Just got one, not that scary, especially if your credit isn't trash. I assumed mine would be because hey, student debt mountain whattup, but it turns out that's not the case. So many people are up to their nethers in that kind of debt it's actually affected the way credit scores are calculated, or something.So I'm thinking about getting a car loan.
My credit's aight. I stupidly missed my first student loan payment after my 6-month grace period ended when I stopped being a full-time student, and my credit tanked. Except I didn't even know it at the time. It's taken like 3 years to improve back to what's normal for someone my age. But I have a consigner, and my mom has insurance through USAA, which is an insurance company (among other things) that provides services to veterans of the US Military. That includes super low rates on car loans. So, that's freaking awesome. I'm finding out later this week if I can qualify for one. But yea, the prospect of "car loan payments" is kind of scary, until you realize that it's only a few hundred dollars a month. Except the danger in thinking of monthly payments rather than total loan amounts is that you let yourself pay a lot of money in interest. That said, I think the utility of getting $12k or so upfront for a super reliable car is kinda worth ~$2k in interest towards the bank.
The $2000 you are giving to the bank for peace of mind is $2000 you could keep in your own bank account for peace of mind. There's a chance a cheaper car will need a "crucial engine component" now and then, but there is no chance you'll avoid that monthly payment. If you shop carefully and have a little luck, I think you'll come out ahead paying cash for the best used car you can find. But I have a soft spot for beaters. I checked Craigslist in your area and found a lot of options under $3000 (including a familiar-looking white Civic hatchback with a stick). Many are German and cool, but if you want to avoid headache I would simply upgrade your Asian ride. You can make money flipping but it's hard if you're not a jerk. You have to be pushy both buying and selling. Transaction costs (taxes and registration) take a bite; I knew a guy who would simply resell within 60 days and never register anything, but that strategy comes with its own risks. I don't think you can do better than USAA and with a cheaper car you save on insurance too. A $100 prepurchase inspection can give you some peace of mind too, but it's not much of a guarantee. Asking if a seller is willing to let you get an inspection can be revealing. If they refuse, you might want to walk anyway. An inspection will always turn something up and provide some leverage to negotiate a discount.
I've never bought a car without having an independent mechanic look it over first, including the new whip. I share your love of beaters wasoxygen. I consider an '05 Malibu Maxx with 100,000 miles practically brand new, those things take a beating. My last one was sitting pretty at 211,000 and still getting 33MPG highway until it was slain. I actually got a new mechanic I can trust faster than I found a new PCP. And I literally work for the healthcare system my PCP is in.
Well put. I'm not generally opposed to a good beater. It's just that the amount of time I've spent worrying if the engine is gonna drop out from under me while I'm driving one has probably taken some sort of toll on me. The thing is, I only have $3-$4k set aside to spend on a car (and that's assuming I sell that familiar-looking white Civic for at least 80% of what I'm asking for it). And that amount puts me square in the territory of another beater. That's what's appealing about me entering the racket of flipping undervalued cars -- a few trades might make me thousands of dollars, so I could ideally end on having a really decent ~$14k car mostly paid off.The $2000 you are giving to the bank for peace of mind is $2000 you could keep in your own bank account for peace of mind.
If it was easy to do why isn't everyone doing it? If you want to make money you really need to be adding value in the process. A car that runs, is clean and has a good record will fetch a decent price every time. There are some pricing errors that occur on Craigslist but they may not be large enough to justify the risk of rushing into a car purchase to beat out the other guy. If you are picking up 200-500 a flip it only takes 1 bad car to eat your entire profit, plus there is a time value of money problem. You can add value by taking a car that is ugly inside, or doesn't run and fixing it. To get there you need to do good research and take calculated risks. Pick a few models you are interested in and then research parts, common defects and associated costs. You will also need a friend with a truck to help you tow and a place to work. You want cars that people are getting rid of and dont care about getting top dollar for but are still appealing to college students or poor people. My buddy used to flip bikes in college. Buy dropped bikes in the winter, replace all the panels, repaint and resell them in spring/simmer during peak season. Cars are probably a bit more competitive but there's is a niche there too.That's what's appealing about me entering the racket of flipping undervalued cars -- a few trades might make me thousands of dollars, so I could ideally end on having a really decent ~$14k car mostly paid off.
I think "everyone" in this scenario are car dealers. They created large barriers to entry for the rest of us, but obviously there's a market for it -- there are approximately 17.5k licensed franchise car dealerships in the US (quora link citing a National Automobile Dealers Association report), and lord knows how many car dealers with just the dealer license. I think the business angle that I would take, if I were to pursue this, is to use my car dealer connection strongly. He shops around for anywhere from a few to 20 clients a week, looking out for cars for them, mostly luxury vehicles. For him to find an undervalued car might not be worth the trouble for him to pick up, store somewhere, and look for and vet potential buyers. It's just not worth it to him. But my $600 is. I don't think I would do any repairs or investing into the car beyond a car stereo or changing a flat tire.If it was easy to do why isn't everyone doing it?
You would learn a lot following the red paperclip program, and if you have time and motivation you could maybe trade your way up to a nice car. But there's no reason you can't begin by flipping undervalued beaters you can purchase with cash, avoiding the expense, paperwork, credit report hit, and commitment of a loan. The prospect of an envelope full of cash has a considerable motivating effect on sellers; imagine how you would react to someone who wants to check out your car but will have to arrange a loan before making an offer. Some other thoughts come to mind: · Write a simple bill of sale, showing the date, vehicle description with VIN, mileage and price. Print two copies, one for each side. I have never needed these later, but they make a good record. · It might be different in your jurisdiction, but here you can figure out how much the seller paid for a car if the title shows the sales tax paid. · Don't buy a car you can't make legal. This probably means avoiding cars with a salvage title. · Don't buy a car you wouldn't be willing to drive yourself in case your interest in flipping fades. · If you plan to resell, shop for the mass market. Alas, this means an automatic transmission and A/C are essential. · There may be a limit to the number of buys and sells you can legally do per year without a dealer's license. I figure if you are well under this limit, you are a hobbyist and do not need to declare profits as income, nor should you deduct losses or expenses. Apparently when you say things like this online you must also say this is not legal advice and I am a random idiot and you must consult a tax lawyer within 24 hours. · Be on the lookout for opportunities. Ask people at gas stations if they are thinking about selling. Be ready to take promising chances that won't ruin you if they don't work out. · Update Pubski on progress.
Thanks w.o. Whatever I wind up doing, Pubski will be in on it.