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Transcript: Tuesday, November 23, 2004, 1 p.m. ET

Buying and Selling a Car

Mary Butler
Managing Editor, cars.com
Tuesday, November 23, 2004; 1:00 PM

Mary Butler is managing editor at cars.com. She has more than a decade of automotive and personal finance experience and looks to empower auto shoppers so that they can make smart financial decisions. Very much a consumer advocate, Mary was part of the site development team that launched cars.com in June 1998.

This discussion was about buying and selling a car.


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The transcript follows below.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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washingtonpost.com: Good afternoon! Welcome to this special edition of Live Online. Today's guest is Mary Butler, managing editor for cars.com, and she'll be giving tips and advice on buying or selling a car.

Cars.com is washingtonpost.com's partner in our Cars section.

Mary, thanks so much for joining us!

Mary Butler: Hello, thanks for joining me in today's discussion about buying and selling your car. Helping consumers find the car that is right for them - whether it be a new, used or certified pre-owned vehicle - is what we strive to do at cars.com. The tagline for our Advice section is "Learn More, Pay Less." With that in mind, please be my guest and ask away.

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Herndon, Va.: Actually, I'm just trying to give away a car. We have a 1990 Mazda 323 with 120,000 miles (no AC) that runs fine. We finally decided to get a new car to replace it. We know that the Mazda has zero blue book value, plus it has a sizeable dent on the front left side and the interior is somewhat beat up, but the guts of the car are solid and could really be of great use to someone in need of wheels.

The problem is that we've found that a lot of charities won't consider taking the car because of its low resale value. Do you know of any who aren't as concerned about that as with getting the car to someone who really needs it?

Mary Butler: Hello, thanks for joining me in today's discussion about buying and selling your car. Helping consumers find the car that is right for them - whether it be a new, used or certified pre-owned vehicle - is what we strive to do at cars.com. The tagline for our Advice section is "Learn More, Pay Less." With that in mind, please be my guest and ask away.

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Monterey, Calif.: I'm very impressed with your website.

I went seeking information about manufacturers' "Certified Pre-Owned" programs, and what you provided sure exceeded any expectations I had. The actual inspection checklists were a goldmine.

Here's the question I still have: do CPO programs stipulate that the car must be up to a certain standard, or is there still a lot of leeway for the dealer to decide whether he is going to address/fix a particular problem that turns up in the inspection?

Unless he is required to make the car "like new" wherever it's needed, aren't we back to the same basic place of the dealer deciding what to fix here and there based on the profit he wants to make?

Thank you.

Mary Butler: Only vehicles that are below the age and mileage thresholds established by each manufacturer - usually no more than five years or 50,000 to 80,000 miles - can be certified. These vehicles are then reconditioned, an extended warranty and other perks are attached. These manufacturer-certified pre-owned (CPO) vehicles are usually sold for a premium, which is the profit motivation for dealers to comply with the terms of the automaker's programs. Because these are manufacturer- and not dealer-certified programs, the same standards apply nationally. However, that doesn't stop some independent dealers who have tried to hop on the CPO bandwagon and offered their own version of certification. That is one of the reasons why we publish manufacturer checklists on cars.com - consumers should make sure any certified vehicle they consider is covered by an automaker-backed program.

Because I see you are writing from California, you may already be aware that the state tried to help consumers with legislation that would have clarified what "certified" really means. The Car Buyer's Bill of Rights was passed by your state legislature in August before being vetoed by Gov. Schwarzenegger in September. The legislation would have disqualified vehicles with histories of significant structural or mechanical damage from dealer and factory certification programs. Additionally, lemon-law buybacks, salvage cars, rentals, and vehicles with rolled-back odometers would also have been disqualified. The bill's sponsors will attempt to pass the legislation again in 2005. In the meantime, it's important to get certification and inspection details on paper in order to determine their relative worth.

For readers who want to learn more about certified pre-owned programs, go to this Advice section in the cars.com section of washingtonpost.com:
http://www.cars.com/go/advice/shopping/cpo/?aff=wpost&_requestid=798369

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Baltimore, Md.: Happy Thanksgiving!

Hi, Ms. Butler -

Wondering if you could possibly provide some feedback...I have a '02 Honda Accord Coupe SE w/70,000 miles...and $10,000 remains on the loan...basically it is in good condition...I want to trade it in. Do you think I will receive any money for the car? If so, about how much?

Also, any recommendations for best city to buy a car in? Thanks!

Mary Butler: You can get current used-car values from KBB on our site (go to: http://www.cars.com/go/kbb/kbbInput.jsp). However, you may want to reconsider trading in your current vehicle and taking on another debt when you still owe $10,000 on your Accord. Purchasing a car with negative equity could have negative long-term repercussions.

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Bethesda, Md.: It's been a while since I bought a car and may have to again soon. Last time, I got the consumer guide printout on the car I wanted, wrote down the invoice prices of the car and the features I was after, and asked the salesman to get as close to those prices as he could, respecting that he had a commission coming.

Will this approach still work again, or is everyone using it now and the sales people not buying it? Is there another approach I should use?

Thank you.

Mary Butler: Starting at the invoice price and working up, as you did last time your purchased a car, is still the best way to start the negotiation process. However, rather than let the salesperson counter with an invoice plus commission price, you can open with an offer of invoice plus two percent. In addition, you should research current incentive offers to see if you qualify for cash-back or reduced-rate financing. (Find consumer incentives here: http://www.cars.com/carsapp/wpost/?srv=parser&act=display&tf=/features/incentives/makes/incentives_all.tmpl)

Of course, market conditions will determine if you pay more - or less - than two percent over invoice price. A hot model, such as the Chrysler 300C, Mini Cooper Convertible, or one of the new hybrids, will command a premium. However, as there are a record number of current model year vehicles still on dealer lots, you should be able to get a great price on a 2004 model.

Lastly, as you begin the negotiation process, make sure you keep each step of the transaction separate. What you receive for your trade-in or how much you pay for financing should be independent of the vehicle transaction price.

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Cincinnati, Ohio: I hear that November, December are the best times of year to buy a car. What are examples of good incentives?

Also, what are your suggestions for negotiating with dealers?

Mary Butler: This time of year is ideal to buy a current model-year car. Through November 30 there are a number of automakers offering incentives of $4,000, $4,500 and more on 2004s they are trying to clear out. To see a list of the Top 10 cash-back offers on 2004 models, go to: http://www.cars.com/carsapp/wpost/?szc=60606&srv=parser&act=display&tf=/features/incentives/incentives5.tmpl

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Mary Butler: Getting back to the first question, from a reader in Herndon, VA: " Actually, I'm just trying to give away a car. We have a 1990 Mazda 323 with 120,000 miles (no AC) that runs fine. We finally decided to get a new car to replace it. We know that the Mazda has zero blue book value, plus it has a sizeable dent on the front left side and the interior is somewhat beat up, but the guts of the car are solid and could really be of great use to someone in need of wheels.

The problem is that we've found that a lot of charities won't consider taking the car because of its low resale value. Do you know of any who aren't as concerned about that as with getting the car to someone who really needs it?"

We have a list of charities on are site willing to accept vehicle donations. For more information about donating your vehicle to charity and for a list of groups go to:
http://www.cars.com/carsapp/wpost/?szc=60606&srv=parser&act=display&tf=/advice/shopping/howtosell/includes/sell_charity.tmpl

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Atlanta, Ga.: I am interested in buying the new Honda Odyssey minivan. Since the current model is brand new and highly rated, I expect it will be hard to get a good deal on it. Do you have any tips? Thanks!

Mary Butler: Yes, the new Honda minivan is a popular vehicle and usually doesn't gather any dust on the lot. However, there are a few things you can do to better your chances of paying less than full list price for this vehicle.
* Get price quotes from a number of dealers in several different ZIP codes. While your local dealer may have four buyers for every Odyssey, it's possible that another Honda dealer may have less demand.
* Can you afford to buy cash? Buyers with money in hand usually can negotiate more favorable terms.
* Have you been a loyal customer of the Honda brand and of your local dealer? Customers who have purchased multiple vehicles from the same dealer will have more leverage.

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Raleigh, North Carolina: I plan on selling my 98 civic hatchback, but I have a dent on the side of it. Is it worth fixing in order to sell it?

Thanks.

Mary Butler: Have you received an estimate to repair the damage? If not, go ahead and do so and then compare how resale values differ between a same year make/model vehicle that is in excellent condition and one that is in poor condition.

In general, once a vehicle is seven years or older, you are less likely to get a return on pre-sale body improvements.

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Looking for tips: Off the top of your head....

I want a car that's fun to drive, reliable, and safe. Probably either a 4 door sedan or a small station wagon.

Which cars do you think I have to see/test drive?

Mary Butler: On the auto show circuit earlier this year, automakers were heralding 2005 as the year of the car. Now that SUVs have started to fall out of favor due to rising gas prices, more consumers are returning to passenger cars and even wagons.

Some of the highest-interest 2005 models on cars.com this year are the Chrysler 300C, the Dodge Magnum and the Scion tC. (To see more user rankings, go to our What's New for 2005 section: http://www.cars.com/go/features/2005overview/myp/whatsNew.jsp)

As for choices that are reliable, safe, a good value -- and yes, even some that are fun to drive! -- check out our Best Bets models: http://research.cars.com/go/features/overviews/bestbets/bbnew.jsp?aff=wpost

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Arlington, Va.: Before I can buy a new family-friendly car, I need to unload our wonderful, but impractical 2-seater convertible. But, I want to get the best price so that means selling to a private owner since the dealer will only give me pennies on the dollar. What's the best way to sell a car to a private party without getting scammed or making it a full-time job?

Mary Butler: Consumers who sell their vehicle themselves receive an average of $2,000 more for their car. With that in mind, how to reduce the hassle factor?

There are a number of things you can do to reduce the amount of time you will need to spend. One way is to post an online ad, which will allow you to provide a detailed vehicle description, post multiple vehicle photos and to limit initial contact to email.

We have found that cars listed with detailed information and multiple photos sell more quickly than those with spotty information. In addition, by anticipating all of the potential questions you may receive and answering them in the ad, you will reduce the amount of time you spend with each potential buyer.

As for avoiding scammers, the best advice is to avoid all offers that seem too good to be true. If someone wants to give you $20,000 for your $15,000 vehicle -- and requests a money order from you for the difference -- report this person to the site hosting your ad.

For more advice on selling your car yourself, go to:
http://www.cars.com/carsapp/wpost/?srv=parser&act=display&tf=/advice/shopping/howtosell/sell_main.tmpl

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Ireland: So do the increasing gas prices mean I can get a deal on a minivan or SUV? I've lived in Ireland for 3 years, so $2 a gallon seems like absolute heaven to me.

Mary Butler: When gas prices first started their upward spike earlier this year, there was a marked decline in consumers buying "super size" SUVs. This year was the first time GM had to offer incentives on its formerly hot Hummer H2.

On cars.com we saw an increase in the number of consumers listing larger SUVs for sale on our site. More of the same type vehicles for sale give potential buyers an advantage.

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Rockville, Md.: Good afternoon. Help!!! We are looking into buying either an Acura MDX 2004 or Infiniti G35 2004, and trading in a Ford 2004 Lariat PU. What is the best way to negotiate a price plus trade in? Thanks so much.

Mary Butler: If you haven't already, check to see if there are incentives on either vehicle. As you are looking at 2004 models, you should have more leverage when negotiating. As mentioned in an earlier response, be sure to start the process at the invoice price and to avoid mentioning a monthly payment amount to the salesperson. You should focus only on the bottom-line transaction price.

After you have negotiated a satisfactory price on the new vehicle, only then mention that you have a trade-in. These are two separate transactions and should be treated as such.

Good luck!

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Clinton, Md.: Hello!

Need some advice - would you recommend paying off the loan of a car before trading it in for a new one? I really would like to buy a new car, but I am afraid the dealers will not payoff the current monies owed towards my current loan ($12,000).

Thanks in advance for your help!

Mary Butler: I also recommend that consumers pay off their existing vehicle loan before considering another purchase. Otherwise, you start out "upside down" and may never own a car that is paid off in full.

Depending on when your loan originated, you may be paying an above-market interest rate. Before rates go up again, see if you can refinance your existing loan at a lower rate. If you can, structure the loan so you are paying about the same per month but for a shorter time period.

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Falls Church, Va.: Is it really worth taking scrupulous care of a car if you just plan on trading it in? I have always maintained my cars very well with regular service, washing and waxing, etc., but when I trade them in the dealers pull a number out of a book and refuse to negotiate substantially. I suppose I could sell them myself, but I hesitate to deal with all the wackos who might respond to an ad.

Mary Butler: Regardless of whether you trade in your vehicle or sell it on your own, I would recommend you continue to take scrupulous care of your car.

However, when you do decide to sell your vehicle, you need to take more control during the trade-in process. Research trade-in values in advance and know the difference in price between a poor, fair, good and excellent condition vehicle. Arrive at the dealership with maintenance records for your vehicle.

There are some factors that can contribute to a below-KBB trade-in value offer: Are you trading in a vehicle from a competitor? Are there a number of same make/model/year vehicles on the dealer lot already?

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Arlington, Va.: I need to sell a car, an older Honda with a lot of miles, but I don't want to run a classified ad or post on a public bulletin board.
As a very recently widowed woman with a teenage girl at home, I don't want to deal with strangers and kooks. A friend who is a retired cop has offered to help me show the car, go on test-drives with potentials, etc.
Aside from telling everyone I know that I'm selling the car and posting it at work, do you have any marketing ideas that offer me better personal security than a classified ad?

Mary Butler: Having a trusted friend assist you will be helpful during the selling it yourself process.

In order to increase your peace of mind, you may consider having an "open house" at your friend's house one weekend afternoon. This will save time by having all potential buyers come by the same day to take a look at the car. In addition, if a crowd shows up and potential buyers see the competition you are less likely to get low-ball offers.

Always ask potential buyers to show up with a driver's license and proof of insurance. This way you can confirm their identity and feel more secure.

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Anytown, USA: How big of a down payment do you think people should aim for when they buy a new car? (I know, the bigger the better, and paying cash is best of all, but that's just not possible for a lot of us).

Mary Butler: Your budget will determine how much you can reasonably afford to put down. We have an affordability calculator that allows you to plug in monthly payment, down payment and interest rate so you can see how much vehicle you can afford.

Try to keep your monthly payments to 48 or less. You don't want to be paying for the car longer than the warranty period.

For new-car benefits at a used-car price, I recommend consumers at least consider CPO vehicles. This saves you from paying for the first few years of vehicle depreciation and allows you to get more car for your money.

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Mary Butler: Thanks to all of you who participated. Good luck to all of you who are considering a new-car purchase or looking to sell your current vehicle. I hope this information proves useful.

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