Team-BHP - Guide: First-time car ownership in the USA

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Originally Posted by AstaAddict (Post 3813471)

There is a TAX which one has to pay for while buying a car from a Dealership. This is the SALES TAX which varies from state to state. Some states charge it at 4% while others charge it at 8.75%. If you are buying a $20000 worth car, the tax would be $1750 (@ 8.75%). This tax amount can be saved if the dealer wishes to sell his car to you as a Private Party. Now all dealers would not do this. It all depends on how the negotiation went between you and the dealer. My car dealer helped me with this when I went to him for my second purchase. My first purchase was a $15000 CPO and I paid the Sales Tax. My next purchase from him was a $43000 CPO one and my only condition of purchasing from him was if he was willing to sell it to me as a private party. He agreed and I saved around $3200. So there are ways of saving your hard earned dollars. One just needs to know the legal ways to do so.

This not true in totality. Sales tax is paid at time of registration of the vehicle to DMV and is not something that dealers charge. While you may save a bit by lowering the purchase price by a few thousands on the purchase but much lowering does not work since most states charge tax on NADA value or Sales bill whichever is higher. I had asked the dealer to cut me a lower bill for used car but had to pay tax to DMV at a higher rate than the bill due to higher NADA value.

Superb article, so well detailed.

One thought. Can't one drive a vehicle that is bought by say a friend or a relative while one get ones credit rating up in the initial 6 months?

If one is driving a vehicle bought by a relative or a friend what are the negative impacts possible on that friend or relative due to what one does. Like have an accident etc.

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Originally Posted by ACM (Post 3815507)

One thought. Can't one drive a vehicle that is bought by say a friend or a relative..

Never advised - in the best interests of the owner and your relationship with them, due to one word - Insurance.

Insurance coverage is valid only when the people registered in that policy are driving. Else, someone pays from their pocket for all damages and third party claims in the event of an accident.

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I dont know if it is true for all states, but even on my second hand cars I bought outside Kansas and Missouri I had to pay sales tax over the purchase vale whenI registered them with the local DMV

In NJ you can declare it as gift and reduce the actual purchase price. Inform the seller about the same and you can save on the tax.

I just registered by Motorcycle as GIFT and saved all the tax. The DMV will call the seller to validate and usually sellers are kind enough to say they gifted.

THere are instances where if you dont inform the seller, DMV will send you a notice to pay the tax.

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Else, someone pays from their pocket for all damages and third party claims in the event of an accident.

Insurance world in US is absolutely crooked. They have insurance for covering you if someone hits you and they dont have insurance. They always find new ways to get premium from you.

Insurance is worse than the drug cartels per me.

@TheMag, this is a fantastic thread and aptly timed one for me - I will be moving to San Francisco in a month with family.
I was going through the NA Car Ownership thread which is HUGE and has many opposing views.
This is a very good extract of all the knowledge from that thread. Great tips, and crisp, well laid out points - 5 Stars!

This has also generated focused posts on experiences of others when buying a car in USA from others which is also very useful.

For any generic inquiries on which CPO program etc, i'll post on the NA Ownership group which I think would be more apt.

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Originally Posted by VW2010 (Post 3816558)

Not Quite sure what gave you that impression? Your particular example is not particularly "crooked". If you take out fully comprehensive insurance that would be covered, but if you have third party only and the other guy doesn't have insurance, there is little you can do, but take him to court. Or buy insurance. You dont have to, it is your own choice.
Jeroen

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Originally Posted by theMAG (Post 3808440)

In fact, given an option between a CPO/used car, you would do well going with the CPO, regardless of its slightly higher price. The maintenance and manufacturer commitment more than compensate for that price.

I do see a lot of rental cars, which are being sold as Certified Pre-Owned cars by various dealer. Is it a good idea to pick one of those or its better we avoid those.

I have a feeling, rental cars will at-least have all the required maintenance done on time. But, yes multiple drivers with different style of driving can be a matter of concern.

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Originally Posted by Schoudhury (Post 3825930)

IMHO CPOs are a scam. The car does not deserve a premium for a stinkin certificate. You need to take the car to a mechanic you know to find out the number of miles left on the tread, life on the brake pads/discs. That would give you a better idea of the exact costs (including labor) involved in the first couple years. A 100 point inspection that brakes/tires are functional does no good. The stealer/dealer simply pockets the few thousand $s for the CPO tag.

With rentals you can be sure the renters have not followed break in rules. I have personally tried to red line every time I got a rental with less than 100 miles. clap: The best shot is to find babied cars with single owner. Next, is to find lease returns. Dealers have 3 yr 36k mile lease returns. This way most cars with such mileage are still under manufacturer's warranty.

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Originally Posted by prasadee (Post 3825945)

IMHO CPOs are a scam. .....................
......................................The best shot is to find babied cars with single owner. Next, is to find lease returns. Dealers have 3 yr 36k mile lease returns. This way most cars with such mileage are still under manufacturer's warranty.

Most lease returns actually go to the CPO section. Lease returns with issues - which makes the car non-certifiable as a CPO - only are available for normal sale.

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Originally Posted by Jomz (Post 3826540)

Most lease returns actually go to the CPO section. Lease returns with issues - which makes the car non-certifiable as a CPO - only are available for normal sale.

Just 1/3rd of used car buyers go with CPO. Why would a dealer rule out 2/3rd of buyers by going CPO on all their cars.
There is manufacturer certified and there is dealer certified. What to offer is decided by the dealer. Both offer no guarantee that things don't go wrong. Dealers have no time to find out or document issues. They push/try to sell CPO because it benefits them. Dealers in Southern California do not do anything on the lease returns but wash and stick it in the parking lot. You have the option of paying couple thousand $s more for CPO, or buy the same car without the certification. If you go the CPO route, they then do a namesake inspection and generate a report. I have had this option laid out to me for an Acura dealer, and a BMW dealer.
Yes, there are some cars on the lot where they may have already done the inspection for someone. You can always ask for 2K discount to buy the same car without the CPO. You basically forego the warranty and things like 24hour assistance. You can get this from your insurance anyways.
Such a safety cover is absolutely needed in this country with a used car, just be sensible not to pay for the same thing twice.

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Originally Posted by prasadee (Post 3826641)

Yes, there are some cars on the lot where they may have already done the inspection for someone. You can always ask for 2K discount to buy the same car without the CPO. You basically forego the warranty and things like 24hour assistance. You can get this from your insurance anyways.
Such a safety cover is absolutely needed in this country with a used car, just be sensible not to pay for the same thing twice.

Well no, the dealer pays the manufacturer to get it manufacturer certified. (~750-1500 on $30k cars) Once it is certified, It stays with the car. You cannot buy without the certification.

Lease + Certified preowned is a well known strategy used in the automotive sales for years. The lease new cars, make sure that they get cars back with minimal damage and low miles, put on a manufacturer certification - make money on the manufacturer certification.

I would be surprised if you can find a lease return without certification at a dealer. the only other way to get a lease returned car is directly from the leesee.

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Originally Posted by Jomz (Post 3826689)

Well no, the dealer pays the manufacturer to get it manufacturer certified. (~750-1500 on $30k cars) Once it is certified, It stays with the car. You cannot buy without the certification.Lease + Certified preowned is a well known strategy used in the automotive sales for years. The lease new cars, make sure that they get cars back with minimal damage and low miles, put on a manufacturer certification - make money on the manufacturer certification.I would be surprised if you can find a lease return without certification at a dealer. the only other way to get a lease returned car is directly from the leesee.

Each manufacturer has his own certification guideline. But, the certification is done by the manufacturer trained mechanics at the dealer according to the manufacturer's checklist/plan. Dealers may pay for manufacturer for the training, or may pay for the plan. It is dependent on the manufacturer. Not all manufacturers require dealer to pay them for CPO tag.
I am very aware of the Lease + CPO model, I have a friend who owned a BMW dealership in San Diego. Yes - you can buy a Lease return without the CPO tag and without the $2K price. Even at a dealer who believes in CPO, they have lease returns coming in every month, and they can set aside cars and not do the checklist if you want one without CPO tag. Like I said 2/3 of used car buyers do not buy CPO. The checklist is not worth $2K.