The Expert Podcast

So when a consumer is looking to purchase a new vehicle, obviously you're going to look at things like what condition it's in. You're going to run a Carfax, you're going to do reviews on the dealership, you're going to compare prices. But there are four other very important steps to take before purchasing any new or used vehicle that are often overlooked. So we're gonna, for the sake of this video, ignore things like shopping price, which everybody knows to do. We're going to ignore things like checking the reviews of the dealer, which everybody knows to do, and even things like having the vehicle inspected to verify the condition if it's a used car—everybody already knows all that, so we'll leave those out of this video.

The four things that are often overlooked can mean the difference between a successful purchase of a high-quality vehicle that lasts you for a long time, or a disaster—financially or for use of that vehicle. And the first one is checking the future of that vehicle. By "future," I mean: is this the last model year of the vehicle? Is it being discontinued? Is there a major upgrade or remodel for the next calendar year? If you purchase the last year of a vehicle, you may find that your market value, resale value, goes down the tubes. Because the next-year vehicle—even if the engine, transmission, everything is the same underneath—if it has all fresh new body panels and it looks different, your car is going to look old instantly.

Many cars stay the same for three or four or five years with a few minor upgrades, but they change dramatically at the end of a life cycle upgrade. If you're purchasing the last year of an upgrade, your car's going to be outdated very, very quickly. You also want to look to see if the engine or mechanicals of that car are being phased out. Especially now with electric vehicles (EVs) being introduced, many manufacturers are phasing out certain engines and transmissions. Because for internal combustion gasoline engines, they don't need as many options for gas engines anymore. They may only keep one or two gas engine options for the next decade until 2030. After that, everything might be electric.

So are you buying a vehicle that will not have any support, any parts, any manufacturing backup behind it? Also, is the electric version of your vehicle going to take over the gas version if you're buying a gasoline version? So looking at the future of your vehicle model is important to make sure you're going to have parts support, be able to have the vehicle maintained properly by the dealership or by mechanics who know how to work on them—or is your vehicle being phased out when it's not going to be a current model anymore?

Number two is making sure that you've verified your insurance premium on that vehicle. You might think that, well, if I buy a car, my insurance is going to go up a little bit because it's a new car—but that should be the end of it. Well, not so fast. There are some vehicles which cost excessively more than the average price of insurance. And it may not be just because a vehicle is expensive, or because it's high-performance, or because it's red, or because it has a big engine. Most of the cost of a vehicle insurance policy premium has to do with the repair expense for that vehicle.

Some vehicles—if you get a minor fender bender and the back bumper is damaged—might cost $5,000 to fix the bumper. Insurance companies know this, and they price insurance appropriately for those vehicles. Even if you have a safe driving record, no accidents, no tickets, you might find that a vehicle that seems to be very safe—a simple sedan, good crash safety record—might have high insurance because the parts are hard or expensive to find. So check your insurance before you commit to a model. You might also find that even within a brand or model of a vehicle, certain trim levels are higher or lower for insurance—maybe because of the engine, maybe because the drivetrain is more difficult to replace or has a higher accident rate.

Number three is making sure the dealership has a title for that vehicle on premise. And you might not think it's important to check for a title, but the title is a legal government document—looks like this—that is what transfers that vehicle ownership to you. Most of the time the dealership is going to have the title on premise. However, if a dealership has recently purchased a vehicle from an auction, or from another dealer, or purchased it from a lien holder, they may not yet have the title in their four walls. And you might think, well, that's okay, they can just get it. Well, not so fast.

Have you read the news about Carvana or Vroom or some of the other digital online vehicle sellers that are having a difficult time providing titles for their clients? And it's not because they're scam or corrupt, or they’re selling stolen cars—it's because unless you have this paper document in your hands, you can't transfer the vehicle to another person. And if you are a dealer and you lose that title—even though you're a dealer—you cannot apply for a duplicate, because the title was never in your name. You're just a broker; you're passing the vehicle through your ownership.

So if the dealership doesn't have the title on premise—even though it's in the mail to them, or it's coming from the auction, or the lender is sending it—if anything happens with that shipping, mail gets lost, FedEx gets damaged, dog ate my homework, that title is not going to be able to be transferred to you. And you're going to be driving around on paper temp tags for weeks or months—or even over a year in some cases—and the dealer can't fix that problem easily.

So ask the dealer: "Hey, can I see the title? Let me just take a look at the title to make sure you have it." They won't be able to give it to you, because when they take your money and sell the vehicle to you, they don't hand you the title. What they do is they take the old title, sign it over to you, submit it to the Department of Licensor/Title, and the new title is issued in your name. That’s okay—they don’t have to give it to you. Just make sure they have it on site and that they can show it to you and you can inspect it. Because there are thousands of people around the country—and you can look up news articles—who have purchased a vehicle from a licensed dealer, sometimes a new car dealer, and are having title problems because the dealer didn’t have the title physically in their possession before they sold it. And now the buyer is scrambling around trying to figure out how to drive their car because their tags are expired.

Number four is: if you can look at that title, take a glance at the name of the prior owner listed on the title. You want to look to see where that title came from. Now, you could run a Carfax or some of these online VIN check sites, which really don’t have much value. But if you can see where the vehicle was last titled—and if the owner was an individual, a company, a bank, a rent-a-car company—because the value and the condition of a vehicle is highly determined by who had the vehicle last, if it's a used car.

If it's a used vehicle, the last two years somebody else was taking care of that car. How well were they taking care of it? Was it a corporation that was using it for on-the-road sales? Was it a rent-a-car company that just had different people driving it every day? Was it a leasing company? Was it a private individual? And if it was, did it come from out of state? Let’s say if you live in Texas—what if that car came from New Hampshire? Well, they have salt on the roads in New Hampshire. Even though there might not be any corrosion evidence, if it’s from a place where there’s salt on the road, that car might rust out faster.

Is it from a place that has a lot of sun, where things might get faded? If it's an electric vehicle, high heat can damage the battery faster than if it's in a more temperate climate. So if you can take a peek at that last owner and see who it is, where they're from—or is it from a bank? Was it a repossession? Well, think about it: if a person didn’t take care of their finances, how well did they take care of the vehicle? If they couldn’t afford a car payment of three or four or six hundred dollars a month, did they do the oil changes properly? Did they drive it carefully? Did they change the brakes properly? Did they overload it? That might be something you want to know about.

And last but not least, when it comes to condition—you know, you can do a third-party inspection of the vehicle, have a mechanic check it out, which is advisable (that’s something we said we’re going to ignore). And you can also run a history report to see if there’s any accident evidence. But one thing you can do at the dealership is ask them for their own records of the reconditioning of that vehicle.

Every dealership—even ones that don’t intend to really fix up cars that well—are going to do something to that vehicle prior to selling it, even if it’s cosmetic: making it look better, replacing a molding, buffing out a scratch, changing a tire if it’s running low on tread. Ask them to give you a printed copy of their repair estimate so you can see what the dealership did to that car before it came in.

If they did a lot of work to it, that might seem like a good thing to have done to the car. But that also implies it needed a lot of work. If it’s a low-mileage car—if you’re buying a two-year-old car with fifteen thousand miles—and it needed three thousand dollars worth of work, what does that tell you about the car?

Also, ask them if you could talk to their used car manager and borrow their finish evaluation magnet. Every used car manager, when they inspect or trade in a vehicle, they take a device and they touch it to the paint on the vehicle to see if there’s anything under the paint—between the paint and the metal. The magnet will determine the thickness. It’s a computerized magnet. The thickness of the finish—and the finish should only be a certain thickness of paint and primer. It shouldn’t be a half an inch thick with filler material or plastic or Bondo.

Ask that used car manager if they’d be willing to run that over the car in front of you, in your presence. If they are, and it checks out good, that means something. It tells you something about the integrity of the dealership. If they make an excuse, say, "Well, he’s not here, we can’t do it, we’re not sure"—well, that might be a red flag. Because they can make an excuse to tell you that person’s not there, but what would they do if somebody came in right then and wanted to buy a new car with a trade-in? Would they not be able to take a trade-in? Look, there’s somebody on staff all the time who can evaluate trade-ins—so help them evaluate your car as well that you’re considering buying.

And if it’s a new car, look at the window sticker of the new car. On the window sticker will be the VIN number, all the equipment, the options, the price. But if you look on the lower right-hand corner or left-hand corner, it will tell you the name of the assigned dealer. So when the factory shipped that car to that new car dealership, it had the name of that dealership—XYZ Toyota dealership, Joe Schmo Ford dealership—it will say printed on the window sticker.

If it has the name of a different dealership than where you’re buying it, there’s nothing wrong with that. It means that they swapped with another dealer. Maybe that dealer needed the car they had, and they shipped it to him and they gave him another car back. But it also means there’s probably some miles on that car—whatever the distance from A to B is, there’ll be miles on that car.