Those Dealership Calculators Lie

…and what you should do instead.

If you’ve spent any time online looking for cars, chances are you’ve seen those online payment calculators; plug in your loan amount,interest rate,down payment, trade-in, and *ping* you get your estimated monthly payment. Pretty cool, huh? Finally, a payment you can live with.


Um, they forgot something. Taxes, title, and registration fees. In most cases, unless you are coming in with a sizeable down payment, you need to calcuate your estimated payment down to the penny (well, as close as an estimated payment can get).

Here is are the same perimeters, this time with taxes, title, and registration fees:


Next, plug in your down payment, if any:


Next, select your loan term and interest rate:


Sure, it adds up to a paltry $17.00 a month difference, but if you’re on a tight budget, $17.00 can mean the difference between some extra veggies/fruits in your shopping cart or skipping them altogether and grabbing some cereal or mac and cheese instead. For many of us, it could mean the difference between being in the hole each month or still being able to pay toward your kid’s lunches.

I learned this the hard way. I’ve been car-shopping. My city is cutting transit service to the bare bones soon and I need to be able to get around. I was fortunate enough to get approved for a car loan at a decent rate, thanks to a pay raise.

I found I car I really liked, crunched some numbers using the dealer’s online calculator, test drove the car, fell in love, called my insurance agent to get a quote, and started picturing what life with a car was going to be like…finally.

Fortunately, I had enough presence of mind to tell the salesman I will be going home to sleep on it. I needed to get my wits about me, get the new-to-me car smell out of my nostrils, and do some deep thinking. And number-crunching.

I had been stalking, er, I mean, reading for awhile now (no affiliation) and headed over to their payment calculator. I plugged in the sales price of the car. Following their screens, I also plugged in taxes and DMV fees (those vary by state).

Big surprise. The difference in payment was enough to rule out getting that particular car. Since it was a no-haggle pricing policy, I was hosed in terms of negotiating a deal.

Lesson learned.

Why I didn’t do that in the very beginning escapes me, but it shouldn’t escape you. Always take into consideration the sales price, your down payment, if any, your trade-in, if any, along with your actual interest rate, selected loan term, and those pesky taxes and DMV fees.

You will save yourself a rude awakening and will be able to budget more accurately and see if the payment will fit into your overall household budget every month. You may even have some additional leverage in negotiating your out-the-door price with the dealer.

Either way, do as I say, not as I do ūüėČ

The Ratio That Can Make or Break Your Car Loan

debt-to-income ratio

A few months ago I applied for a car loan and got promptly roasted by the credit union’s loan underwriter. My credit score is strong, so I wasn’t sure what happened.

“Your debt-to-income ratio is outside of our guidelines,” she told me.

Oh, snap. I think it was her way of politely saying that I earned jack shit, because my only debt is a student loan under income-based repayment and my rent. That’s it.

Just how is the debt-to-income (DTI) ratio calculated anyway?

In simple terms, your debt-to-income ratio(DTI) is the percentage of your income that goes to repay debts such as credit cards, student loans, existing car loan payments, and your rent or mortgage payment. Lending institutions such as banks, credit unions, and finance companies watch this figure closely and it plays a big part in whether or not your application gets approved.

Crunch those numbers

Let’s suppose you rent a room and your rent payment is $600.00 a month. You have a minimum credit card payment of $30.00, along with a student loan payment of $50.00 per month under an income-based repayment plan.

Total debt: $680.00 per month.

Your income before taxes: $1900.00 per month.

$680.00/$1900.00= 36% of your income goes to repayment of existing debt. In most cases, that would put your application in either the “no” queue or the “secondary financing” queue for higher-risk borrowers.

Well, sometimes

Depending on the loan approval guidelines for a given lender, you may still get your loan approved if you have a high credit score, a co-signer, or you’ve been at your current job for a few years. Lenders refer to these factors as “compensating factors” that can offset a less-than-ideal DTI ratio in some cases.

Generally speaking, the lower your DTI ratio and the stronger your credit score, the better chance you have for getting your loan approved by a first-rate lender (trust me. You’ll want a first-rate lender for many reasons).

If your overall debt load is 36% or higher, the lender will view you as a higher risk of default and you may get stuck with a higher interest rate, a larger downpayment requirement, or end up getting financed through some backwoods finance company that will make your life hell.

Fun with numbers

If you want to find out where you’ll really land on the DTI spectrum, factor in your proposed car payment along with your existing installment debt. After all, the lender will do the same thing when determining whether or not you qualify for that low interest rate.

When calculating your DTI ratio, only include installment debt such as student loans, existing car payments, credit card payments. Don’t include utilities or your cell phone bill.

By knowing your DTI ratio in advance, you’ll have a better idea as to how much you can afford to pay without giving a lender (or yourself) a heart attack, and your chances of qualifying for a decent interest rate and quite possibly the car of your dreams.

If your DTI too high, in the 40 percent range for example, it’s best to put off the car purchase until you can lighten your debt load. If you’re screwed and really need a car, prepare yourself for a higher interest rate and/or a limited selection of vehicles, and for dealing with a less-than stellar finance company.

Although your credit score plays a significant role in determining your eligibility for a car loan, your DTI can either help you or hurt you when it comes to getting a good interest rate with a reputable lender and the best shot at getting the vehicle you really want.

Co-signer Or No-signer?


Getting turned down for a car loan sucks. In some cases, credit or income issues may be all that stand between you and a new or new-to-you car. A co-signer with a strong credit history and good income may be the answer…or not.

If you’re a first-time buyer with little or no credit or just starting out on the job, chances are it’s tough to qualify for a car loan without a little help. In some cases, the lender or finance company will recommend taking on a co-signer for your car loan.

Your co-signer will sign the paperwork with you, and in turn, they are legally obligated to make the loan payments if you are unable to for any reason. Your BFF may have a great income and excellent credit, but would they be a good co-signer? Probably not.

Taking on a co-signer is a business transaction, so it’s best to leave friends out of it, even if they offer. Same goes for significant others. They mean well, but chances are there will be bad blood if they had to step in and take over your payments if you were unable to.

My neighbor had a rude awakening when his now-ex-girlfriend stopped making payments on the car they co-signed for. My neighbor found out the loan was 45 days in arrears, and the credit union came looking for him to make the payments and to bring the loan current.

Like I said, leave friends and SO’s out of it for everyone’s sake.

Enter mom/dad, grandparents or other relatives. Sure, they face the same risks as do other co-signers, but in most cases, they have the maturity and life experience to view it as a business transaction and treat it as such.

It helps to be on good terms with them in the first place. In that case, parents or other relatives can co-sign for you, and you can refinance the loan into your name only after you’ve made successful payments after a year or two.



If you and your family are on shaky ground for any reason, don’t do it. It will only strain the relationship even further. Money and family either mix or they don’t. Period.

Don’t do it if your co-signer isn’t fully clear-headed or in good health. Attorneys use the term “being of sound mind and body” for a reason. Grandparents may mean well and want to help, but if their health or mental faculties are fading, they may not fully understand their legal obligation to you and the loan should you lose your ability to pay.

They may also end up experiencing a health-related financial crisis in the near future that will hamper their ability to meet their own obligations, let alone a transaction they co-signed for.

Don’t do it if there are any kinds of strings attached, aside from meeting your obligation to repay the loan. Family dynamics are tricky, so as badly as you may need a car, it may not be worth bringing on a co-signer in the long run if your family relationships are unusually complicated.

Getting turned down for a car loan sucks, especially if you are in dire need of a car. Taking on a co-signer is a major business transaction that requires a clear head and some insight

Next up: How your debt-to-income ratio affects your car-buying chances.

Psst! Wanna Buy A Used Hybrid?

You can score a sweet used hybrid…just watch out for this one trouble spot.

Hybrids were once the exclusive domain of smug greenies and hypermilers. Trust me, I was throwing my fair share of shade at hybrids until I shut up and actually drove one.

These cars are no longer the Birkenstock sandals of the automotive world. Hybrids now carry broader appeal beyond the trippy-looking Toyota Prius.

The venerable Prius is a longtime hybrid favorite

2012 Toyota Prius

A used hybrid might be a good bet if you’re facing a long commute to work or school, or if you’d rather not contribute to the soaring levels of pollution. Either way, a bum battery pack could leave you stranded if you don’t know what to watch for in shopping for a used hybrid.

Garage Queen no more. Remember all that advice you’ve heard about low mileage cars? About how what a treasure they are due to low wear and tear? Yeah, fuggedaboutit. A low-mileage hybrid has a lower quality battery life due to its limited use. Look for hybrid that’s had an active life, such as a daily commuter.

But not too active: As with standard-fuel vehicles, high mileage and expired warranties can put you on the spot for some hefty repair bills. Hybrids in California and California-compliant states carry a 10-year/150,000 battery pack warranty. Non-California hybrids carry an eight-year/100,000 mile warranty.

If you buy a hybrid with a battery¬† that is out of warranty, you run the risk of shouldering the cost of a new battery pack. Replacement costs are based on the make and model of the car, as well as its size. It’s cheaper to replace a battery pack on a Prius than a hybrid Ford Escape, for example.

Parts/labor for a new battery pack can range from $2700 all the way up to $10,000 depending on the model year of the car. Stick with hybrids with in-warranty batteries whenever possible.

Heat will toast more than the car’s interior. Depending on the manufacturer, hybrids have different systems for cooling the battery pack. The Toyota Prius, for example, cools its battery pack by pulling cool air out of the car’s interior. In doing so, it also draws in dust, cigarette smoke, lint, and pet hair, which clogs and degrades the cooling system if left unchecked.

A quick review of service records can help you determine how well the car was maintained. As with gasoline power trains, be leery of any hybrid that has a spotty maintenance history or has been neglected. There will be a good chance the battery pack is in sad shape with infrequent cleaning.

Other reasons to say “nope.” Infrequent use and declining MPG are reasons enough to pass on a used hybrid. Infrequent use can lead to battery pack failure over time, and declining fuel efficiency is a surefire symptom of declining battery life.

Reasons to say “yes.”¬†Hybrids are equipped with a regenerative braking system. Each time you apply the brakes, the battery is replenished with additional “juice.” Even better, these brakes can go for up to 200,000 miles before replacement.

Lower fuel prices mean more drivers are returning to the standby gasoline power train. The end result? Lower prices and lots of used hybrids to choose from, so choose wisely. With their improved handling, performance and appearance, hybrids are gaining appeal as a viable used car option.

Are You Really Ready To Buy A Car?

How to tell if you're really ready to buy a car

 You may want to buy a car, but are you truly ready to make the leap?

If the thought of financing a car makes your heart race and your palms sweat, you have good reason to feel that way: buying a car is one of the most significant purchases you’ll ever make.

Whether you’re new to the whole car ownership/adulting thing or if you’ve been around awhile, it helps to know the key benchmarks that help determine if you’re truly ready for the leap into car ownership.

Calculate your debt to income (DTI) ratio: Lenders rely on this figure when determining the level of risk involved in extending a loan. You can calculate your DTI ratio here. The lower your DTI ratio, the better your loan terms and interest rate will be.

Here is a breakdown of the DTI ratio ranges that most lending institutions and dealers rely on in deciding whether or not to grant a loan or extend any other offer of credit:

  • 36% DTI ratio is ideal. You stand a better chance of getting the best loan amount, term, and interest rate for you.
  • 37-42% DTI: Borderline high. You may end up with a higher interest rate or a¬† lower loan amount.
  • 43-49% DTI: High risk of default. Very few lenders would grant a loan to someone in this range. Expect to be saddled with a double-digit interest rate, and/or a high downpayment requirement if you’re granted a loan at all. Not worth it.
  • >50% DTI: This is the “nope” zone for any lender.

Credit counts, too

Check your credit report: Another factor in determining overall creditworthiness is your credit profile and your credit scores. The three credit bureaus (TransUnion, Equifax, and Experian) will offer a free credit report to consumers through their websites.

In some cases, you’ll run into membership fees for extras such as credit monitoring, but unless you’ve been a victim of identity theft, come for the free credit report and stay for the FICO score (available at cost). Your credit score is one of the determining factors for a car loan.

Review your credit report and confirm that all of the information is correct, including the monthly payments on any active debt such as student loans. If you have any recent past due payments, collections, or public records, your chances of getting a decent car loan are slim.

If you notice any errors on your credit report, follow the procedure offered by the credit  agency website. Expect to wait anywhere from 30-90 days for resolution depending on the nature of the error.

Insurance matters

If your DTI ratio is good and if your credit is even better, get insurance quotes on the cars you’re interested in buying.You’ll avoid sticker shock and can factor the payments into your budget.

For example, I was floored to find it would cost me more to insure an 8 year-old Toyota Camry than it would to insure a 4 year-old Hyundai Elantra, mostly due to risk of theft in my community.

Insurance laws vary by state, so make sure you’re covered before taking your car off the lot. Investopedia has a great explanation of car insurance policies if this is an entirely new area for you.

Buying a car is a significant step whether you’re a first-time car buyer or an established car owner re-entering the market. By understanding the key components of buying a car, you’ll know whether or not you’re truly ready to take the leap into car financing and ownership.



Don’t Let Student Loans Torpedo Your Chances Of Car Ownership

Student loan debt

Your student loans could be why you’ve been turned down for a car loan…but not for the reasons you’d expect.

If you’ve attended college at any point during the past 20 years, chances are you’ve got some student loan debt. According to the popular website Student Loan Hero, 43 million college graduates are carrying some form of student loan debt. The average college grad is about $37,000 in debt by the time they leave school.

When it comes to car loans, however, it may not be the student loan balance that stands between you and a car loan. It could very well be the student loan payment itself. An inaccurately reported student loan payment could¬† wrongfully land your car loan application in the digital “no” pile (while this applies to all forms of debt, I’m just sticking with auto loans for now).

Right loan, wrong payment

Suppose you’re enrolled in an Income Driven Repayment plan. These programs were instituted so student loan borrowers could make their payments and avoid living in a box at the same time.

In this case, not all federal student loan servicing companies report the IDR amount to the credit reporting agencies. What shows up instead on your credit report instead could be the standard payment amount which is typically much higher.

In other words, instead of your credit report reflecting your $20.00 per month loan payment under an IDR plan, it may show a much higher monthly payment amount calculated under the Standard Repayment plan.

What this means for you as a prospective car owner is this: any time you apply for a car loan, the lender (bank, credit union, automotive finance company) calculates your debt-to- income ratio, or the percentage of your income that is applied toward monthly debt payment.

If this debt percentage falls outside of the lender’s guidelines, your application is either torpedoed altogether, or you could end up getting reamed by an interest rate that’s needlessly high. Both scenarios may be avoidable with some persistence on your part.

Don’t panic. Take action.

If your auto loan application was declined, the lender will issue you an email notice (for online applications) first, followed by a written explanation via snail mail. If your notice indicates “excessive debt load” or similar phrasing, there’s your tip-off.

  • Contact the lender and request a secondary review. Ask which figure was used to calculate your student loan payment. If they used the standard payment as shown on your credit report, offer to send them copies of your Income Driven Repayment plan paperwork showing the correct payment amount.
  • The updated information may or may not save your bacon in terms of finally gaining loan approval or a better rate, but if an inaccurate student loan payment amount was all that stood between you and loan approval, you could be in luck.

Taking out an auto loan, especially for the first time, is a big step. If your loan is declined for excessive debt load, it could be an inaccurately reported student loan payment amount. Don’t let that stand between you and a new or new-to-you ride.


In Which a Nervous Car Gal Dips Her Toe Into The Water, Part 2-The Test Drive

The  2008 Toyota Camry  LE goes from snark fodder to a downright respectable choice for this car shopper.

I never thought much of Toyota Camrys. As a long-time favorite of the much older drivers in my neck of the woods, I never gave the Camry  a second glance. Plain. Boring. Stodgy. Frumpy.

And popular. The Camry is one of Toyota’s best sellers and a leading contender in the busy mid-size sedan segment, so they can’t suck that much. I mean, really.

My neighbor’s son-in-law has his 2008 Camry LE up for sale and I’m feeling my way back into the car market.

What did I have to lose? I made arrangements for a test drive.

My community is the perfect test chamber for a car: the streets serve up a combination of wide open stretches, hills, speed bumps, crappy conditions, cul-de-sacs, and even a roundabout thrown in for good measure.

While the car lurched a bit during initial acceleration (red flag #1) it had no trouble darting up the winding roads on my way to a hilltop housing tract where most of my testing would take place.

The 2.4 liter, 158 hp 4-cylinder engine handled the uphill haul well with little to no fuss.

The Camry was nimble as I worked my way up the curving road. I love cars that offer a smooth ride while being agile and  sure-footed at the same time. Good road manners do count.

While the cabin wasn’t as quiet as I had hoped, it was still bearable.

Once I reached the top of the hill, I headed for a cul-de-sac. Front wheel drive cars are prone to CV boot issues, and I wanted to rule that out from the beginning. After a few tight turns in a circle left and right, with radio off and windows down, there was nary a peep. Sweet. Onward.

The steering was tight, and this car has an excellent turning radius, something I missed from my Volvo-owning days. Braking was another story as the brakes were grabby (red flag #2).

The car had a distinctive pull to the left (red flag #3) as I drove a straight line with hands off the wheel. Low tire? Crappy alignment? A future million-dollar fix? Hard to tell without a thorough  pre-sale workup.

Vanilla interior, thy name is Camry

The interior was dutiful and bland, but holy moly, was it spacious. I could easily seat two tall adults in the back seat with plenty of head and leg room, sloping roofline be damned. The driver’s seat was a perfect fit. I had plenty of head and leg room.

The plain interior has an upside: it serves as a canvas for some personalized touches. I could easily make this car mine with some simple tweaks.

Controls in the center stack were well-placed and ridiculously easy for me to use. I popped in a Strauss CD and the sound quality was glorious.

However, visibility in this car isn’t just bad, it’s terrible. Had I not been as vigilant as I was, I easily could have sheared a fender or two while backing out of a parking stall. Rear visibility is just awful. I would need lots of road hours to get used to it.

I deeply and sincerely hope to hell subsequent Camrys have better visibility. Thankfully, backup cameras are now standard as of this year.

Aside from the car’s drawbacks, I found it to be a likable, potentially viable option for a driver like me. Of course, the thought of shouldering both repair bills and a loan payment made me sick to my stomach; over 93000 miles on the odometer, so an eventual big-ticket fix isn’t that far-fetched. Eep.

Stay tuned, as the seller and I will be arranging for a pre-sale workup and I’ll be digging into the maintenance records.

In Which a Nervous Car Gal Dips Her Toe Into The Water, Part 1

I’m not gonna lie. The thought of financing a car makes my stomach churn.

As someone who’s had the bottom fall out three times in the past ten years, there’s a reason for the sweaty palms, dry mouth, and upset stomach.

Like most Americans, I got hit hard in the recession. First with a job loss and the subsequent financial disaster (raiding my 401k so I didn’t end up on the streets. Same for my savings),and then the loss of my car when a 16 year-old totaled it while chatting on her cell phone.

A health crisis three years ago wiped me out physically and financially. To this day, I think I got through the 2013 L.A. Auto Show on sheer will. No way was this Cinderella going to miss the ball.

I rebounded in early 2014 and picked up a social media gig with a local business owner. She abruptly changed course in January 2015, shuttering her practice and leaving me jobless.

Lightening struck not once, but three times. And people wonder why the thought of financing a car makes me hyperventilate and become nauseated.

Back on my feet

Currently, I’m what lenders would consider a “good risk” for a modest car loan.

In other words, I have the “right stuff” to make the leap: income from a stable source, a stellar credit rating, and a gig that isn’t likely to disappear anytime soon.

My solid credit score will put me out of reach of predatory sub-prime lenders and their shenanigans.

The bad news? I’d qualify to finance an used car under 10K because of my modest income.¬† Good cars in that range are few and far between; most of them that I’ve looked at have mechanical issues or have been treated badly. A loan payment and repair bills?


I test-drove a car yesterday that is a possible strong candidate. A cash transaction would be ideal (I could flip the car a few months down the road and use the proceeds as a down payment) but not realistic. It would take years to save up; I’m not 16 anymore.

I need my life back. There are friends to visit, classes to take, appointments to tend to, and additional income opportunities to pursue.  My current method of getting to work involves playing Transit Roulette with a crumbling small city bus system that frequently runs late, or not at all.

I want to be part of a volunteer cadre of drivers for a local non-profit, giving rides to their clients as they go to job interviews, attend classes, and look for work.¬† I’d like to return to the city college that gave me my start as a lifelong learner, this time as an outreach and tutoring volunteer.

I want to take some time for myself and take a drive along the coast, or along the winding Ortega Highway. My best ideas come to me from behind the wheel of a car.

I really wish I could talk this over with my dad, who had a clear-headed view of life’s tougher choices. I wish he could see me as I take this significant leap.

Join me for the ride in the coming days as I check out the different financing options available to me. In the meantime, could someone pass me the saltines? I feel queasy.


Close, But No Car

beggars can't be choosers when it comes to old cars

This  Elantra is pretty damn close to the one I was offered, but in much better shape.

In which my search for safety, economy and reliability come up short

I turned down a car that was offered to me.¬† If you’ve been hanging out in my ramshackle corner of the Internet for awhile, you’ve known how much I need to get a car.

My neighbor at the end of my street has two college-age sons. They shared the old family car when they were in high school. Now entering their second and third years of college respectively, both kids have decided to pass on car ownership for the time being. The aging Hyundai Elantra GLS has been idle for months.

The kids’ dad¬† offered it to me last week. I could buy it for next to nothing. “Just get it off my hands. It can’t sit in the drive because we just don’t have the room and I want it gone.”

I wish I could say it was a perfect match. Based on¬† what I’ve observed over the years, I knew better. They never really took care of their cars. I looked the car over. It had been washed and prepped for sale. The radio didn’t work well, and the window motors were iffy. It squeaked by smog testing earlier this year. Barely.

Service records were scarce. Understandable from a busy family with two kids and not a clue about cars.

This Beggar Needs To Be  a Chooser

Still, I need wheels. Beggars aren’t supposed to be choosers, right?

One of my friends is a tech over at the local Shell station, so I ran the car over there for a pre-sale inspection.  I hovered while he checked it out and rode shotgun while he drove it. Too many knocks, creaks, and squeals for my blood. I knew that from my short drive to the station.

The rear bearings were shot to hell to add insult to injury. I also worried that it would burst into flames just when I needed it most.

“You could go back and counter-offer him about a grand less, because that’s how much you’re looking at to get it really road-worthy.”

NOPE. I’ve been down this road before. No sooner will I sink a grand (which I don’t have in the first place) than I will have to sink yet another grand into the next crisis that pops up. I remember driving an aging car. I lived in crisis mode the last three years of that car’s life.

I can’t and won’t do it again. Call me crazy, because I don’t have a lot of options here,¬† but I have neither the nerve or the resources to take on another elderly car. I don’t have the tools or the space to fix it myself. I sure as hell don’t have the cash.

It was sold two days later, most likely to someone with the emotional and financial wherewithal to take on an aging car that needs serious work. More power to ’em.

For the sake of my sanity and finances, this beggar is gonna be a chooser.


Five Things You Need To Know About CarMax

When it comes right down to it, CarMax is just like any other used car dealer

A few weeks ago, I headed out to my local CarMax to test drive a 2012 Nissan Leaf. I chose CarMax because of its low-hassle test drive policy and supposed low-pressure sales/business model.I was even thinking of buying from them when the time came. Now, not so much.  Here are a few things I found out during my visit.

Carmax, home of no-haggle pricing


If you place a car on hold via their website, they assume you’re going to buy it no matter what you tell them. Not a huge hassle in the long run, but I no sooner finished reserving the car online than I received a call from a “sales associate” who agreed to meet me the next day.

I emphasized to him that I was in no position to buy, just heading out there to test drive and to either add or delete the Leaf from my short list. Period. “Got it.” he said. “No worries.”

They assumed I was going to buy it anyway, as evidenced by the sales associate’s upbeat attitude and the giant “hold for sale” pricetag on the windshield, and the sales song and dance I got.


Their CA salespeople are on commission, so if you’re a CA shopper and are expecting low-pressure tactics, think again. While the price of the vehicle is in fact their no-haggle take-it-or-leave it price, they will still try to chase a higher commission, which can get old quickly.

Gods know the sales associate tried to talk me out of the Leaf. He tried, he really did. He cited battery life statistics that were inaccurate, downplayed the overall awesomeness of the car, and really pushed the CarMax extended warranty and service plans.

I did my homework in advance and knew he was full of shit.

All in pursuit of a higher commission, no doubt.

They will sell you on their on their MaxCare program. Hard. My opinion?¬†Think long and carefully about this one. You’ll be limited to CarMax service facilities. Based on the local user reviews, I’d run like hell.

If you already have a reliable automotive tech lined up, stick with them.¬† If you don’t yet have one, get recommendations from friends or by checking on Yelp.

Don’t take CarmMax’s word for it on their “125-point inspection.” CarMax, like any other dealer, is in the sales business, not the servicing business. It’s their goal to move inventory–lots of it–quickly.

The second you sign for your car, take it to an automotive shop that is familiar with the make and model of your car, just like you would with any other used car.

You may end up having to shell out for an outside inspection, but it could save you thousands of dollars if your new-to-you car is a potential money pit. By getting the inspection done soon after buying the car, you have the opportunity to return it within the 5-day trial period.

Despite their no-haggle pricing model, Carmax is in business for the same reason other dealerships are in business: to make money.  Think twice about add-ons such as their MaxCare plan. Obtain your own outside financing or come in with cash. Have your car inspected by your own mechanic during the trial period (5 days in CA).

I’m not sure what all the hype is about since CarMax really is no different from any other used car dealer.

Do your research, know what to expect, think twice about add-ons, and you could drive away in a great car that will be your sidekick for years to come.