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Don't miss out on the ultimate thrifting experience at our Pix Exchange parking lot anniversary sale at our Torrance location. Visit pixexchangehhh.org for more details. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua. I am your host. I am your fellow financial freedom fighter, working with you as you create and build your plan for financial freedom. Today I want to tackle the subject of buying a car, specifically buying a used car. On yesterday's show, I engaged in a form of satire, perhaps a bit of hyperbole.

I created a show that I hope struck at your emotions. My intent was to trigger you into thinking, just through the use of something that I hoped would be entertaining and provocative and yet demonstrate some useful tactics and techniques. But today I want to be a little bit more analytical and a little bit more of a teacher, build not with hyperbole but with just systematic thinking.

Sarah in the Facebook group wrote in and asks, "Tips for buying a used car. I'm a graduate student. Luckily, I've been able to work and study, so I have no loans and debts or debts. However, I don't own a car. I'm planning to move once I graduate and I might need to purchase a car then.

I want to get a used car, but I don't want to buy something that ends up falling apart shortly afterwards. I plan to pay in cash." I know this is a broad question, but do you have some input? What should I keep in mind? Are there good places or websites for me to look at for cars or good resources I should check out, et cetera?

That question came in from Sarah and I'll also reference another question that came in in the Facebook group about a listener who recently had a car that was totaled and they're in a situation of – well, let me read you the details because I will integrate these too. "I'm seeking vehicle advice for someone who has totaled their car and is averse to car debt.

Me. The question is do I purchase a vehicle for about $7,000 for myself to keep going as I have been or splurge on a family vehicle for my wife and two small children, i.e. a minivan. The story is I totaled my 2009 Mazda 3 last week and will be getting $6,200 from my insurance payout.

I have a $12,000 emergency fund, no debt besides the house. If I utilize my emergency fund to pay out on some other YNAB categories that are long-term savings goals for home improvements, I could pay cash for a vehicle of around $17,000 out the door. It's a scary thought. My money though, not the bank's, right?" Anyway, her car is a 2006 Hyundai Tucson with 110,000 miles and good condition that I hope to own for five more years.

Within two years, we'd like to have a third child which would require a third row for my wife's car, etc. So I'll talk through these two examples and give you some advice. Let's start with used car versus new. I'm not opposed to buying new cars. I think you can actually make a very strong argument under certain constraints for buying a new car.

The first simple and clear argument would be if you have the money and you're rich and you want to buy a new car, okay. That's fine. Go buy a new car. Who am I to tell you what to do with your money? You don't answer to me. I just want to help you think about it and make an intelligent decision.

But of course, I know that you're here listening saying, "Well, is buying a new car an intelligent decision?" And I would say it can be. It can be. There are times at which if you'll buy a new car, you can get a great deal. Sometimes if it's a new technology or a factory is offering some special rebates or incentives, you can purchase a new car and because of the heavy discounting, get a great deal.

Number of years ago, Nissan was selling Nissan Leafs and they weren't selling well and so they brought out this very big rebate program. I thought it was a great deal. When I calculated the numbers, there were good rebates. By buying a new car, you were able to get good government tax credits on that purchase.

It was a well-built car that had good results. Because it was a new technology, it wasn't really available in the used market. It was a substantial savings because of buying an electric car instead of a gas car. I thought it was a good deal. It was a good example of a car to buy new.

Sometimes you'll see this in terms of a lease deal even. A few years ago, I watched the lease deals on the smart car, so-called smart car that was in the market. They were offering these crazy cheap lease deals. For somebody who wanted to use one, I had a friend of mine who was a real estate agent.

They leased one. They wrapped it nicely. It was a great showpiece for their business. I thought it was a good deal. From time to time, you'll find these inefficiencies in the marketplace. I alluded in yesterday's show with regard to a pickup truck. I alluded to something like a Toyota pickup truck.

If you had the money and you were looking to buy a newer pickup truck, something like a Toyota Tacoma especially, if you don't do the math, the used market for the Toyota Tacoma pickup truck, one that's a few years old, two, three years old, it's so close to the new market.

It really is hard to make the argument that you save much money buying in the used market. Buying in the new market can be a good idea. New cars are easy to finance. If you're going to use some form of financing, I think in general you should avoid that, but there are times in which – my hyperbole yesterday notwithstanding about only idiots finance vehicles – there are times in which you may choose to finance a vehicle.

I am deeply opposed to that with the exception of some kind of – let me rephrase that. I try not to make absolute statements, but it's very hard for me to use financing. I can understand if you can arrange it. There are ways to make a deal. If you're the kind of person who has iron discipline on your money and you say, "Okay, this car is going to cost me $30,000.

I'm going to put this $30,000 over here in the CD ladder and I've got this great deal, this 0% financing," I can concede that. Most people overspend because of using financing. That's what most people do. If you're not most people, if you have the iron discipline to walk into a car dealership and not go from the cheap model to the fancier model just because it's only an extra $20 – go for it.

I don't think I have that discipline. So I'm opposed to financing, but it's not like it's a moral argument. I'm not saying that it's always wrong. I'm saying that the effect of financing where you're taking a large amount of money and you're turning it into a stream of payments can be very harmful because you wind up buying more.

Anytime you can put something on payments, you wind up buying more than need. Also, if you're buying new cars, you have all those problems. So 97% of the time, I'm opposed to financing for vehicles. But these are some arguments in which new cars can be helpful. Perhaps you are looking for a technology that's just not available in the other marketplace or you're shopping for something like an electric car.

That's a good current example. Perhaps the needs that you have, you need a large four-wheel drive SUV. Well in that case – and you live in the bush – you might need to buy a new Toyota Troopy and that might be what you need to do and they just aren't out there in the used market as you would like.

There are times in which the new is really compelling. I think there are times in which if you can commit to owning a vehicle for a long time, you can make the new car – find the case for a new car financially. Somebody commented in the Radical Personal Finance Facebook group and shared a picture of their new Honda Ridgeline pickup truck that they had purchased recently.

This was the second version or the second model that Honda recently redesigned it. This person had saved for it for years and they paid cash for it. That's a great pickup truck. If you can make a thoughtful, intelligent decision and buy a kind of vehicle that you know you're going to keep for a long time and then you can own it straight from the factory so you can ensure that all of the proper servicing is done right from the beginning – I know guys that go and buy a new Honda or a Toyota, immediately swap out all the fluids for the best synthetic fluids and they drive it carefully.

They make sure that their maintenance schedules are followed to the T. You can take your vehicle ownership period and push it out to maybe 20 years and have trouble-free ownership. The longer you can own that vehicle, the better. So there are good arguments for buying a new car but that's not what most people do.

Most people just buy a new car because it's convenient, because they want the new car smell, because it's easy to finance a new car. So they wind up wandering into the Kia dealership and buying a cheap new Kia and ruining their financial life. Somebody like Sarah who's riding in as a graduate student, frequently a non-thinking person would just say, "Well, I'm going to go and finance a new Kia," and they buy a car that is certainly a decent vehicle in terms of it's well-made.

It's got a 10-year warranty, et cetera. But you're buying a cheap car that's an Econobox that probably doesn't have the level of comfort that you'd want to have for a long-time ownership. I don't enjoy driving Econoboxes on the interstate at 75 miles an hour and frequently that chafing of this not being a great car but an adequate car will result in the person three, four years in going ahead and saying, "I'll just trade this in and move up." So I think that there are better ways.

In general, I think you want to look for used cars while you are building your wealth. One last comment. There is an argument also that could be made for new cars, especially if the vehicle itself will be financially productive for you, i.e. you run a business. Sometimes just the simple reality of getting a vehicle and then buying it new, buying it as part of a fleet, ordering it exactly how you need it because of the equipment that you're going to run on it, or being able to order it and immediately have it wrapped, or being able to order it and in the business you're in, the particular newness of the vehicle matters and it's helpful to you, or being able to order it, have it serviced by the factory and have a service contract smooths things out.

If you're making money with a vehicle, downtime is a very bad thing and so you've got to account for that. And so it may be worth it for you to pay in depreciation rather than to pay in downtime. There's no guarantees on any of these things but I am encouraging you to think carefully.

Now for most of us who may work a job and who are still seeking to build wealth, I think you're well advised to steer clear of the new car marketplace. I do wonder if I would have made that recommendation 30 or 40 years ago. Frequently people talk about, "Oh, buying a used car, you're buying somebody else's problems." In 1970 that may have been true.

It may have been. I'm not sure of it but it may have been true. But today in 2018 as I record this, man, vehicles are made so well. You just don't see vehicles broken down the way that you once saw them. Vehicles are made so much better. I don't get this like hating of technology.

For most applications, an electric car is a superior technology to a gasoline car. Don't hate the electric car technology. Just calculate if it's right for you. A vehicle that runs with fuel injection is a superior vehicle design, is a superior engine design to a vehicle that runs with a carburetor.

No you can't adjust the fuel injection system when you're out on the boonies like you can with a carburetor. But the fuel injection system is very unlikely to leave you on the side of the road like the carburetor was. There's this weird hatred of modern technologies that so many people have.

New cars are great. I mean you've got so many new car makers. Even I may criticize Kia. I've owned a Kia, Hyundai, but I've owned a Hyundai and had no problem with it. But I may criticize them. But man, they're wonderful cars. They come with a 10-year, 100,000-mile powertrain warranty.

That's amazing. So cars are made so well today. I really think and I have good evidence for this as far as objective research evidence. The minimum life cycle for just any normal car that's cared for, not abused, and that has the basic maintenance done should be about 200,000 miles.

Really should be. And it's not uncommon for a vehicle to be able to go for longer. So back to Sarah. I would encourage Sarah to buy a used car. But to shop carefully. Let's talk about how to shop. First you need to know what you need. And one of the biggest things to consider is what kind of vehicle will suit my needs for the longest period of time.

One of the problems that people make when buying cars is they don't exercise a lot of forethought. I remember this a number of years ago watching somebody. They bought a convertible. Newly married. They were hoping to have children. And they bought a two-seat convertible. I thought, "Why did you do that?

Did you not ever think about strapping a car seat into a two-seat car? It just doesn't work. It destroys your back." And yes, sure enough, a few years later they wound up selling the convertible. And it was a poor, cheap convertible that didn't get a lot on the marketplace.

It was a soft top which got destroyed and it was just a dumb decision. So if you can just do something – if you're willing to be practical and do something as simple as buy a four-door car instead of a two-door car, that car will last you longer. And this is a big deal because the buying and selling costs on a large ticket item like a car are substantial.

In Florida, we have sales tax. Every time you buy a car, you're going to incur a 6% sales tax or a 7%. You're going to incur a significant sales tax. There's new registration fees. There are new costs of doing the shopping, the time. And so the longer you can – if you can choose something that is going to work for you for longer, that's better.

Does that mean that you always get the biggest vehicle possible? You have two children. Does that mean you automatically go for a 15-passenger van because you might have more children and outgrow a seven-passenger minivan? No, I don't think so because there would be other costs associated with that. But for Sarah, I would encourage Sarah to at least consider purchasing something that would be a four-door car at the very least.

Now, I love minivans and I love minivans even for single people. And here's where you have to consider your personal circumstances. Knowing nothing about Sarah other than her comment here saying that she's been in grad school, I would still think a minivan is a wonderful vehicle for her to buy.

For the full version, go and listen to episode 356 of the show called Your Next Car Should Be a Minivan, Here's Why. But for somebody who's a graduate student, there's a good chance that a graduate student would be – after they graduate, would be looking for a job. In that early phase of a career, there'd probably be quite a bit of movement.

Well, minivan would be a wonderful car for a young woman to own. It's very practical. It's very, very safe. Minivans basically all get five-star crash – modern ones all get five-star crash ratings on every one. They're one of the most safe vehicles you can drive. They're safer than SUVs in terms of on-the-road manners because they have a lower center of gravity.

They avoid some of the inherent characteristics of an SUV or larger van that make them unstable on the highway at high-speed maneuvers. Minivans are wonderfully safe. They're wonderfully practical. A young woman who is building her career – I have no indication of her being married – a young single woman, it'd be a wonderful vehicle because she could use it if she needed to move.

She could easily downsize her things into that vehicle. She needs to change cities to go to a job. She can avoid expensive movers. She could get everything she needs into a minivan. If she needed to use it for travel, she would have a comfortable place where she could travel with her friends.

It would be a wonderful vehicle. So that would be a great road to go. Minivans are very, very popular. There are tons of them out there. More on that in just a moment. But at the very least, I would encourage Sarah to purchase something that would be a four-door sedan or a minivan.

Now if Sarah were living in downtown New York City or downtown Miami, now that advice might change because now there might be a need for or a benefit from a smaller car that's easier to park, that's easier to park on the streets. That would all depend on what her long-term plans are and what her lifestyle is.

So think about it and do your best to look forward perhaps a decade and plan on a 10-year car ownership lifecycle. Even if you bought new cars but you just thought in terms of a 10-year lifecycle instead of a 5-year lifecycle, you would come out financially significantly ahead. So I would encourage Sarah, think about what type of vehicle would fill your needs.

For most people, the practical, reasonable answer to the question is a four-door sedan or a minivan. You may have other purposes. If you need to tow a trailer, if you need a smaller vehicle, you adjust accordingly. But for most people, a four-door vehicle will give them years of usage or a minivan.

It would give them years of usage. Consider for something that's fuel-efficient, of course, but calculate the math. I love the Toyota Prius. If I were just going to tell Sarah, "Here's one car you should buy, buy a Toyota Prius. It's a wonderful vehicle. It's a wonderful vehicle." But for somebody who doesn't drive a lot, the excess – the better fuel mileage doesn't make that big of a difference.

So how much are you driving? Calculate all those costs and try to understand what type of vehicle would be effective for you. Number two, calculate how much money you have. And here would be my constraints. First, no debt. No car debt, no debt. Pay cash. In order to pay cash, you'll have to have savings.

If you only have $1,000 or a couple thousand dollars, you can find a vehicle for $1,000 or a couple thousand dollars. I do think at those prices, you're starting to get where you better become a skilled shopper and/or you better plan to upgrade. But it's entirely possible to buy a quality vehicle that is inexpensive.

For quite a while, I had a Toyota Corolla that I had purchased. It was a 1998 Toyota Corolla. I bought it from an elderly lady who was selling it because she was no longer able to operate the manual clutch. I had always kept my eyes out for such a car.

I always wanted to have just an extra cheap car with very few things to break. This was the most basic model in existence. This was a four-cylinder engine with a manual transmission. Nothing on the vehicle was power and it had just basically been driven around in a normal usage scenario.

It had about 120,000 miles on it. A vehicle like that has very few things to break. I paid $500 for it. I kept it for a while. I drove it for quite a while. Drove great. It's comfortable for me. I enjoyed it. Got me down the road. Wound up selling it for $1,000.

I replaced the radio. I think I paid $30, put a new radio in it, $40, something like that. Other than that and other than changing the oil, I didn't spend one dime on the car other than gas. Gas, change the oil a couple times, put a new radio in it for $30 so that would have a Bluetooth connection so my phone would work.

That was it. That car is still going fine. It could still go for another – for years and years because it fundamentally has not a lot of things to break. Now, it's got its own problems. It doesn't look fancy. It's not – it's perfectly comfortable to drive long distances.

I've driven it – I drove it across the state of Florida a couple times. It was cheap to drive. It didn't have a cruise control but I could have installed one if I wanted one of those. It didn't look great. If I needed to present a certain image, that wouldn't be a great vehicle to drive.

But you could do it. That was a $500 car. I think in general, you probably should get – go a little bit more upmarket to get something that's a little bit more comfortable for the longer time. But a few thousand dollars, you can find wonderful cars for a few thousand dollars.

And so here's how I think you should establish your budget. Your first establishment should be how much money do you have? Don't go into debt, especially for somebody like Sarah, a young woman getting out of graduate school, building her career. Don't go into debt. If you go into debt, now you start to get locked into a situation.

If you don't have any debt and let's say Sarah gets a job that winds up being unhelpful for her, it doesn't work, she has bad coworkers, she has an abusive boss. If she's in debt, she's going to be tempted to stick it out for longer than she should. She has no debt.

She says, "That's it. I'm out of here." She loads up her stuff in her minivan, drives to another city, gets another job. Simple. If you have debt, it's not simple. It's harder. So no debt, however much money you have. But number two, if you have a lot of money saved, I think you should, especially in the early years of your life cycle, your wealth building, you should keep your car purchases as low as possible, somewhere between 10% of your annual income and 50% of your annual income, depending on how hardcore you are and depending on the marketplace.

You can't always follow that rule, that arbitrary rule, and get what you need. For example, I recently shared how I now own a diesel pickup truck. I have a specific need case that I've voluntarily committed to. It's not something that I've chosen for a diesel pickup truck. Well, that makes it harder to buy a $2,000 vehicle.

If I didn't need that diesel pickup truck to achieve my goals, then I could have bought a $2,000 vehicle. If you're hardcore, at 10% of your annual income, you can find something great. If you have an annual income of $30,000, $40,000, $50,000, we're talking about a car of $3,000, $4,000, $5,000, all day long, I can go to any city in the country, in the United States.

I don't know the context in other countries, but any city in the United States, and if I have a little bit of time, could find a quality vehicle in that $3,000 to $5,000 price range. Now there are times in which it would make sense for you to increase that.

Let's go back to Ben's question where he talked about a minivan. Ben says that I have two young children and we're hoping to have a third child in the coming years. So we're considering purchasing a minivan. In this case, Ben has no debt. He has an insurance payment. He has savings.

In this case, I would consider saying, "Let's go a little bit higher than the 10% in order to have an ideal life cycle." If Ben bought a $3,000 minivan, he might be putting himself in a situation where that minivan would start to get long in the tooth after four or five years when he still would have a lot of value of that minivan.

But if Ben were to purchase a – let's say a $10,000 to $12,000 minivan with cash, that was – I don't know what his income is but let's just say that were 30% of his income. Now he would have a vehicle that could last for a decade easily and would comfortably accommodate his family and would be very reliable, very new, very fancy, little things that would probably make his wife happy like having the electric doors.

That's really nice for a mom to have the electric doors. Little things like having a nice systems built into the vehicle, whatever those things are. Those would make his life really nice and I think he would find value of going up a little bit in price so that he could have a longer term of ownership versus following some arbitrary rule of 10% in order to keep it as cheap as possible.

As long as the total value of your vehicles doesn't go north of half of your annual income. So if your annual income is $50,000 per year for your household, you should never own cars, motorcycles, RVs, snowmobiles, jet skis, boats. You shouldn't own toys and depreciating assets or if we want to use Kiyosaki's term, depreciating liabilities.

Just toys that go down in value of more than half your income. Otherwise, you wind up I think putting yourself in a situation where it's hard to get wealthy. You become vehicle rich and money poor. So 10 to 50% of your annual income. I encourage lower but sometimes you got to go up market a little bit to get something that's really going to last for you.

So set your budget. The next thing to consider is what brand and what models are you interested in. Make sure there is good data that you can consult and whenever you have good data, study the data. If you'll just study the data on so many things in life and try to align yourself with whatever constraints are there with the data, it's a little easier to get good results.

For cars, study the reliability data and buy something that is reliable. If you want to make it simple, buy a Toyota. Toyota has over the last decade and a couple of decades earned for itself a world-class reputation for reliability. That reputation has been won the hard way. It's not a false reputation.

It's a real reputation and Toyota very well deserves to be the highest ranked most popular vehicle brand in the world. I think that's worth your considering. If you can't buy a Toyota, buy a Honda. Honda also has done a great job with reliability. Now what's interesting, your best resource here is Consumer Reports.

What's interesting is there are other brands and other models that can be very reliable but it's harder to find that more sure thing with other brands and other models. If you were going to buy a pickup truck, a medium-duty or heavy-duty pickup truck, of course, you wouldn't necessarily automatically go right to a Honda.

If you wanted a light-duty pickup truck like the Ridgeline, you would go with a Honda. Toyota has their Tundra. That's their biggest one that they do. But if you needed a bigger one, of course, they're not going to offer it. Well, now you get into a situation where you can say what model is very reliable.

The Ford F-150 is a very reliable vehicle. The Chevrolet Silverado is a very reliable vehicle. You may find that a BMW 5 Series is a very reliable vehicle. But for a new car buyer like Sarah, I would just say look for a Toyota. Makes it very, very simple. You may or may not get lucky with some other model and if you have another model you're happy with, that's fine.

But I personally would just put my bet on buying a Toyota. I wouldn't buy a Mazda. I just buy a Toyota. If you come to a different solution, at least study your solution and find out why you think it to be the case. If you do say, "I'm going to buy a Hyundai Tucson," then know why you're buying it and understand what the data is on it.

In addition, I think there is good reason to choose a model that is ubiquitous. Now, here would be where you have to make a distinction between something that's financially practical versus something that's meeting some other need or some other goal. If you want a car that is unique, if you're seeking to express your personality with your vehicle or enjoy a toy of some kind, you might purchase some not so common vehicle and that's something that you love.

There's all kinds of great options out there and you can still do that and be very intelligent about it. A Honda S2000 is a wonderful roadster. Very fast. Very fun to drive. It has a whole interested little consumer or a whole interested little group of aficionados or a Mazda Miata, for example.

Wonderful little sports car that you could buy. Just a little harder to find than something like a Toyota Camry. In general, my preference for practicality is to buy something that's ubiquitous and here are a few advantages of that. What you get is you get a vehicle that's easier to find.

The F-150, the Ford F-150 is the most sold vehicle. It's the most popular vehicle in the United States of America. I just as soon own a Ford F-150. They're wonderful. They're easy to find. There's a huge market for them. Because there's a huge market, their prices are very, very stable.

They're well-known, which means it's easy to know if you're getting a value when you're buying and it's easy to sell it into the market when you're selling, which for somebody who's not a car person, somebody like Sarah who's looking for transportation, not just a – she's not trying to join the Mazda Miata weekend roadster club.

For somebody like Sarah who's looking for transportation, that ubiquity can be helpful. That ubiquity can lower many of your ownership costs. It makes it easier and cheaper to accessorize if you need to change something out. It makes it easier and cheaper to find parts if you need to fix something.

That ubiquity is valuable. And so whenever possible, I would like to own a vehicle that's just the same as everybody else owns. I don't have that need that you might need to look different if you do deal accordingly. But for Sarah, I would say buy something that is relatively ubiquitous.

You also want to buy something that's appropriate to where you live and the lifestyle that you're going to engage in. So consider that. But don't get taken in by things that are just simply flatly untrue. For example, you don't necessarily need a Subaru because it snows where you live.

Sarah – she's going to live in a place with a lot of snow. She could do extremely well to buy a normal front-wheel drive vehicle and just put snow tires on the thing. You don't need four-wheel drive for the snow. You don't necessarily need a pickup truck because you own a jet ski.

Your minivan will tow a jet ski just as well. So just think about the things that you're looking for and then consider, "What am I likely to buy and what am I likely to own?" If I lived in rural Oklahoma, I might not own a Prius because I don't know how popular Priuses are in rural Oklahoma.

I might own an F-150 because it'd be easy to buy, easy to service, easy to sell. You figure out where you live and what's appropriate for where you live. Now when it comes time to actually buying the thing, where do you go and how do you get it? Well there are a number of different sources.

Basically they would boil down to a dealership or a private party. Now dealership could mean different things. The basic value of a dealership, whether that's a new car dealer, used car dealer, is selection and the fact that they're probably going to have what you need when you need it.

If you need to buy a car today, you may need to go to a dealer because you can drive in with a friend and you can drive out with a car. They're going to have something. If you need to buy a Toyota Camry today, you go online, you start searching and you find a dealer that has one.

That dealer is performing a valuable service in the marketplace of selection. They're providing vehicles that are available when you need them. They're also going to be compensated for that service. That compensation usually comes in the way of a few extra thousand dollars, depending on the value of the car, that you're going to spend in order to pay the dealer their price that they have for the car.

That may be worth doing, especially if you're shopping for a specific vehicle. Back to Ben. Let's say that Ben decides that he wants to buy a Toyota Sienna minivan and he's looking for one that is three to five years old. He's looking for one that has fewer than 100,000 miles.

He wants electric doors on both sides and he wants the eight-seat model. When it comes on the dealer's lot, because Ben is specific, he probably should just go ahead and buy it from the dealer. Now, strike a good deal. Do your best to get a good bargain. But there's more value for Ben in buying that specific minivan that can last him for a decade versus waiting for one of those to show up in a deal.

Meanwhile, he only has one car and they're trying to figure that out. If you've got time, however, it is a good option for you to wait in the marketplace and to shop from a private party. There are random approaches to this and there are less random approaches to this.

The random approach is just to go and drive down the road, especially some secondary road or out in the country. I always like to look at cars that are for sale on the side of the road because usually that's a great deal. You might find somebody who's just reselling their car.

They put a sign on it, selling it by the side of the road. You can get a great deal that way. But the finding of that is very random. It's hard to predict where that Toyota Camry is going to be. It's hard to predict and to say, "Oh, that minivan or that SUV that I'm looking for is definitely going to be there." And it's very hard to predict that it has those options.

A great way to do it is, of course, to use the value of the internet and some of the newer versions of classified ads. Classified ads had their place. Today, most of that has been replaced locally. Now, there are a few options here. The big one, of course, that everyone knows is Craigslist.

In some of my recent secondary market transactions, I've learned that at least in my area, Craigslist is starting to fade in terms of its usefulness. The most impressive place that I have found a huge selection of vehicles has been Facebook, the Facebook marketplace. I hadn't paid much attention to it, but over the last few months, I have done a lot of transactions in the Facebook marketplace and I have been very impressed.

It has been much more fruitful than Craigslist. Here's my theory as to why. Most people have Facebook on their phone and it's so easy for them to just snap a picture of their car, put a quick title and description and post it, that a lot more people are using that.

The Craigslist interface on a phone is very clunky, doesn't work very well, and so you have to work to put it on Craigslist. Facebook is easy. They got a cell phone, boom, it's done. So I would encourage you, figure out what you want and then shop heavily on something like Facebook.

When buying a used car, I think there is a good argument to be made for buying used from a private party. Here are some reasons why. When you buy from a dealer, it's very hard to know the backstory of that car. Usually a dealer has a car either because they've taken it on trade from somebody who's upgrading or because they've bought it at an auction, but you don't know why it's at that auction.

It's hard to know the history. The vast majority of cars are going to be fine, totally fine at a dealer. The vast majority are. But there are going to be cars out there in the marketplace that somebody was having trouble with it. They fixed a couple of things and they said, "I'm getting rid of this thing." They trade it into the dealer.

That dealer takes it. They may put it on their lot and resell it or frequently they'll send it down to the auction. It goes through the auction. Another used car dealer buys it. They bring it in and they sell it. Now a used car dealer, most of them are going to stand behind their vehicles to some degree.

They might fix some things that are wrong and they're going to stand behind it to some degree. But it's hard to find out the history and be very confident in it. You can, of course, check the car facts. That doesn't tell you much about it, though. It just tells you what was actually listed in the report.

I would much rather pay extra for a vehicle to buy it from somebody who's been a long time owner. Whenever I know somebody who's selling a car, I always ask the details in case I might be interested in buying it because if I can know the person and know the ownership history of it and get an accurate report of what's wrong with it or what's right with it, that's a really, really important thing.

You can do that often with the technique of driving down the road in the country or looking on Facebook. If you can deal with a person, then most of your skills, your normal interpersonal skills will be useful for you. If you're dealing with a dealer in a dealership, now you're into that more kind of combative bargaining.

Are they honest? Are they dishonest? Use those skills that we don't use every day. So if you look on Facebook, let's say Sarah is looking around and she says, "You know what? Josh was right. A minivan is the best car for a grad student to buy. A minivan gives me safe, reliable, comfortable transportation.

A minivan is comfortable for a cross-country road trip because it's heavier than a little car. I can carry more things with me. I can use this minivan to move around the country if I need to. I don't have to rent U-Haul trucks. I can get a small trailer if I need to and hook it up.

This will be comfortable. I can load up my girlfriends. We can put the paddle boards on the roof and go spend a weekend at the beach. Like Josh was right, a minivan really is the perfect vehicle for everybody. No matter what, I'm going to get one." And of course she takes my advice and says, "All right, I've got about $5,000 saved.

I want to buy a Toyota minivan, so I'm going to start shopping." And so Sarah goes on Facebook and she just starts looking every day, Toyota minivans, starts interacting with people, asking questions. And then she finds somebody who's selling a Toyota minivan. She goes to see it and she finds herself talking to Ben, 10 years down the road, who's selling his Toyota minivan because now they've had five children.

They can't fit in it anymore. She says, "Ben, how's it going?" "Well, it's good. My children have beat this thing up inside a little bit, but it's been a good vehicle for us. I replaced the timing chain at such and such a miles or I've changed the oil on this level.

There's a little bit of a noise coming from the right front, but that's just, here's the reason why." Well, now she can interact with Ben, the seller, and actually understand what's happening with it. She can then, of course, check the Carfax. She would take down the VIN number. She would run it through Carfax or one of the competitors.

And with that data, she would be able to confirm, "Yes, indeed, this vehicle has been registered to Ben for the last seven years, just like he said." Okay, now I know that Ben's probably telling me the truth. Now she can start to interact and find out something that's real.

Now Ben may very well be willing to give her a little deal. After all, she just graduated from grad school. She's buying her first car. She's getting herself set up at her first job after grad school. She wants to give her a good deal and help her to get a good start in life.

But on the flip side, if I were Sarah, I would be willing to pay an extra $500 for that vehicle that I was confident in the history. I could see Ben and his wife and his children. I could know that this car wasn't in Hurricane Harvey and now it's on a dealer lot and it was flooded.

I could be confident. Yes, they've had it for seven years. I'm sitting here at their house. They're not lying to me. All the external data bears out. I would pay $500 extra to buy the vehicle of a known history because that would substantially lower my risk with buying the vehicle versus the dealer who may or may not be able to know that the electrical system got fried because there's an intermittent problem and every now and then when the car is sitting out there at night, the lights start turning on because it was sat through Hurricane Harvey.

The problem for Sarah is that buying process is going to take a while. But if she has time and she has money, that can go fine and she can look. Now as she's looking, she should be understanding the prices. Looking is cheap. Calling people is cheap. Interacting with Facebook Messenger is cheap.

Finding out what's going on with this. Now Sarah, what you should do is of course check the marketplace. When you've narrowed down on a type of vehicle that you're looking for, a range that you're looking for, you start looking at ads. Look everywhere. Look on Craigslist. Look in the classifieds.

Look at autotrader.com. Look on OfferUp. Look on Facebook. Run the Kelley Blue Book, kbb.com. Run the Edmunds values. Try to get an idea of what this thing is worth and start to understand, okay, Toyota minivans of this certain age, these many miles, they go for about this much money.

When you do that, it'll give you confidence. Your goal is to develop confidence about the market so that when you see the vehicle that you think is right for you and when you strike the vehicle that's right for you, you can move fast because as a buyer, you want to put as many helpful things in your pocket as possible.

When you're negotiating, price is only one point of negotiation. If you're willing to move fast, that can be an additional point of negotiation. If you show up at Ben's door, Ben's selling his minivan that his family has outgrown and you've got cash on you, you may be able to say to Ben, "Listen, I know you've got this thing listed for $4,500.

You probably could get that if you keep it on the market, but I'd really like to buy it right away and I've got with me $3,800. Would you be willing to take $3,800 in exchange for selling it quickly?" You don't know Ben's circumstances. He might say, "No, Sarah, I'm in no hurry.

I'm going to wait for my $4,500." Or he might say, "Yeah, I'll take the $3,800." But Sarah, you should be prepared for that. You should be prepared. You should have studied the market. You should know this is a deal. And if this is a deal at $4,500, it's fairly priced for a good vehicle, you may be willing to pay it.

Or you might say, "No, it's just not worth $4,500. It's worth $3,800." Do your shopping in advance digitally because once you start actually going and looking in person at a vehicle, that starts to incur time and expense. The expense of time, the expense of going to see something, and then the expense of getting it inspected, which would be my next point.

When you're looking at a vehicle, it's important just to look at it. And most of the time, if you'll just simply look at it, you'll be able to see, is this thing cared for or is it not? Check for all the little things. Go online, look for some checklists of how to investigate a vehicle.

But just look to see, is this thing cared for? Look to see if the story rings true. If Ben has children, look in the inside and say, "Is this thing beat up appropriately for children?" Just use your nose and sniff around and say, "Does this work out?" You have an intuition.

You have an ability to judge somebody's story. What I frequently will do in this situation is I'll just ask the questions multiple times. And listen, ask one question, tell me what's the background of the vehicle, what's the story. And then when you start to hear those details, start to question again the details.

Question if there are multiple sellers involved. Question each of them separately. See if they are telling the same story. Ask a little bit more details. For example, a pickup truck that I purchased was being sold because there had been a death in the family. So I asked the story from a couple people that were involved in the transaction.

And then after the story was found out, I changed a couple of details. And so you said such and such happened? No, no, no, that was wrong. And check to see if the story changes. Most people aren't going to be able to keep those facts straight. So if you could just listen to somebody and think, use that intuition that you have to try to get a sense of if somebody is being honest.

Many people, probably most, are simply going to be honest when they're selling a car. And especially if you're buying at private party where you're talking to the owner, they're just going to tell you here's what's going on with it. But you do want to get it inspected. The way to do that is make sure that you're confident that this is a car that you want to buy.

Go ahead and talk to the owner and try to strike the deal. So let's say that Ben is selling it for $4,500. You say, Ben, listen, I'd like to buy the car. I know that you could probably get $4,500 if you keep it on the market. But if you'd like to sell it today, I know this is really what I'd like to have.

Would you be willing to sell it today for $4,000 cash? And when you're dealing in this market, you should be dealing with cash, $20 bills, $100 bills, et cetera. Cash speaks. Now, I've never found that actually splaying out the cash necessarily makes that big of a difference, kind of the dramatic thing of let's put these bills here.

Maybe some people with more flair than I have can make that work. I've tried but it hasn't really worked for me. But dealing with cash means that the transaction is simple. Once you buy the car, it's going to be simple. It's going to be owned. If Ben says, yeah, I'd be willing to take $4,000 if you take it today, then you say, OK.

But my only thing is I need to get it inspected. I've always been able to have it when I've done it and I've made the mistake enough to know I'm not good enough of a mechanic to not get the vehicle inspected. I would make the deal and depending on the vehicle, depending on where it is, if you're out in the country, it's one thing.

But get it arranged to get it inspected. Usually, you can find and arrange an inspection by somebody close by. One time I bought a vehicle in Atlanta. I just simply looked around and I found somebody nearby and I made the deal. I'm going to take it to a local shop.

It's better for you to spend $150 at some local shop just to get it inspected than to get it a little bit cheaper and not have it inspected. It'll be worth it to know if there are any problems. And it's especially worth it in advance. Even if you got to do something close, it's not your normal mechanic, it's worth it to get it done in advance.

Sometimes you could hire a mobile mechanic or ask your mechanic to come with you. But I would get it inspected by a mechanic. If you have a friend who is knowledgeable and experienced and works on cars, that may be a good person to have come with you. And there are people who would be far more thorough than a mechanic and far more effective.

If you don't have that, at least take it for an inspection. It'll be well worth your time and your money. Usually the buyer will expect that. You may leave another car with them, leave some keys. You may need to put up collateral. What I have done at times is said, "Our deal is for $4,000.

Here's the deal. I'll give you $100 deposit that's nonrefundable to show you how serious I am and $1,000 refundable deposit with you while I take the car to get it inspected. You keep the title, of course. I'll take the car." So that person has $1,100 of my money. If I take it to the mechanic and I come back and it's in great shape, then I'll go ahead and pay the balance.

If I don't want the car, then they'll give me my $1,000 back. I'll give them the car and they'll keep my $100 deposit. You don't even always have to do the nonrefundable deposit. But those are the types of things that I would have ready and planned of how to do it.

So take it to a mechanic. Get it inspected before you do the deal. Depending on what you find from the mechanic, you may do the deal under the original terms or you may need to renegotiate the deal. Most people who are selling a used car don't know that much about its actual condition.

They may have fixed the things, but yeah, there's the sound from the right rear tire, but they don't know why that's there. And so find out from the mechanic. Get an itemized list of what's wrong with it. And then you've got to approach this reasonably. Here's where your market research is so important.

Sometimes you'll find a substantial problem with a vehicle and you're well within your prerogative to use that as a negotiation point. Listen, we've got our deal here for five grand, but man, this thing needs $2,000 worth of expenses. I don't know if you knew this about it, but I'm just not willing to do that.

Will you take $3,500 for it? The seller might take that or they might not. Be prepared to walk away if the list is long. Far cheaper for you to lose a $100 deposit and an afternoon going to look at a car and taking it to a mechanic than to buy something that's going to result in hundreds or thousands of dollars of repair bills later.

Don't worry about losing the $100. Don't buy something that's a bad deal. But frequently you'll find, "Hey, this thing checks out." You may negotiate another couple hundred dollars off and you buy the vehicle. The process of buying a vehicle is very, very simple. Basically all you need is the title.

Now technically most people would advise that you also get a bill of sale and that's a good idea. But really all you need is the title. There's a phrase in legal circles that possession is nine-tenths of the law. If you're going to leave with a vehicle, keys, and a title, you pretty much got what you need.

The wrinkle might be if you're buying a vehicle that has been financed. If the vehicle has been financed, it's owned by the bank, the seller is not going to be able to give you the title. That might be good for you when you're buying something that's newer. You will find that a seller who – sometimes you'll find someone who's trying to sell a car.

They owe money on it. They just want to get out of the debt. In that case, then what you'll do is you'll sign a bill of sale between you and the buyer. Go online. You can type it up yourself. You can write it up on a legal pad, whatever.

Just write up a bill of sale. You'll give them the money and then you'll arrange with the bank and the bank will send you the title. Just do a web search and you'll find that. It's very simple. I do like to buy cars that are a little bit older.

I think that there is a sweet spot in the market. Depending on the model, there's a sweet spot in the market when you start to get to a 10-year-old car because cars that are older than 10 years old are not really able to be financed, at least not in conventional financing.

For someone like you, Sarah, if it's 2018, if you go and you look, a vehicle that's 2008 is a very – or older – or newer, is a very serviceable vehicle, but it's not financeable. But usually in that space, you'll have – that car will be paid off. There's nobody that's doing 10-year loans on cars.

That's a sweet spot. Usually if you're shopping in that range, you're not going to have to come up with a big – the person will have the title. You need the title issued from the state, the vehicle and the keys, and then you just give them the money. In this situation, I think cash is the best.

When you're dealing at the lower end of the market here and I'm talking cars of $2,000 to $6,000, $8,000, something like that, $10,000 perhaps, cash is the best. As a seller, I would not accept a cashier's check or checks for vehicles in that range. I want cash. Just even with a cashier's check, it's a very good thing, but it's still – I was burned one time on doing that.

So I would only deal in cash. So cash is just simple. It's clean. You can do the transaction and you're done. You need to walk away with the title and the car and a bill of sale is fine. Drive it home. Take it down. Get it tagged. Get your own title and you got your vehicle.

It's really pretty simple. I can't think of any more practical information than I have given you. So Sarah, if you were my sister, I would say take the money that you have, keep it low, buy either a Toyota Prius, a Toyota Camry or a Toyota Sienna minivan. You can buy them for – get – look in that 8 to 12-year-old range, somewhere between 80,000 to 120,000 miles.

Even more is fine. Here's one comment for you on miles. Miles make a huge difference in the market price of the car. I have access through – I have had access to the auction systems and the dealer auction systems and I went through and did an analysis one time on the actual market price and for dealers, miles make a huge, huge difference in the cost of the car.

So if you can go with higher miles, it makes a big, big difference. But as a car owner, I am not so concerned with miles. Each part of the car has different things that are going to have wear and problems. So certainly, a vehicle with a lot of miles is going to have functionally more wear than a vehicle with fewer miles.

But it may not actually be a problem. I would rather buy a vehicle that's been used steadily and has 100,000 miles because the person had a 100-mile commute every day where every day it's been warmed up. It's driven long distances. So that burns off the water and the fuel.

It keeps the vehicle in good running order. It's been – had regular maintenance. I'd rather buy that vehicle with more miles than one that sat around and the person has been in and out of town. They haven't used it regularly and who knows what's going on with it. It's one of those things where there's just not a strong argument one way or the other.

The other thing I would say is that how many miles are you going to put on it? If you're not going to put so many on it, you can buy a minivan or a Camry or something with 120,000 miles and it's got another effective lifespan of 180,000 miles. You'll never go through that period of time.

With vehicles, some things will need to be fixed and replaced based upon the years of ownership. Some things will need to be fixed and replaced based upon mileage. You'll need a new battery based upon the age of the battery. The miles are not such a big deal. It's the age of the battery.

And so having a vehicle with more miles, that's not a problem. You're going to need to replace your brakes based upon the miles, not based upon the age. But maybe those brakes were just recently replaced. With tires, there's a component of age and miles. But in general, most of the stuff, as long as you buy a car that's relatively inexpensive and you're prudent, you don't have payments.

I've really never gotten burned. The only vehicle I've ever gotten burned on is the one that I replied previously with where I talked about the mistakes. And that was a unique situation, not a normal situation like this. And it was my fault. I forgot the last piece of advice, Sarah, that I need to give to you is calculate your ownership costs and run things like insurance.

So you should get insurance quotes on the things that you are considering buying. And you should consider what those insurance quotes will be. What I have learned with insurance is sometimes the vehicle choice is more important than the value of it. With a car insurance company, the value of the vehicle is a known quantity.

If the vehicle is totaled, then they know how much that's going to be worth. But the liability payments are the lesser known quantity. And so sometimes you could have much cheaper insurance for a vehicle that is more modern, newer, has the modern safety equipment than for a vehicle that is older and doesn't have a lot of safety equipment.

My '98 Toyota Corolla that I owned for a while, that I bought for $500, had what I consider to be very expensive insurance. I only kept liability coverage on it, the legally mandated liability coverage. But because it didn't have modern airbags, it had analog brakes, but it didn't have a lot of the modern stuff, I think statistically it's not a very safe car to drive.

And so it would result in potentially higher medical liability for the insurance company. If we compare that to some of the minivans that I have owned, the minivans were very inexpensive to insure. I bought a – a number of years ago I bought a 2007 Hyundai Entourage minivan. It was very inexpensive to insure because it had five-star crash ratings all around minivans – all around airbags, et cetera.

Number of years ago I bought a 2004 Toyota Sienna minivan for $3,000. I think it was rock solid, works great, still drive it. But it had great, great crash ratings. So the insurance costs are very low. So calculate those costs in advance. And if you're thinking about buying something, make sure that you know what those costs are.

Now back to Ben's question as we finish. Ben is considering replacing his car and keep going like they are without robbing any other categories of their budget, not buying – not paying debt, or going ahead and buying a Toyota or Hyundai minivan for cash for his wife to drive and then for him going ahead and taking over the Hyundai Tucson until it dies.

So Ben, in short, I would say if I were in your shoes, I would go ahead and purchase the minivan. When you're in a situation like that where your car is totaled – this happened to my wife and to me a number of years ago. We had at the time a Ford Escape and a Ford Expedition.

We had a Ford Escape and a Ford Expedition. And when you are in a situation where you have ownership of vehicles, generally doing nothing is the best financial course. Usually just staying with what you have is the best. You own these vehicles, just keep them. So don't make any changes.

But when you have an accident and we had an accident – I had an accident. We were together but I had an accident. We were in the Ford Escape. We wound up being totaled by the insurance company. Now you need to make a whole new decision and that's what you're doing.

So now you wipe everything away. You start with a blank slate and you say, "Now, looking forward over the coming years, what is going to meet the needs of our family in the best way possible?" What we did at that time was buy a minivan. I had already known that I planned to buy a minivan.

There was no reason for me to sell the vehicles that were working great and buy a minivan. We bought a minivan. It was a great decision. For all the reasons that I have exhaustively discussed. But what I would do if I were in your shoes, I would buy a minivan.

I would try to – I would not invade my emergency fund unless I found a screaming deal after I analyzed the market and I would not take out debt. So I would use the insurance payment. I would seriously consider using other funds but I would try to buy something that is going to last for the longest period possible and to be new and in good condition but not particularly fancy.

With young children, I hate having fancy stuff. I would much rather have an older vehicle that I'm not worried about, that we can go to the beach, we can go to the park, we can put the – they're going to get it dirty. So why buy a new vehicle that's just going to beat up, be beat up?

So with anywhere from $6,200 to $6,000 to $10,000, man, you can buy a great car in that range. Thank you for listening to today's show, you radical you. Before you go, I have one question for you. Was there an idea in today's show that helped you? Were you inspired?

Were you motivated? Did you get an idea on how you can earn more or spend less money or invest more wisely or perhaps protect yourself from catastrophe and insulate yourself from financial disaster or just improve your life and your lifestyle? Well, if so, I have three requests for you.

Number one, take action. Listening doesn't improve your life. Doing, however, can revolutionize your life. Number two, take the idea or concept that you learned from me and go and teach somebody else. If you want to really learn something, go and teach it to others. That ripple effect of you to someone else will systematically transform your life and the lives of all those around you.

Number three, if you thought there was financial value in what you just heard, I'd ask you to come by and pay for it at radicalpersonalfinance.com/patron. Now however much you want to pay, that's up to you. But if the show is worth a dollar a month, come by radicalpersonalfinance.com/patron and sign up to support the show at a dollar a month.

If the show is worth $20 a month to you, I'd be happy to have your $20. Hey, if it's $1,000 a month, write me a check. Don't send it to me on Patreon, but I'd be happy to have that as well. radicalpersonalfinance.com/patron is where you can do that. Thank you.

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