I sold my car in Canada before moving to California, so I’ve been carless for the past two and a half months. I’ve either been getting rides to work from my very pregnant wife, or simply taking her car and leaving her stranded at home — neither of which were good long term solutions. And with a baby on the way, it was imperative to us that we get a second car.
With our astronomical cost of rent, buying used instead of new was the only way to go. I saved a lot of money by going this route, but finding the right car and securing the financing proved to be a massive headache.
Financing
Because I have no established history of credit in the U.S., it was tough to find a lender who would lend to me, let alone give me a decent rate. TD Bank in the States was no help, even though I have a relationship with TD in Canada; they wanted me to have lived in the country for 2 years. RBC Centura seemed amenable to giving me a loan, but I needed an RBC account in Canada, which I couldn’t get unless I showed up in person at a Canadian branch. My everyday bank, Citibank, was unwilling, as was KeyPoint Credit Union, who is affiliated with Google (where I’m working).
As much as I like buying from private sellers (no overhead, so the cars are much cheaper), car dealerships were pretty aggressive when it came to financing — they’re in tough times and a bit desperate for business — but even then, the best rate Sunnyvale Acura could give me for a used car loan was around 10.5%. Not only that, but they restricted the term of the loan to the length of my work visa (3 years).
Toyota of Sunnyvale was actually quite helpful. The financing agent there offered me 0% for 36 months on a new Prius, or 1.9% over 48 months, all based on my Canadian credit history. Too bad that a $23,000 Prius would have cost us about $400/month over 48 months, even with 20% down and 1.9% financing. That was a non-starter for us.
Eventually, Stanford Federal Credit Union came to my rescue. Like KeyPoint, they are also partnered with Google, but unlike KeyPoint, they have a program to help Googlers who’ve just moved to the States and have no credit history. With 30% down, I was able to secure a loan for 6.24% — not great, but miles better than 10.5%.
Having a car loan also helps you to build credit fast, which is exciting. (I find credit-building exciting?? I must be getting old.)
Finding a Car
This was stressful in itself. When you’re buying a used car, you only have so much selection to choose from. My shortlist included the Toyota Prius, the Mazda RX-8, and the BMW 3 series… but after scouring Craigslist for weeks of not finding the right car and developing an increasing sense of despair, that list expanded to Honda Accords, 2-door Acura RSXes (completely impractical for a guy with a baby on the way), and even 14-year old Integras, which was what I’d been driving before.
My search was complicated by the fact that I wanted something with manual transmission (what real men drive), but everything out there is automatic. (I ended up with an auto in the end — guess I’m not a real man.)
My tip is to actually drive the car before you spend a lot of time hounding Craigslist for the particular make and model. I thought I really wanted an RX-8, but after driving a couple of them, I realized that they were underpowered and too small, despite their technically having four doors. They are also prone to mechanical problems, which I was willing to overlook as I sifted through the discussions on Internet forums, but suddenly became unacceptable to me as I actually drove one that made Darth Vader breathing sounds from the vents.
Doing Your Due Diligence
First thing to do is to sign up for Autocheck and get the unlimited reports. (They’re “unlimited” in that you get 50 reports, at which point you have to call and get them to give you another 50. Inconvenient, but technically unlimited, I suppose.) First thing I did with every car that looked interesting was to do an Autocheck on the VIN to make sure it had a clean record.
The last thing I did once I found the car I wanted was to sign up for Carfax. Carfax doesn’t have an unlimited option, so doing it last made sense.
It’s probably also a good idea to get a mechanic to inspect the car, but I cheated a bit and just inspected the engine myself. (This crash course in car inspection helped.) It was a local car, too, that had spent its entire life being bought from and serviced by a single dealership, despite me being its third owner. All that, plus a test drive and a good feeling about the seller, was enough for me.
Getting Insurance
From everything I’ve heard and read, Wawanesa is a great insurance company, and their rates are almost half of what most other insurers charge. They rely on word of mouth instead of spending heavily on advertising. The downside is that they need a week and a half to process your application — meaning that you can’t use them for your first car purchase.
I ended up calling Esurance, told them their first quote sucked, spoke with a retentions CSR/broker who found me a decent quote from Progressive, and signed up for 6 months. My next insurance policy will be with Wawanesa, though.
Getting the Deal Done
The seller met me at Stanford Federal Credit Union and the loan officer there did all of the legwork. No lining up at the DMV, no figuring out what documentation was required or how to fill out DMV forms — easy peasy. The whole process took about an hour.
I am now the proud owner of a 2006 BMW 325i that’s in pristine condition. The last owner really took care of this car — it feels just as good as any reconditioned car on a used car lot.
I really miss shifting through gears, though. (Even if my wife certainly won’t.)
When prices do start to fall, don’t expect a quick rebound like we saw three years ago. The average home price fell by 8.5% between August 2008 and March 2009, according to the Teranet-National Bank House Price Index, in a decline sparked by the financial crisis. By November, the market had already recovered. Part of the reason for the quick rebound was massive government intervention.
