Speaking of the GM bankruptcy, as individual dealerships crash and burn, some of them are taking customers with them. CBS MarketWatch reports that car dealers are failing to pay off loans on traded-in cars and often are not sending in payments for registration and taxes. This is usually not done with criminal intent but happens because the dealer’s creditors freeze its funds as its cash flow stops. Understandable, but it doesn’t change the fact that consumers are left holding the bag.
If you’re buying a car through a dealership, you need to be careful. A few things to consider:
• Don’t buy a car now unless you absolutely must. If the purchase is in any way optional, delay it until the chaos afflicting the industry settles out.
• If you still owe on your present car, sell it privately rather than trading it in. This will allow you to pay off the loan yourself. Also, private sales usually bring a better price than trade-ins.
• Try to get the dealer to let you send payments for the taxes, title, and registration yourself.
• Purchase only the most reliable vehicle brands, such as Honda and Toyota. There’s some question whether state lemon laws will apply after a dealer closes, making purchases of less reliable vehicles even riskier.
• Be aware that when a used car dealer buys new vehicles wholesale, the warranty starts running at the time the dealer buys the car, not at the time you buy it. Thus even though you’re the first owner, you’re still buying a “used” car without the full warranty.
• If you’re buying used, consider spending a little extra to go through a private sale. This will at least assure that you can pay the taxes, registration, and title yourself.
What a pain! My Sienna is ten years old. I’d planned to trade it in this year, but with my job ending in December, obviously I can’t do that. I never pay for cars on time, but sure can’t afford to pay in cash now…or any time in the predictable future. As a practical matter, I may never be able to afford another car, certainly not new. My plan now is to drive the gas-guzzler for at least another five years; ten if it’ll last that long.
After that? Well…in five years, the light rail will come right past my neighborhood. Maybe I won’t need a car after this one gives up the ghost.
Copyright © 2009 Funny about Money
My young cousin just convinced his family to purchase a new car for him recently and I have to wonder if they should follow up on the payment of the taxes, title and registration.
At least he DID buy Japanese so we know it’s relatively reliable. And perhaps one of these days, I’ll be able to talk some financial sense into him.
@ Revanche: M’hijito’s father still pays the insurance on his clunker–it’s probably pretty minimal, because the kid has a 24-karat driving record and the car is worth nothing. But my son said he would not be able to afford the car at all without that help from his dad.
It’s leaking oil badly, and he needs a new car. If I weren’t about to lose my job, I’d buy myself a smaller vehicle and give him the aging Sienna, which (according to the Mechanic Extraordinaire) has another 75,000 miles of life in it. He says vans are unmanly, though, and so I guess he wouldn’t want to drive it. Besides…I can’t afford to buy another car now. Late-model used cars with decent reliability cost upwards of 17 grand, which now is going to have to be used to support me. {sigh}
If my car runs another five years, I might be able to put enough in savings to buy something then. I figure to pay what a second-hand car will cost in five years, (probably around 20 grand), I’ll need to put $333 a month aside, starting right now. Exactly where that’s gunna come from remains to be seen! And then we do have the problem that a newer car costs a LOT more in taxes, registration, and insurance…possibly more than I will be able to afford on the penurious retirement income.