Monday, November 28, 2011

Buying a Car: Part 3

Finally bit the bullet and got a car, a new 2012 Nissan Versa SV sedan.  It's surprisingly big, has good gas mileage, and best of all it really squeals the tires going 0 to 60 mph in a breathtaking 10.2 seconds.

How did I end up getting the car?  I got a decent price of $14,975 from a Chicago dealer, shopped that around in New Jersey, then bought it for that price.  Well, not exactly $14,975.  Let's take a look at some of the taxes and fees I paid:

New Jersey 4 Year Registration: $385

From what I understand, this seems to a be a standard fee.

Dealer Title Documentation Fee: $75

Another standard fee, although apparently this fee can be used by dealerships to recoup money in a sale.  Keep an eye on it because it can widely vary from dealership to dealership.  I think $75 was more-or-less reasonable.

VIN Etch Title Policy: $395

This is supposed to be a way to help prevent automobile theft, but I think it's a basically a modern-day rust proofing.  Just a way to get more money out of me.  I could have probably haggled and lowered this fee.

New Jersey 7% Sales Tax: $1,074

Uncle Sam needs to get paid,  there's no avoiding that.

So, at after all the taxes and fees, the car comes to $16,903.  Decently expensive, but I plan on keeping the car for a bare minimum of seven years.  So, if you factor that in, the cost per year comes out to a reasonable level, assuming low maintenance costs.  I paid in cash money, because Debt is Slavery.  More on that in a later post.

I read a recent article that posed the question: Why are US teenagers driving less?  I think I know the answer.  It's because everything about owning a car is a pain in the ass.  Buying a car, driving it, fueling it, maintaining it, insuring it, selling it...  Everything is a big, complicated, time-consuming pain in the ass.  If I didn't absolutely need to own a car, I wouldn't. 

I love reading stories about people avoiding car ownership, which seem to be popping up more and more often.  Cars seem to be the big status symbol of the baby boomers, an item people bought without really thinking if they needed it or not just to show off.  Luxury items are fine, but cars are really, really expensive, even the cheap ones.  As more and more households go from two-car to one-car to simply carless, their lives lives will simplify and they'll be better off for it.

Sunday, November 27, 2011

Update Delayed

Update tomorrow, got caught up with a few things today.

Sunday, November 20, 2011

Buying a Car: Part 2

Update for this week: I've received a bunch of different offers from a ton of different dealerships for a new 2012 Nissan Versa SV sedan.  Thanks!  The best walk out the door price I have is for $14,975 from a dealership in Chicago (a hard-fought price received after extensive haggling).  If you take a look at this site, it says the invoice for a new 2012 Nissan Versa SV sedan is $14,808.  From what I understand, that means that the dealer is buying the car for $14,808.  So if I can buy it off him for $14,975, that's a pretty great deal (and $345 better than buying it for the quoted MSRP of $15,320).

Of course, I don't think the dealer was born yesterday and is going through the hassle of selling a car to only net a couple hundred bucks.  The dealer that gave me that price is a very large dealership in Chicago, so I imagine that they get large bulk discounts on their cars.  So, I assume they bought the car for much less than the $14,808 invoice that spits out.

Furthermore, I'm shopping for a car close to Thanksgiving.  There aren't a ton of car buyers at this time of year.  That fact coupled with us being close to the end of the month means that the dealership is probably trying to squeeze sales in to meet their quota.  That means I'll get a better deal.

That's what appears to be a great price from a Chicago dealer but I would like to purchase the car in New Jersey.  That's because the car will be titled in New Jersey and primarily driven there, so if I buy in Chicago I will have to (1) do titling out-of-state, which could be a hassle and (2) pay to ship the car.  Not to fear: with that $14,975 walk out the door price in hand, I emailed a few New Jersey dealers to see if they could match it.  Already a couple have, so I may have the car by the end of the week.

So, at the end of the day I should have a new car with a price that I can live with.  Still, there's a lot of bullshit haggling involved.  I've sent and received around 25 emails.  I've gotten a bunch of phone calls.  I wish I could go on the Nissan website and just build the car, get a price without any haggling, and order the car there.  You can go on the Nissan website and build the car, but at the end of the process you still have to talk to dealerships.  This reminded me of an experience I had abroad.

When I went to South Korea, I was surprised that there was no tipping.  I had a great tour guide for one of the imperial palaces, and slipped him the equivalent of a $10 or so at the end of the tour.  He just looked at it and didn't know what to with it.  My girlfriend had to explain that it was an American custom and then he slowly put the money in his pocket with a quizzical look on his face.

The thing is, I had great service wherever I went in South Korea, so they clearly don't need tipping as an incentive.  In America, tipping is customary but it is a tremendously inefficient tradition.  Often, the waitress checks in every five minutes trying to secure a good tip, but it's more annoying than helpful.  And what is a good tip?  15% for okay service, more for better?  Do you calculate that before or after taxes?  What if you had a good waiter but the guy who gave you the dishes spilled the food everywhere and was rude?  I've seen Fark threads with 500+ comments on how to properly tip.

At the end of the day, it's just a waste of time.  Get rid of the tip, pay the waiting staff a living wage, and avoid all the hassle.  Same thing goes for car dealerships.  Let me build the car online and then order it.  Everyone who gets the same accessories gets the same price.  Sure, car dealers wouldn't be able to screw over little old ladies.  But it would greatly streamline the car buying process.  The average margin over invoice would go down, but so many more cars would be sold that it would surely make up for it.

Sunday, November 13, 2011

Buying a Car: Part 1

I'm going to be getting a car before the end of November.  It's going to be a nice, cheap car as my priorities will be price, reliability, safety, and fuel efficiency in that order.  Right now I'm leaning towards a new 2012 Nissan Versa SV sedan, which has an MSRP of $15,320.

Why new?  I'm pretty cheap (I like to think frugal) in most aspects of my life.  So why would I get a new car?  Well, the issue with late-model used cars nowadays is that everyone is buying them because of the recession, jacking up the price of used cars close to new cars.  For model years 2009, 2010, and 2011, used Nissan Versas (Versii?) are only a few thousand dollars cheaper than new (if that).  Now, a Nissan Versa is a pretty cheap car to begin with so this makes sense.

But the first few years of a car's life are its most trouble-free (and that's one of the reasons there's a new car premium).  I'm willing to pay a bit more to get the new car and get those reliable years.  If a good condition late-model used Versa was dramatically cheaper (say $5,000 to $6,000), I would spring for it.  But they're not, so I'll be buying new.

Upon the recommendation of my friend Rich, I am using as a starting point.  On the website you specify which make and model of a car that you're looking for.  You then give provide your name, address, phone number, email address, and additional comments.  Here is my comment:

Contact only via email.  Looking to buy the car before the end of November.  Show me your most competitive offer.

I put in the comments that I only want to be contacted via email, but all the dealers call anyway.  Why only email?

Rich recommends using an email only system right up into purchasing the car.  With phone conversations, the dealers can let their inner weasel shine through.  If you come to an agreement on the phone and then walk into the dealership, more often than not you hear something like, "Oh, $22,500 was for the basic package, not what we were talking about.  That didn't include the steering wheel or windshield." 

So, the reasoning for using emails is simple: it's straightforward and everything is written down.  You ask the dealer a question and they can respond.  If they're not answering your questions, you move onto the next one.  If they're changing their answers, you move onto the next one.  Everything is already saved in text, so you can refer to it easily.

Once you've negotiated a bit with the dealer via email, ask for a final, walk-out the door price.  Print their response and take it with you when you go to the dealership.  If they try to charge any more than the agreed price, get up to leave.  They'll probably come down to the agreed upon price.  If not, there are plenty more fish in the sea.

That last point highlights the most important principle of getting a good deal on a car: not really needing the car.  If I desperately needed a car for transportation or if I had to have a particular model, the last thing I would want to do is tell the dealer that.  Then the dealer would have me over the barrel, now that they know that they can charge a premium to me because I'm willing to pay up.

So, with all that said, I just submitted my request on to get price quotes.  To tell the truth, I've done this before this year and have had some final, walk-out the door offers from a few dealers that were good enough for me.  I didn't really need the car at the time so I didn't take them up on it.  I will be doing so shortly, though.

I'll be doing further blog updates as I buy this car.

Sunday, November 6, 2011

October Lending Club Update

October Lending Club Update

Lending Club update time!  Lending Club calculates my returns as

Similar to last month’s NAR of 15.74%.  I now have a loan that has been charged off, meaning that there’s no chance that I get my money back.  The borrower declared Chapter 7 bankruptcy.  Note: this was one of the loans that I talked about last month.  Under my current Lending Club filters, I would not invest in this loan because the borrower had 3 inquiries in the last 6 months.  My maximum for this category is now 1.

And for you people out there that worry that there are no consequences for defaulting on a Lending Club loan, check out this person’s change in credit score over time.

Yikes.  I would like to have my money for this loan (I only received $2.32 and I expected to receive $67.46 over the life of the $50 loan), but I take no joy in seeing someone’s credit score hammered like that.  It will be a long time before this borrower will be able to borrow again and they’ll probably have trouble applying for jobs with a credit score like that.

With the charge off, how do I stack up against other investors? 

Still holding steady at 92%.  And I still have reservations about this number.

That’s about it for this update.  One final note: I did cut back on my Lending Club investments to $750/month.  In the month of October, I didn’t even meet that lower goal.  I only invested $600 across 8 loans.  My explanation basically amounts to laziness.  My Lending Club filter is an Excel file that sits on my old laptop.  My new desktop has all the bells and whistles (and then some) but doesn’t have Microsoft Office, so I have to go back to my old laptop to invest in Lending Club.

Because I use my new desktop for all my other computing needs, that means I have to boot up my old laptop just to invest in Lending Club.  So how I used to check out Lending Club every day or every other day, I now only check it out once a week or so.  The barrier isn’t that high (all I have to do is boot up my laptop).  But there definitely is a barrier now.  I’ve been meaning to get Microsoft Office on my new desktop, and not meeting my Lending Club investment goals will probably be the straw that broke the camel’s back.

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