoenix) and sold hundreds of thousands of those. By 1985, these cars were showing their age and it was time to come up with a new compact car. GM enjoyed such great sales to the rental car companies with the X-cars (and the J and A-cars that came out in 1982 to supplement them), that they wanted the next design to be tailored to them. In 1985, GM introduced the N platform (Skylark, Calais, Grand Am) but did not introduce a Chevrolet version.

For 1987, they introduced the N-derived Chevrolet models (called the L platform) of the compact front-drivers. The Chevrolet Beretta was the 2-door model and the Chevrolet Corsica was the 4-door model. These two cars were offered initially as fleet-only models for large companies and rental agencies. You couldn't go into a Chevrolet dealer in 1987 and buy their newest car! For 1988 they were offered to consumers and were the 2nd best selling cars in the United States that year, largely due to their volume fleet sales. These models continued with minor changes through 1996. The Corsica was replaced by the now popular Malibu, and the Beretta was not replaced by anything. Beretta owners were encouraged to buy Cavaliers and Camaros.

The Corsicas are simple and plain. Base models started out with a 2.0 liter 4-cylinder engine and 5-speed manual transmission. Optional was a 2.8 liter V-6 and 3-speed automatic transmission. Most models had no trouble acheiving 20mpg in town and 30mpg on the highway. A 4-door hatchback Corsica was offered from 1989 to 1991. In 1990, both engines were enlarged, the four to measure 2.2 liters and the V-6 was now a 3.1 liter. In 1991, the dashboard was redesigned and now featured a driver's side airbag. In 1992, the hatchback was dropped and anti-lock brakes were made standard on all models. In 1994, bumpers were now all body color and V-6 models now had a 4-speed overdrive automatic. The V6 remained the same size but was now the 3rd generation model, known as the 3100. The cars were dropped after 1996.

More detailed information on the Corsica is available at the WikiCars entry. is another great place to read specifications and technical data. A photo of a Chevrolet Corsica can be found at Wikipedia.

Even though almost 150,000 Corsicas were made each year they were built from 1987 to 1996, you don't see nearly as many of them today. The cars are definitely function over form as a beater should be, and for that reason, few people are willing to keep them running or take good care of them. This is why they make great entry-level beaters. No matter what part of the country you're in, there is likely an early 90's Corsica with peeling paint, torn upholstery, and broken air conditioning for sale in the sub-$500 range. I have not owned one myself but I see them daily for $300 to $800. Things to look for in a Corsica are the later models. The 1994 to 1996 models with the 3100 engine and overdrive automatic are probably the most forgiving, comfortable, and reliable Corsicas you can find. The 3100 engine and 4T60 transmission was still in use in many GM products up until a few years ago. There are literally tens of thousands of these and similar cars in junkyards to pull parts from. And when you're done with it, it's a very popular demolition derby car because of the short wheelbase.

I heartily recommend the Chevrolet Corsica as an official "Beater" car. Don't pay too much for it. But enjoy the savings of buying a sub-$500 car and not having car payments, interest, full coverage insurance, or having to worry about it being stolen.

Beaters...what is a beater?

A beater is the car you drive when you no longer care what people think about your car. A beater is what the perennial Dad drives. A beater is function over form. A beater is not bling. A beater is what your parents drove when you were a kid. A beater is what you buy when you are unable to afford anything you actually want. A beater is what you should drive if Dave Ramsey told you to get rid of your Navigator.

Some cars will always be known as beaters. I will get into profiles of individual beaters in later posts. In fact I would like to profile at least one "Beater" a week so when you see it, you will understand. Some cars are only beaters after they have been beat on. 1980's model Cadillacs and Lincolns and even BMW's and Mercedes-Benzes fall into this category once the leather seams are splitting, the paint is oxidizing, and the odometer rolls past 200,000 miles.

Many people these days have decided that it is no longer time to keep up with the Joneses and spend their hard earned discretionary income on their car. With the cheapest new car sticker prices up over $12,000 and most common and most wanted cars costing $20,000 to $30,000 or more, it can be difficult to keep up with the finance payments. If you have fair, poor, or bad credit for whatever reason, you may end up paying 15% to 25% per year in interest on top of that.

Now step back a minute. You are looking at a new sedan with a $20,000 sticker price. After the rebates and dealer discounts come off your price is down to $16,750, and after taxes, title fees, license plates, and other costs are added, you might be looking at a $18,000 car. You already did your homework, right?. You know you want to put some money down so you decide on $3,000. Now you need to finance $15,000 but your credit score is in the low 600 range and you get slapped with a 15% interest rate. You budgeted $350 a month for payments. The salesman comes back from the manager's desk and says for a 4-year term, your payments would be $418 a month. OUCH! So you tell him about the $350 a month you'd like to pay. Salesman comes and goes and says, I got a GREAT deal for you (watch yourself here), I can get your payments down to $317 a month! You think, that must be for 5 years, sounds good! That's for 6 years. 5 years would be $356 a month. But you thought about the extra monthly cost of getting full coverage insurance and go with the 6-year note. You sign the paperwork and have a brand new car for only $317 a month!

I have some bad news for you. You just spent almost $26,000 on a car that stickers for $20,000. You got a great deal after discounts and rebates. You even got your financing in order. But now six years of your disposable income is going to be sucked away. There is a better way. Do you remember the $3,000 you put down on this new car? Did you know you could spend that $3,000 and buy a perfectly good used car for that? You could probably even get a decent enough car for $2,000 or even $1,500! If all you do is drive 15 miles each way to work, visit friends and family on the weekends, and take that trip to Florida each summer, there is not much sense in spending $26,000 over 6 years when you can spend a couple thousand now and get years of use out of the car!

A quick classifieds search near me shows a new Impala for sale for $22,888 after discounts. I can buy a 2007 model Impala with 20,000 miles for $12,995 through a Certified Pre-Owned program. I can buy a 2006 model Impala (same bodystyle, same model, same motor, same options, same color) with 50,000 miles on it for $8,995. I already saved nearly $14,000 just by buying an older model of the same new car! If I go to an older generation of Impala, I can buy a 2004 model with 100,000 miles on it for $4,500. Just cut that in half! And if I'm willing to put up with some issues like faded paint, windows that chatter when they roll up and down, and a missing hubcap, I can buy the 2002 model of that car with 150,000 miles for $2,250! Cut in half AGAIN!

Maybe I am a little different from other car buyers. I am willing to put up with noises, cosmetic deficiencies, and broken trim pieces. Of the 60 cars I have owned in the last 15 years, only a small handful of them cost me more than $1,000. I would rather buy a $500 car, drive it for a few months, and sell it for about the same price to buy another. I rarely have a car payment, I never have full coverage insurance, and I always get to drive something different. But then you have my wife-she likes nice things-and she is always paying a car payment on whatever she drives because she wants it to be nice and clean and look new and shiny. I will profile her last car purchase sometime in the next few days.

If you would like to learn more about buying cars, please stay tuned. Comment here, send me a message, I will be happy to help you. My friends always come to me to find them a great cheap deal, I love helping them, and I would love to help you, no matter where you are located. No charge, I do this for fun.