How to Buy a Car Part 1: Planning

Hi, everybody. New Jersey Forensic Accountant here again. Today I'm going to talk about a topic that is a little bit different than what I talk about. And the reason is I get a lot of calls on this, believe it or not, but it's on how to buy a car. And the reason I want to talk about this is because, you know, we'll get engaged in a forensic accounting assignment and if [inaudible 00:00:51] a company or looking for fraud within a company, a lot of times someone will come to me and say, "Hey, look, I bought this car." And we'll take a look at it and it's a complete disaster. They overpaid for it, the financing is not right, they didn't get the car they wanted. And so I'm going to make a four part video on how to buy a car. And these are just some ideas you may want to consider. And I'm going to split it up into four parts, because each one's kind of long, and I like to keep them around five minutes.

So, from the New Jersey Forensic Accountant, how to buy a car, and this is going to be a four part series. And the four parts are... Buying A Car, Part 1 is going to be about plans are useless but planning is critical. This is a quote from President Eisenhower. I think you should know that he was the lead general in World War II and he knows quite a lot about planning. And what he's basically saying here and what I believe is that it's good to have plans, or you know, to do planning, I'm going to do this if this happens. I'm going to do this if this happens, I'm gonna do that if that happens, okay? But making a plan, when you're going to go in and do certain things at certain times, it just doesn't work out. So, Part 1 is planning is critical. That's basically going to be the theme of Part 1. Part 2 is going to be researching your car. Do you want a used car, a new car? How do you research it, research your financing, that type of stuff. Part 3 is going to be, what about the cost? I mean, you hear all these people getting their cars impounded or they buy a car and they can't afford it, or they buy a car and then they get rid of it because they don't like it, you know? So, obviously, the monthly cost are important to understand what's your plan for this car? And Part 4 is going to be the negotiation, which is the fun part, right? I mean, some people dread that, but it's the fun part if you do it right. And I have a little bit different take on negotiations that most people. You know, I think a negotiation should be respectful, I think it should be fun, and I think you should be trying to look to build a friendship there. So, we're going to talk. I'm gonna have four parts, we're going to go through them all.

So, what is the first step? This is Part 1. So, we're going to talk about the first step to buying a car. Time to plan, right? If you saw the introduction before, planning is critical. And remember, you're in an asymmetric situation. And what does that mean? Asymmetric, what does it mean? Okay, it just means that they know a lot more, when you go buy a car, they know a lot more about that car than you do, because that's what they... You know, especially if you're dealing with a dealership, or someone selling you a used car, they lived in that car for five years. The dealership sells, you know, 30, 40 cars a week, right? They know a lot more than you do. And when you're in a asymmetric situation, what happens? The party suffering an information disadvantage often has no better option than to assume the worst. Now, how does that help you if you have to assume that the car's transmission is bad or that you're overpaying for the car because you're not confident? I mean, you look silly, right? And that's why you need to do planning to understand when you walk in there, you're always going to be in a asymmetric situation but at least if you have, you know, an idea of what you want to do through this planning, it's going to help you a lot. You know, I mean, this is about car-buying but this this applies to almost everything you do.

So, the first thing is the rule of thumb. For every hour you spend in a dealership or negotiation with someone to buy a car, you should spend at least three hours researching the car you want to buy and you're financing alternatives. Now why is that? Why is that? Because if you just go in, you're trying to learn and like I said, you're in an asymmetric situation, they're not there to help you. They're there to sell a car, right? Okay. And there's a reason they want to sell the car. Either they want to, you know, make money or it's a piece of junk or, you know... But if you have an idea of what you're looking for then, you know, it doesn't matter, but you need to do the research. Okay, don't go in... I love to see these young kids go into these dealerships, and they come out and they pay twice what they should for the car, the financing is horrible, they got all kinds of extras. You know, this is ridiculous. Do your research, do your homework, okay? So, for every hour, you need to do three hours of research.

And this is something everybody should have. Okay, you should have a dummy email, okay? Because when people ask for your email, you don't want to give them your good email. You should have a couple, maybe one or two junk emails, but call it something, you know, sophisticated. You know, don't make it look like a junk email. But this is an email you're going to give out to people who you necessarily don't want to correspond with constantly because when you go look at a car and you can do that research, that three hours of research, a lot of that is going to be done on the internet, and they're constantly asking for your emails. And you're going to get hundreds and hundreds of emails because for this video, you know, I was actually doing some things and I had to give... I've got hundreds of emails. I got like 60 or over 100 phone calls. So I have a dummy phone...I have a dummy phone number too. You know, if you do have like one of these voiceover IPs, you can do a dummy phone number pretty easily. And it's a phone number you don't check very often. And same thing with your dummy email. So, these are the first steps to buying a car. And next we're going to talk about determining the type of vehicle you want and doing some research.