22
Sep
14

Tires, You, and your car

Quick review from the last session:  soft compound (performance) tires perform great, but may sacrifice quietness, tire life, and comfort in the process.  Harder compound tires (all season, touring) give up performance so you get quietness, tire life, and comfort.  Don’t cheap out on tires – good ones will give you a blend of everything.

 

Now, let’s line up tires with you and your car.

 

If you have something like a Honda, Toyota, Lexus, mini-van, or SUV, you’re probably not driving NASCAR-style.  Your car is designed to be durable, comfortable, and quiet.  Look at a good all-season or touring tire.

 

If you have a true performance car (Porsche, Ferrari, //M, AMG, Corvette, etc.), it probably doesn’t get driven daily.  You don’t care about wet traction, because your car doesn’t go out in the rain.  You don’t care much about tire life, because your car doesn’t accrue much mileage.  And noise isn’t a big concern because either your car is loud, or you drive with the windows down on that nice day.  In that case, you can sacrifice the niceties to get all-out performance and feel…you’ll be looking for a summer tire, typically called a max performance tire (i.e. Dunlop Direzza or Michelin Pilot Super Sport).

 

If you have a sporty car (Mazda, BMW, Audi, Infiniti, small Cadillacs, etc), the type of tire you buy depends on your driving personality.  If you’re easygoing on your car, then get something more like an all-season or touring.  If you tend to drive aggressively, get a performance all-season tire – it gets you a good blend of everything.  There’s still no need to go all-out performance on a car you drive every day.  90% of your driving won’t utilize the tires’ potential, and you’ll probably be frustrated by noise/tire life.

 

Brands:  I tend to veer towards Michelin, Continental in a pinch.  I’ve tried similarly priced tires (Goodyear, Continental, Bridgestone, Yokohama) and some of the cheap ones (Sumitomo, Kumho, General, Bridgestone, Cooper, etc.).  In the end, I had to deny my inner cheap-Indian and pony up for the better tires because they give me such a great blend of everything (performance, life, and comfort)…enough to justify the extra cost.  That said, do your research on the specific tire model before buying – http://www.tirerack.com is a great resource.

 

The general idea is this – when you buy a car, you usually pick the one that fits your personality the best.  Do the same with your tires – because that’s one of the few things you buy for your car that actually makes it feel different.

 

Now go have fun.

14
Sep
14

Tires: why are there so many?

Tires are your friend, my friend.

Tires are your friend, my friend.  (credit:  carid.com)

Years ago, when my wife asked this question, I pretty much put her to sleep with the answer.  I’ll try to do better this time.  

I’ll tell you a story, you tell me if you can relate.  Your have an non-repairable flat, or worn-out tires.  The tire salesman says you should get “this” tire.  Feeling like he’s trying to sell you, you ask about the cheapest tire and get “that” tire.  Later that year, your car feels older, louder, less comfortable, and you want a new car.  You may have just spent $20k on a $300 problem.  Read on to find out why.

Before we talk about what kind of tire you should buy, let’s talk about why there are so many types of tires.  If asked what a tire is made of, you would say “rubber”…and you’d be right…sort of.  Different tires use different grades of rubber, along with other materials that results in a “tire compound”.    Saying you understand tire compounds makes you sound pretty smart, but it’s actually pretty simple.

Think about it in terms of shoes (yes ladies, I said shoes).  Your dress shoes have soles made of wood (or hard material) with a little bit of rubber.  They last a long time, and are good for everyday standing/walking.

Ever work out in dress shoes?  That’s because they aren’t made for it.  For aggressive use, you need all rubber, lightweight, performance sneakers.  Sure the soles don’t last as long, but they’re made to perform well under aggressive use.

The same is true for car tires – you’re basically putting shoes on your car.  A harder tire compound is like the dress shoe, and a softer tire compound is like the sneaker.  Of course, there are all kinds of tires in between.  So now that we understand tire compounds, let’s talk about why they’re important to you:

Tire life:  sneaker tires usually have no mileage warranty, but dress shoe tires usually do.  Why is that important?  Money.  Let’s say you bought an all-season tire with a 40,000 mile warranty, and it wore out at 20,000 miles.  The tire company (or store) would give you half of the tire’s value towards a replacement.  No warranty, no credit.

Dry performance:  how your tire will perform in great weather. .

Wet performance:  how your tire will perform in less than ideal conditions (rain).

Tire noise:  in general, a performance tire will be louder than an all-season, because performance tires don’t prioritize comfort (see budget section below).  You’ll notice this most at highway speeds.

Comfort:  sneaker tires generally are less comfortable than dress shoe tires, again because of their primary role.  Dress shoe tires are made to make you feel comfortable.  Sneaker tires want you comfortable enough, but are more concerned with helping you perform.

 

Budget:  just like shoes, you usually get what you pay for.  A great shoe looks great, performs great, and is comfortable.  The same is true for your car’s shoes – a great set will give you great performance, be quiet, comfortable, and last a relatively long time.  And once you live with a great set of shoes, you won’t want to go back.  Great tires may be the $300 answer to your seemingly $20k problem.  Try it before deciding that your car is suddenly too old to keep.


So now you can hang with your Discount Tire guy – next session, we’ll cover what kind of tire you should buy.

29
Jul
14

Writing a good car ad

maxima_ad

Most of us are used to buying a car, but at some point in your life, you’ll decide to sell your car.  As a seller, you want a fair, easygoing, honest buyer.  But some of us forget that we reap what we sow…in order to attract a good buyer, we have to be a good seller.  You can get a great start by writing a thoughtful classifieds ad.

 

Start with the basics:  These include year/make/model, trim, Exterior/interior color, automatic or manual, & price.  By the way, while we’re talking about price, don’t use the letters “obo” (or best offer) unless you mean it.

 

Outline options.  Navigation, upgraded stereos, performance packages, convenience features, things that you think a buyer will want.  Don’t mention the Oreos you found under your car seat.  I’ll take those.

 

Never underestimate the power of your pictures.  They’re probably the most important part of your ad.  They help a beginner see the car.  They help an enthusiast determine trim level, options, and condition.  We don’t need pics of your car with a wife/children, unless they come with the car (and a discount).  And we don’t need random, incomplete shots of your car.

No really, I'm glad you cropped the top half of your car so I could notice that sweet pavement job that is your driveway.

No really, I’m glad you left out the top part of the car so we could see that sweet pavement job.

 

Talk about the car’s history.  Length of ownership, accidents, cosmetic or mechanical repairs, receipts…all of this helps paint an accurate picture of the car’s life.  It also keeps you from having to answer the same questions over and over again.

 

Be forthright.  This isn’t online dating…it’s a car ad.  Be up front about imperfections.  Don’t make a potential buyer go through the effort of seeing the car in person, only to discover things that could have been disclosed in the ad.  You may think this will scare away potential buyers.  But it’s quite the opposite – it actually filters out buyers who wouldn’t want your car anyway.

 

Don’t be sales-y – AN ALL CAPS AD DOESN’T MAKE YOUR CAR AWESOME.  It means you either yell a lot, can’t wait for high school graduation, or both.  Saying your Accord is reliable is not sales-y, but saying it’s “one of a kind” probably is (unless you have a Ferrari motor in it).  Be thoughtful about your verbiage/syntax.  If you think your car is awesome, then be specific and tell me why.  If you have restrictions, convey them gracefully.

 

Anyone can own and try to sell a car.  Unless your car is really special, it’s not the big selling point – you are.  Put some thought and effort into being a great seller – and start with your ad.

17
Jul
14

Park. Like a Boss.

01
Jul
14

Buying vs. leasing – a note to the leasers

In the last post, we gave the car buyers something to think about – the nature of cars today, and the inherent risks of owning them long-term.  Before Team Leaser gets too comfortable, let’s give them some things to think about, shall we?

 

1)  Negotiating a lease takes more work.  How do I know?  I shop around for interesting cars that I can either lease or buy.  (If my wife is reading this, I’m just shopping for cars for OTHER people to lease or buy).  You know what I found?  Most people have sucky lease terms (financially).  But leasers aren’t dumb people, so what happens?  I suspect it’s because…

 

2)  Leasing math is more fuzzy.   Purchase math is the elementary teacher that gives the numbers to you up front, plain and simple.  Even I can keep up with it.  A buyer only worries about 3 things:  purchase price, down payment, and interest rate.

If purchase math is an elementary teacher, leasing math is that poker player friend that’s so good, you never know if they’re genuine.    Leases have many more variables, which means a bad lease company has many more tools to take advantage of you.  There’s the cap cost (which most people don’t know they can negotiate).  There’s the money factor (basically interest, but displayed as a weird looking number).  There’s the residual value, which is a guesstimate of what the car will be worth years from now.  There are mileage restrictions, with severe financial penalties for overages – imagine your cell phone usage, but with mileage.  Also, your deposit won’t be returned if the car comes back with more than “normal” wear & tear – and “normal” can be very subjective.

All of these have a bearing on the leaser’s total cost.  They’re also variables that the buyer doesn’t have to worry about – they just buy, drive, pay it off, and then drive for free.

 

3)  Once you sign a lease, you’re locked in for that term.  If your financial situation changes at any point (i.e. job loss), you’ll find that selling a lease is significantly harder than selling a car (especially if your lease terms suck).  So if you’re going to lease, it’s probably a good idea to have at least 6-12 mo. worth of payments in the bank to cover the unexpected.  That’s so you can build financial momentum, which brings me to my next point:

 

4)  Leasing is a long-term rental, and usually doesn’t benefit you financially.  I’m going to spend some time here, because continuing to lease becomes a silent financial assassin for many people.  Many justify a lease by saying they hate the idea of paying depreciation, and because they assume they’ll always have a car payment.  Let’s take a closer look.

From 0-5 years, a leaser and a buyer pay about the same money.  But at 5 years, the buyer has paid off their loan, and owns their car as an asset.   And if they pick a reliable car, they can drive that free car another 5 (or 25) years for free (other than periodic maintenance, which the leaser would have to pay anyway).  The buyer has options.  They can keep their “free” car and put that money towards paying off their house early.  Or, they can sell after year 5, and every dime from that sale goes back into their pocket.

The leaser?  At year 5, they own nothing.  They have to return their lease car, and start payments all over again (whether they buy or lease).  It’s a new vehicle, but the same equity (zero).  No financial momentum.  The idea of not buying to avoid depreciation?  A  lease payment is like an interest-only home loan – all you’re paying for is depreciation (plus some padding for the dealer).   Not only that, you’re paying the most expensive depreciation for the dealer – new car depreciation.

Public Service Announcement:  If you have an interest only mortgage, get some new (financially sound) friends before getting a new car.

The point here is – the main reason buying a car wouldn’t be financially advantageous is because of our buying habits, not because leasing is a better financial move.  Many of us don’t keep cars long enough to enjoy the financial benefits of ownership.  If you can decide to be content with your car, you can get much farther in life (financially).

So if you’re leaning towards a lease, it may not be a bad thing for you.  Just go in with both eyes open.  Know your personality.  Know your financial goals.  Know why you buy a new car, and why you SHOULD buy a new car.  Know your environment and driving habits.  And know your risks.  Because leasing can be a really cool way to experience new, more expensive cars.  But like most things, cool comes at a price.

27
Jun
14

Leasing vs. Buying – a note to the buyers

My parents are buyers.  They like buying new, and they keep their assets until they have no usable life left.  They maintain things well, and make them last.  Their maroon living room couch is 25 years old and counting.  Their cars are like the family dog – they stay until they have to be put down due to age, disease, or an accident.   

I have other friends/family that are leasers.  They love the new puppy stage – something fresh to discover, something new to experience.  They’re ok with not owning, if it gets them a newer car with a fixed monthly cost.  In a number of cases they have a business (tax benefit), and/or may live in areas where leasing makes financial sense.

So is one absolutely better than the other?   The truth is, even for me, the answer is not so absolute anymore – not only because of buyer habits, but because of the cars themselves.  So let’s take this one step at a time:  today, we talk to the buyers about considering a lease.

For buyers, the  monkey wrench is today’s cars.  They’re getting packed with more technology…tech that makes it safer, more entertaining, more fuel efficient, and (supposedly) more fun to drive.  But the same technology makes it harder to drive them until the wheels fall off.  Why?

Technology is really cool when it’s new and under warranty.  It ain’t so cool after the warranty expires, when it’s outdated, and/or the repair costs are higher than your mortgage.  Ask any tech user – it breaks.  Because of this, keeping a tech-laden car for a long time has an inherent risk we didn’t have to worry about years ago.

Cases in point:  My dad’s 1-year-old BMW was immobilized because because the shifter’s electronic sensor forgot what to do.   I’ve replaced motor sensors to the tune of $3k on my M5.  I paid for one of my mechanic’s car lifts…and asked that my name be engraved on it.  My wife drives a Lexus, known for their reliability.  The nav touchscreen stopped working, which wouldn’t be so bad if it wasn’t the only way to control the AC…in Texas.  Lexus’ solution?  Replace the entire ($3,000!) unit.  Why?  Lexus doesn’t sell the faulty part individually (the extended warranty more than paid for itself with this one repair).  The warranty has since expired, and we have since stopped touching that screen.  

Even if your tech doesn’t go bad, outdated tech affects your desire to keep a car.  In 2006, I showed off the AUX port in our Lexus like it was a Super Bowl ring.  This was largely because my BMW didn’t have one (my BMW doesn’t play MP3s either).  These days, Corollas have Bluetooth, 10  USB ports and can play 180 file formats.  You and I now wouldn’t think of RENTING a car without this tech.  Why?  Well, we simply don’t like burning mix CDs anymore.  

Do you want to know why used Mercedes S Classes, Audis, and BMW 7 series are so scary to buy?  Because they were packed with that year’s latest gadgets, and 7 years later, the only thing that works are the windows.  So let’s fast forward to the future when cars will drive themselves.  When Self Driver 2.0 comes out – the one that can see a human being 2 seconds faster than your car, won’t you be more compelled to upgrade?  

I have a buyer mentality – I’m the guy that in a world of smartphones, goes and buys a well maintained StarTac simply because they’re cool, and you don’t see them anymore.  But I have the luxury of not having a work commute.  If I did, and needed something new, I have to say I’d look hard at leasing, and you might too.  But before you do that, wait up for my next post to the leasers.

01
Jun
14

Leasing Lingo 101

Thinking about leasing a car? First off, consider this a long-term rental.  Secondly, you should know there’s more involved than a purchase price, down payment, and interest rate. The dealer has many more variables to hide numbers- so get educated. Below are some key elements you should understand:

 

Closed End Lease: A lease with an agreed-upon residual value. This is the most typical kind of lease, and it means at the end of your lease term, you (the buyer) may:
1) Purchase the vehicle for the residual value
2) Return the car and walk away.

 

Residual Value: when you sign the contract, this is the agreed upon value of the car at the end of your lease. It’s based on the vehicle’s estimated depreciation.

 

Money Factor: this can be a confusing one. Consider this the financing fee on your lease. It can be confusing because it’s usually quoted as a tiny number such as .0016 or “1.6”. To convert it to a conventional interest rate, multiply the former by 2400, the latter by 2.4 (example: .0016 x 2400 = 3.84%) Lease payments are based on the car’s sale price (cap cost) minus the residual value, plus the money factor.

 

Capital Cost: also known as “cap cost”, this is the original price of the leased car. Many people don’t realize this, but the price of a leased vehicle is negotiable, just like if you were buying the car outright.

 

Capital Cost Reduction: this includes anything that lowers the car’s cap cost (purchase price), which thereby reduces your monthly lease payment. This can include money up front (i.e. down payment) or trade-in.

 

Dealer Acquisition Fee: an administrative fee that you should ask to be waived.

 

Shop your lease around:  There are independent lease companies in most cities.  You may find that you get better mileage allowances, better pricing, or even companies that lease slightly used cars (which would drive down your cap cost considerably).

 

Mileage:  Think of mileage like your mobile phone data plan. Getting on a plan with sufficient bandwidth is cheaper than not buying enough and dealing with overages. If you think you’re going to exceed the standard mileage limit – it should be cheaper to buy extra mileage up front and avoid the overage rate.

 

When You Return the Car:  it’s important to understand how this works, especially if your leasing company is different from the dealer that gave you the car.  When you return the car, it could be a month before the lease company actually gets it back – and you don’t want to be dinged for something you didn’t do.  So when you return the car, take pictures, and get written sign off from the dealer recipient stating the condition or any damages with a date stamp.  This way, if there is a dispute, you have proof that you didn’t throw baseballs at it after your lease term was up.

 

In becoming well versed with lease variables, you’re better prepared to get a great deal, just as if you were looking to purchase your new car.

 

reference: Tony Quigora, Car and Driver April 2013,




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