Car Buying Seminar

1. Car Buying Seminar Tom Lindstrom linds017@umn.edu China Outreach Ministries www.comumn.org

2. Outline • Understanding our assumptions • Understanding Cars • Dealing with People • Dealing with Details • Inspecting the Car • Recommendations

3. Understanding Our Assumptions T/F Test What REALLY Matters?

4. TRUE / FALSE TEST • 1. Japanese Cars are the cheapest to drive • 2. The more I spend purchasing a car, the more dependable it will be • 3. Finding a reputable dealer is the most important step • 4. Getting a car is going to relieve a lot of anxiety about living in the US • 5. Cars with “Prior Salvage” stamped on the title should always be avoided • 6. New tires on a car shows it has been cared for

5. Appearance Reliability Cost of Maintenance Gas Mileage Ability to impress my friends Cheapest price Safety Make of car (ie Toyota) Everything MUST work all the time Easy to park, learn to drive, etc. Lower anxiety about vandalism, theft, etc. Rank the following in order of importance:

6. Dependable transportation that doesn’t interfere with your studies Lower anxiety regarding safety & damage to your car while you learn to drive What REALLY matters?

7. Understanding Cars • When cheaper means more expensive and saving money means spending money! • Sweeping Generalizations • Understanding Wear Cycles • Choosing a car based on thorough research • Tools for determining the value of a specific car

8. Different Cars for Different People • For most people, cars are pragmatic…just transportation

9. But today, cars are increasingly about image, fulfillment, even personal identity!

10. This discussion will focus on practical cars • My recommendations will be for cars that are more simple in design • If you prefer a fancier car, the research methods shown in this presentation will also help you find such a car!

11. Japanese cars RUST but are typically more dependable. Repairs sometimes expensive. European cars are well designed but expensive to repair, more complicated. Complicated electrical systems are their death knoll. Motors and bodies last forever. American cars rust, are not as well designed, but parts and repairs are readily available. These cars are usually more practical in design, and there are several that stand out as very reliable. Sweeping Generalizations

12. Which car represents the greater value? • 2002 car with 100k or a 1998 car with 50k? • Import car in OK/poor shape or a Domestic car in EXCELLENT condition? (Normal annual mileage is 12 - 15k per year)

13. The Truth about “Economy Cars” Rank the following Cars: Which one costs $141 to replace the water pump? Which one costs $624 to replace the water pump? $33,000 MSRP $18,000 MSRP $545 $624! $46,000 MSRP $10,000 MSRP $141! $322

14. Who would think that this car would have the most expensive repair? And who would think that you could replace a water pump on a $46,000 Cadillac for under $150? Of the cars on the previous page, the Acura would have the highest rating for dependability…but @ $545 to replace the water pump…you might want to think again about purchasing one!

15. So what is real economy about? • Reliability is NOT the same thing as economy! • Economy is about the bottom line…how much does it cost to drive a car • What does economical transportation look like?

16. Laugh if you want to, but THIS was the cheapest car I have owned! 1983 Ford Econoline 150 10 mpg, but… Very cheap and easy to repair- This was the best economy car I had for 15 years!

17. Tires Battery Exhaust Struts/Shocks ATF/Antifreeze change Timing Belt Alternator Water Pump Air Conditioning Automatic Transmission Understanding Wear Cycles Repairs 60 - 90k: Repairs beyond 100k: Sometimes a car with 100k on it is cheaper to drive than a comparable vehicle with 60k on it

18. The Bottom Line on Economy • Gas Mileage is only part of the cost of operating a car • A car considered reliable isn’t necessarily the cheapest to drive • Lower miles on a car do not necessarily mean less repairs • Knowing your assumptions can lessen your disappointments

19. You probably don’t NEED a car after all! There are other forms of transportation!

20. My Suggestions • Consider a $500 - $1500 car for the purposes of learning to drive • Determine what causes you the most anxiety about car ownership and try to reduce your exposure to those risks • Buy a car from a “Maintenance NUT”

21. Why consider this car? • $1400 for a ’91 Accord with 215,000k ! The owner of this car kept meticulous records of repairs and it drove absolutely like new!

22. Or this car? • ’85 Olds $500 This car has an excellent engine, its safe, and it won’t matter if you smash it up a little learning to drive!

23. Why start with a cheaper car? • Most new drivers are very nervous • Nervous drivers make mistakes • Mistakes cost $$$, raised insurance premiums for years to come • A cheaper car means you will be less nervous

24. So where do we start? • How do I decide what make and model of car to buy? • How do I know how much I need to spend? • What is the most “bang for the buck” in terms of the usability of any given car?

25. If you had time, you might start your research at the junkyard!

26. What can you learn from a junkyard? Some cars give their owners the “Blues” Some cars end up junked sooner than you would expect Certain models have consistently defective major components

27. The day I was here (at the junkyard) I saw 3 or 4 Mazda 626s in this condition…why are they there when they appear to be in great condition and only five to seven years old? For Example… BADtransmissions!

28. Issues that send cars to a Premature Death Expensive, “surprise” repair bills Repairs for which no parts are available,often due to defective parts! When buying a car, how can I minimize my exposure to the risks of repair bills I cannot afford?

29. Finding the Right Car- Doing your Research! Researching the history and reliability of specific models In the case of the Mazda 626, I found a website for complaining owners whose transmissions failed

30. Obviously, our research has to include sources that will help us find (and avoid) those lemon cars! • Periodical Literature • Web sites; Governmental, Complaint sites, Consumer Websites, etc • The advice of mechanics, friends, relatives

31. Periodicals • Consumer Reports is a good place to start

32. Examples of things inConsumer’s Reports • Which cars are the most dependable? • What new laws or recalls will affect me? • Complaints and Recommendations

33. This chart is from the Consumer Reports Annual Auto Issue, published each spring

34. Millions of readers contribute to the data collected by Consumer Reports, making their resources some of the best available for comparing cars.

35. This chart is also A part of the Consumer’s Reports Annual Auto issue.

36. This chart is a list of recommendations for used cars that statistically have had a consistently excellent reputation over the years…

39. But Keep it ALL in Perspective Glenn, Karen Beach and I all own vans on this list!!!

40. And, Consumer Reports doesn’t include… • Costs of maintaining a vehicle • Costs of typical repairs

41. Hence…The CAR Book • Compilation of Govern- ment data previously unavailable to the public • Focuses on Safety • Predicts maintenance costs and charts total costs of ownership including depreciation, etc.

42. Examples of helps The CAR book can give: • Summaries of replacement costs for major and minor components on popular vehicles • Estimates the costs for preventative maintenance as prescribed by the manufacturers of the new cars • Complaint charts • Crash test results • Depreciation (Use this in your favor…you can get a 3 year old car for 60% of its new price!)

45. WEB searches • To locate Automobile related websites, try words such as “reliable used cars” or “automobile complaints” or “defective transmission” or “defective engine” or “automobile complaints” or “automobile recalls”, etc

46. What you will find on the Web • Lots of complaint web-sites, some profane and not legitimate • Some helpful things • Some commercial sites, designed to make money off all information they provide

47. Some Helpful Web-sites • www.samarins.com • www.carsurvey.org/ • www.recalls.gov • www.dmv.org • www.nhtsa.gov • www.consumerreports.org

48. Where to go for advice • Your Host family • Trusted people like your advisor, neighbors, COM staff, etc • Ask around for referrals to a good mechanic – if you pick your mechanic FIRST, and have him recommend a car, you will always have someone to repair it! (I will include referrals at the end of this presentation)

49. Are there exceptions – is it ever wise to buy a car your research says to avoid? • Yes when you can buy a car from a trusted friend • Yes when you are shown records for maintenance and repairs that outweigh or cancel out the other concerns (Ford Focus) • Yes when you can accept the faults of a vehicle, knowing its benefits outweigh the negatives (Astro Van)

50. Dealing With People • Finding a Reputable Dealer • Finding a “private party” • Understanding Classified Ads • Understanding “Minnesota Nice” • Negotiating a Sale