Yo HP - Car Buying 101

Bear with me as I’ve always purchased my cars from private parties in the past. This is the first time I’m getting a ‘new’ car from a dealer. I feel abused already.

So I’m looking at getting one of the following rides:

  1. Ford Fusion

  2. Chevy Impala

  3. Cadillac ATS

I went into a Ford dealer today with my trusty built Ford tuff Expedition. I meet this Don Ready actin mufugga who’s pushing hard to get me into a Ford Fusion today. Anyways, they inventory was sht and I didn’t really like options+features+miles+price that was available.

He wasn’t really digging my needs and requests and pushed what was on the lot.

So here are my questions for the car connoisseur of this board.

  1. New vs. Used. This negro kept pushing new as he said depreciaiton is not as bad as it used to be. Therefore I would not be saving much, if anything at all.

  2. Furthermore, there is a warranty included on new cars for 5 years 60k miles which a used car would not have; a used car could have a warranty purchased for an additional fee.

  3. What are some of the ‘gotcha’ traps I should avoid. For instance, when I sign the dotted line, I know they’ll hammer on me for things such as rust proofing, dealer prep fees, and other high margin cross sales to nickle and dime me. Again, I have not had the (dis)pleasure of working with a dealer in the past.

HP, I’m not trying to diss your former profession, I just find it frustrating given the sales people are on a commission leading to the only incentive of selling cars. What other advice do you have for a guy like me? I simply want to spend ~$14-16k and get a decent used car. The dealer today got me thinking of a new car based on the warranty and slim depreciaiton in the early years.

Respect in advance.


Good read.

How long do you keep your cars and how many miles do you drive per year?

I have had my Expedition for 10 years. I drive 6-9k miles a year.

Then buy new. Early year depreciation only matters if you expect to sell in the early years.

FWIW, don’t believe anything dealers tell you about car depreciation. For one thing, they probably don’t know the real answer. The used market for 3 year old cars and newer is heaviy distorted by captive leasing programs.

You get your most reliable information for used values is consulting with one of the majors. I happen to like clearbook.

Dealers generally mess with customers whereever information is assymetric – leasing programs, non-factory financing, and extended warranties. Avoid them all (except possibly leasing).

Btw, if you can pass the CFA program, you can master the car buying experience. Just apply your finance brain to the process, do your research, and you should be okay.

dude these 3 are not even in the same class

  1. Ford Fusion

  2. Chevy Impala

  3. Cadillac ATS

i always get my cars at auction, find a dealer you trust or friend/relative who is a dealer and hit up a car auction with him.

most charge 300-400 bucks.

make sure u get a car that is still under warranty (so you can take it to the dealer and get any issue resolved)

put some nice rime on it then ride around town laughing at the suckers who buy cars from dealers

^ No offense broseph, but I don’t recall an LOS on “Process of Car Buying + Dealer Negotiation.” Conventional wisdom tells you that the dealer is out to screw you.

I know how to run numbers and calculate an appropriate payment per these low interest rates. The big clutch to get the upper hand on is the vehical price. The price is set at the dealer which is an inner santum gaurded by a sleezy salesman. Asymentric information 101. AFs own HP has worked in the inner sanctum and can help me avoid pitfalls the typical muppet will fall for.

Negotiating the vehicle price is the easiest part of the process – as long as its a new car. Use the Internet to solicit quotes from multiple dealers. Go to the mfrs websites to find out what incentives/interest rates are being offered. Go to Edmunds to get invoices. Edmunds also has forums where people share their insights on their deals.

Dealers know that customers are pretty good at getting the right vehicle price. They also know that people are generally pretty shitty about other things such as interest rates, leasing terms, and extended warranties. This is where they take advantage of you.

Never negotiate the deal from the monthly payment perspective. Never negotiate a deal in person.

Respect. Edmunds is where I need to get at.

Where do you live?


The density of dealerships in that region should make it pretty easy to establish the right price. Hone in on one car, find the invoice price for that car, then use the Internet and email to compare the relative margin relative to invoice. Car buying services such as Costco, AAA or USAA, while not the perfect answer, will provide a good starting point too.

Edmunds is a good source for useful information, but don’t neglect the manufaturer’s websites too. They will often tell you about rebates, subsidized interest rates and other goodies.

^ Thanks bud. So do you think I should go new straight up? In the past I’d target cars with 30k miles for a price in the teens.

If you can afford it, yes.

If you buy used, avoid dealers. The price will be too high making the amortized ownership cost the same as buying new.

Is Hank Moody = HP? At any rate, I’m curious why someone in the car business was motivated to take the CFA. Unless you are in a treasury function of a large dealership or something

I don’t know what HP is but I don’t work in the auto industry. I’m a CPA and an investment advisor, which is why I entered the CFA program. Negotiating car deals for my clients is really a side activity.

HP is an econ grad on AF who could not find a job during the market crunch and sold cars for 4 years. Since then he entered the CFA program and landed a sick job reppin’ the buyside. Now he preaches his wisdom around AF for those who are in the car buying stage.

Ahh, got it.

Been working in the public accounting profession a very long time – have my own firm. Been managing client investment assets within that firm since '03. Got the CFA to give me a competitive advantage and help with the migration to FT wealth management.

I do car deals for fun. Just helped a client with an M5.

Appreciate it Hank. I’ll keep kicking tires and looking for the right car at the right price. While I’ve paid cash in the past, I plan on financing this time given the low interest rates.