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I had the frustrating experience of going through the car buying experience this past weekend. This car was not for me but for my cousin who turned 18 on Friday. Yep, this is the same cousin from this post. He has been at his job now for a year and a half and managed to save over $8000 (I'm so proud of him). He came to me because he wanted to buy a car and wanted to make sure he made a wise decision. I was more than happy to help him out because I didn't want him to make the same bad decisions I did when I bought my first car at 18.

The first thing we did was sit down and discuss what his price range was and how he would pay for the car. Normally, I would have told him to take the majority of his savings to pay for the car in full but make sure he leaves himself enough money for an unexpected financial emergency. This time though, I went a different route. You see, since I wrote the "
I Want to Be Rich Like You" post, he has become a father. He has a beautiful three month old baby boy. Granted, I wish it had not happened but what is done, is done. We've had numerous discussions about it and he knows I will be on his back to make sure he is taking care of his responsibility. Seeing as how he has this additional responsibility, I wanted him to only use a small portion of his savings. We decided on a price range of no more than $10,000 and he was going to be putting $2000 as a down payment; the rest would be financed. He has no other debt and can handle a small car loan comfortably. I told him he could always make extra payments to pay off the loan early. I usually would be against financing a car but in his situation, we felt that needed to pay a little more to be sure he had a good, reliable car to transport his son. Since he did not have enough saved to pay for the purchase in full while still leaving himself a hefty emergency fund, his next best option was to finance the purchase.

We did research online for safe, reliable and fuel efficient used cars and decided on him purchasing a used Nissan Sentra or used Honda Civic. Knowing what we were looking for and the price range, we headed off to search for the vehicle. We went to about 15 car lots until we found the perfect car for him. We found a used 2006 Nissan Sentra with less than 23,000 miles with an asking price of $12,900. The car was exactly what he was looking for so we sat down to wheel and deal with the salesman. I won't go through all the negotiation details with the salesperson but we ended up getting the car three hours later for $9600.

Since he had no credit history, he needed a cosigner. His mother took the responsibility of cosigning the loan because this was one thing I was not willing to do. (Have you watched any of the tv court shows about people cosigning loans and having their credit ruined when the person they cosigned for did not pay the loan?).

Had he gone to the dealership alone to purchase the vehicle, he probably would have paid about $4000 more for this vehicle. He had never purchased a vehicle before so he did not know you could negotiate the purchase price. That was a savings of $3300. He also did not know about all the junk fees the dealer adds to the purchase. I was able to get them to waive the document fee for a savings of $489. The dealer also added in a charge for vehicle etching (basically, this is a charge for putting the vin # on the glass). Since this was a used vehicle, this charge had already been covered by whomever originally purchased the vehicle. This was a savings of $239.

As the title says, knowledge is power. Since he did not know what he was doing, he was smart enough to find someone who did. Unfortunately, I had to learn the hard way and made all the same mistakes myself with my first car. These days, if I am not sure about something, I find someone who knows better than I do or I do research until I am better able to make a decision.


  1. Mr. ToughMoneyLove // October 13, 2008 at 10:35 AM  

    I'm curious - did your cousin not already own a car? Was this just an upgrade? If so, did you try and talk him out of it? Being 18 and already having a child and a car payment is a rough start to adult life. Plus Mom co-signing? May be time for some tough love lesson learning before things get completely out of hand.

  2. Anonymous // October 13, 2008 at 1:16 PM  

    $8000 is ton of savings for an 18 year old who started working at 16. I was earning minimum wage back at that age, around $3.5/hr.

    Buying a used car is tricky. I was confident of getting a good deal, but emotions factors in, and I had the complexity of a trade-in. It's nearly impossible to get a good deal on a trade-in. And the used car salesman often have alot of talent, practice, and game face to move a car for more than what its worth. I bought my car for $10k, which in of itself was a good deal, but they got my trade-in for $3k, and later I saw it advertised for nearly $7k.

  3. Eric N. // October 13, 2008 at 3:43 PM  

    I kinda wish you did go through the details of the negotiations :)

    I'm thinking of buying a used car in the near future too and would love to hear what things I should be looking out for.

  4. The Other Biz Guy // October 13, 2008 at 6:37 PM  

    I had a similar experience while buying my last car (although I had a little bit more money to work with). Like you mention, I urge anyone who is considering buying a car to really know what they want before even going to a dealership. Then again, I would also recommend test driving -- I thought I'd be happy in a Prius but it didn't turn out that way. I wound up going with a MINI due to the even mix of mileage and aesthetic (also size) but didn't know that it was MY car until I got in one. So, research to get a short list, THEN go dealer-hopping.

    And as another commenter mentioned, I'd love to hear more about the negosh.

  5. sara l // October 14, 2008 at 12:34 AM  

    can you come visit us when we're ready for our next car?

  6. zachyounkin // October 14, 2008 at 2:24 PM  

    Great thoughts!

    I just recently bought a 1998 Civic with 214,000 miles for $3450 when KBB has it for $4500.

    It runs well. I'm going to let it run till it dies and the tires fall off of it.

    I've already started saving for my next car and will pay for it in cash and cash alone.

  7. Curt // October 14, 2008 at 4:52 PM  

    Knowledge is power and the Internet is able to deliver more knowledge then ever before.

    I saved a few thousand dollars by researching on the Internet to purchase my last vehicle.