Are car buying services worth it?
I have used car buying services through Costco and USAA.  Twice with a Ford, and once with a Honda.  In all instances I was directed to sales people that were uncommonly friendly and pleasant to work with.  I was given a deep discount without any negotiation.  In two of the three cases I did not have a trade.  In one case I had a trade, and negotiated a deeper discount then was originally offered.   Did I get a good deal?  Eh, who knows?  Really it depends what your goal is.   If your goal is to avoid negotiation, avoid idiot salesmen, and receive a good discount then a quality car buying service may be for you.  My research, a few years old, indicated Costco's program was better then the USAA one. If your goal is get a deep as a discount as possible on a new car, well then you have some work cut out for you.  Keep some hand sanitizer handy when you meet one of the slime ball salesmen.  Keep in mind that not everyone understand the difference between the words value and cheap. If your goal is to pay as little as possible for quality transportation.  Avoid most dealers and new cars. But I don't think that is what you are looking for. I haven't heard of these before!  (And I'm on the board of a Credit Union.) The 0.99% on loans is great.  It's especially great on a used car: the steep part of the depreciation curve was paid by the first owner. The network probably have a business relationship with the credit union.  Credit unions do indirect lending -- approval of loans that happens at the point of sale, which then the credit union gets as assets. Depending on the cost of that program, it probably won't hurt.  Your credit union wants to keep your business, because they know that you have a lot of options for where you bank and where you get loans. The buying service your credit union uses is similar to the one my credit union uses. I have used their service several times. There is no direct cost to use the service, though the credit union as a whole might have a fee to join the service. I have used it 4 times over the decades. If you know what make and model you want to purchase, or at least have it narrowed down to just a few choices, you can get an exact price for that make, model, and options. You do this before negotiating a price. You are then issued a certificate. You have to go to a specific salesman at a specific dealership, but near a large city there will be several dealers to pick from.  There is no negotiating at the dealership. You still have to deal with a trade in, and the financing option: dealer, credit union, or cash. But it is nice to not have to negotiate on the price. Of course there is nobody to stop you from using the price from the buying service as a goal when visiting a more conveniently located dealership, that is what I did last time. The first couple of times I used the standard credit union financing, and the last time I didn't need a loan. Even if you don't use the buying service, one way to pay for the car is to get the loan from the credit union, but get the rebate from the dealer. Many times if you get the low dealer financing you can't get the rebate. Doing it this way actually saves money. Speaking of rebates see how the buying service addresses them. The big national rebates  were still honored during at least one of my purchases. So it turned out to be the buying service price minus $1,000. If your service worked like my experience, the cost to you was a little time to get the price, and a little time in a different dealer to verify that the price was good. Depends on how you value your time.  These programs do not say they will get you the lowest basement price; they say you get a reasonable price without negotiation.  This is true. Use a service.  Pick out the car you want and spend less than an afternoon picking up your vehicle.  You don't have to fret or do all of the price research or comparison shopping because that is what the service does for you. Since you have to pick a make and model before you begin AND because you need to arrange your financing at a credit union before you being (regardless of a buying service) I don't think they actually work out financially for most folks. My anecdote: Because we were buying an already inexpensive new car, the Costco pre-negotiated discount was just a few hundred bucks.  The discount is different for each car (naturally).  Our base model was terrific in consumer reports, but the sticker price doesn't leave dealerships a lot of room for profit to start with. We ended up saving a couple thousand dollars by skipping the Costco program and following these tips from JohnFX:  What are some tips for getting the upper hand in car price negotiations? But we did it all over email.  We emailed any dealership we could find online that was in driving distance. (There were literally dozens of dealerships to choose from.)  We made a new, throw away email address and starting to ask for a lower price.  Whenever we got a lower price, we simply asked the others to beat it.  All over email.  It only took a few days, we know we got a low price and the stress really wasn't a factor.  (A couple of the salespeople got a little rude, but it was over the email so we didn't care or fret.) I had time to kill, and the extra hassle and effort saved me much more money. "I went through the Costco program for the so-called ""no-hassle"" bargain price when I bought my Prius. According to other Prius owners that I've met on forums and TrueCar's web site, I paid ""average."" Lots of people in my area managed to negotiate a better price by $1-2k. So much for getting a deal. I do not plan to use Costco to buy another vehicle again."
"You can greatly reduce the risk if you can line up a buyer prior to purchasing the car.  That kind of thing is common in business, one example is drop shipping.  Also there are sales companies that specialize in these kinds of things bringing manufacturers of goods together with customers.  The sales companies never take delivery of the product, just a commission on the sales.   From this the manufacturers are served as they have gained a customer for their goods.  The buying company is served as they can make a ""better"" end product.  The two parties may have not been brought together had it not been for the sales company so on some level both are happy to pay for the service. Can you find market inequalities and profit from them?  Sure.  I missed a great opportunity recently.  I purchased a name brand shirt from a discount store for $20.  Those shirts typically sell on ebay for $80.  I should have cleaned out that store's inventory, and I bet someone else did as by the time I went back they were gone.   That kind of thing was almost risk-less because if the shirts did not sell, I could simply return them for the full purchase price.  That and I can afford to buy a few hundred dollars worth of shirts. Can you afford to float 45K CDN?  What if it takes a year to sell the car?  What if the economy goes sour and you are left ""holding the bag""?  Why are not car dealers doing exactly what you propose? Here in the US this type of thing is called ""horse trading"" and is very common.  I've both lost and made money on these kind of deals.  I would never put a significant amount of my net worth at risk." Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less. But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car) The good debt/bad debt paradigm only applies if you are considering this as a pure investment situation and not factoring in: A house is something you live in and a car is something you use for transportation. These are not substitutes for each other! While you can live in your car in a pinch, you can't take your house to the shops. Looking at the car, I will simplify it to 3 options: You can now make a list of pros and cons for each one and decide the value you place on each of them. E.g. public transport will add 5h travel time per week @ $X per hour (how much you value your leisure time), an expensive car will make me feel good and I value that at $Y. For each option, put all the benefits together - this is the value of that option to you. Then put all of the costs together - this is what the option costs you. Then make a decision on which is the best value for you.  Once you have decided which option is best for you then you can consider how you will fund it. If it costs more to fix the car than the car is worth, then those repairs are not worth it.  Hit craigslist and look for another junker that runs, but is in your cash price range.  Pay to get it looked at by a mechanic as a condition of sale.  Use consumer reports to try and find a good model. Somebody in your position does not need a $15K car.  You need a series of $2K or $4K cars that you will replace more often, but pay cash for.  Car buying, especially from a dealer financed, place isn't how I would recommend building your credit back up. EDIT in response to your updates: Build your credit the smart way, by not paying interest charges.  Use your lower limit card, and annually apply for more credit, which you use and pay off each and every month.  Borrowing is not going to help you.  Just because you can afford to make payments, doesn't automatically make payments a wise decision.  You have to examine the value of the loan, not what the payments are.  Shop for a good price, shop for a good rate, then purchase.  The amount you can pay every month should only be a factor than can kill the deal, not allow it. Pay cash for your vehicle until you can qualify for a low cost loan from a credit union or a bank.  It is a waste of money and time to pay a penalty interest rate because you want to build your credit.  Time is what will heal your credit score. If you really must borrow for the purchase, you must secure a loan prior to shopping for a car.  Visit a few credit unions and get pre-qualified.  Once you have a pre-approved loan in place, you can let the deal try and beat your loan for a better deal.  Don't make the mistake of letting the dealer do all the financing first. A lot of articles about this kind of thing ask you to do the simple math: $5k < $15k.  If you've got a trustworthy mechanic, and you're looking to save money, it's simple, you're looking at $10k in savings, not even counting interest, higher insurance, etc. On the other hand, if you're just lusting after a new car, and don't mind spending the extra money, then why not? As you mentioned, however, if you think you'll get at least the value of your repair back, you might as well get the car repaired for $5k, so you'll be able to get around town.  If you still decide you want a new car, then you'll have a trade-in worth $6500 instead of $1500. As someone who was just recently a salesman at Honda, I'd recommend buying a Honda instead :). If you really prefer your Toyota, I always found quote-aggregation services (Truecar, I'm blanking on others) very competitive in their pricing. Alternatively, you could email several dealerships requesting a final sale price inclusive of taxes and tags with the make, model, and accessories you'd wish to purchase, and buy the vehicle from them if your local dealership won't match that price. Please keep in mind this is only persuasive to your local dealership if said competitors are in the same market area (nobody will care if you have a quote from out-of-state).  As many other commenters noted, you should arrange your own financing. A staple of the sales process is switching a customer to in-house financing, but this occurs when the dealership offers you better terms than you are getting on your own. So allow them the chance to earn the financing, but don't feel obligated to take it if it doesn't make sense fiscally. "Uh, you want to lease a car through a dealer? That is the worst possible way to obtain a car. Dealers love leases because it allows them to sell a car for an unnegotiated price and to hide additional fees. It's the most profitable kind of sale for them. The best option would be to buy a used car off of Craigslist or eBay, then sell it again the same way when you leave. If you sell the car for what you paid, then you get the car for a year for free. If you are determined to go through with the expensive, risky and annoying plan of leasing a car, then you should use a leasing agent. I recommend reading some car buying guides before going out into the wilderness with the tigers and bears. Comment on Leasing Tricks Don't get tricked by the ""interest rate"" game. The whole interest thing is just a distraction to trick you into think you are getting some kind of reasonable deal. The leasing company makes most of their money from fees. For example, if you get into an accident it is a big payday for them. The average person thinks they will never get into an accident, but the reality is that most people get into an accident sooner or later. They also collect big penalties for ""maintenance failures"". Forget to change the oil? BOOM! money. Forget to comply with manufacture recall? BOOM! more money. Forget to do the annual service? BOOM! more money. Scratch the car? BOOM! more money. The original car mats are missing? BOOM! you just paid $400 for a set of mats that cost the leasing company $25 bucks. The leasing company is counting on the fact that 99% of people will not maintain the car correctly or will damage it in some way. They also usually have all kinds of other bogus fees, so-called ""walk-away fees"", ""disposition fees"", ""initiation fees"". Whatever they think they can get away with. The whole system is calculated to screw you." It is almost never going to be more economical to buy a new car versus repairing your current car. If you want a new car, that is justification enough. The .9% looks great, but it's not as relevant as the cost of the car itself. There are those who believe that one should never own a new car, that the first X years/miles of a car's life are the most expensive.  The real question is how your budget is allocated. Is the car payment a small sliver or a large slice? How big is the housing wedge? "A while back I sold cars for a living.  Over the course of 4 years I worked for 3 different dealerships.  I sold new cars at 2 and used at the last one. When selling new cars I found that the majority of people buying the higher end cars honestly shouldn't have been - 80%+.  They almost always came in owing more on their trades then they were worth, put down very little cash and were close to being financially strapped.   From a financial perspective these deals were hard to close, not because the buyer was picky but rather because their finances were a mess.  Fully half, and probably more, we had to switch from the car they initially wanted down to a much cheaper version or try to convert to a lease because it was the only way the bank would loan the money.  We called them ""$30,000 millionaires"" because they didn't make a whole lot but tried to look like they did.  As a salesman you knew you were in serious trouble when they didn't even try to negotiate. Around 2% of the deals I did were actual cash deals - meaning honest cash, not those who came in with a pre-approved loan from a bank.  These were invariably for used cars about 3 to 4 years old and they never had a trade in.  The people doing this always looked comfortable but never dressed up, you wouldn't even look at them twice.  The negotiations were hard because they knew exactly how much that car should go for and wouldn't even pay that.   It was obvious they knew the value of money. That said, I've been in the top 3% of wage earners for about 20 years and at no point have I considered myself in a position to ""afford"" a new ""luxury"" car.  IMHO, there are far more important things you can do with that kind of money." It depends completely on the car.  Some cars retain their value much better, and others drop in value like a rock (no pun intended).  The mileage and condition on a car also has a huge impact on value.   According to this site, cars on average lose 46% of their value in three years, so seeing one that drops 62% in roughly 3 years does not seem impossible. That value could also have been trade-in value, which is significantly lower than what you could get with a private party sale (or what you'd pay to get that same car from a dealer) One example: a new Ford Taurus (lowest model) has a Kelly Blue Book value of $28,000.  A 2014 Taurus (lowest model) with average mileage and in fair condition has a private party value of about $12,000, for a 57% drop in value. Note: I picked Taurus because it's a car that should not have exceptional resale value (unlike BMW, trucks, SUVs), not to make any kind of judgement of the quality or resellability of the car) You are really showing some wisdom here, and congratulations on finishing college.   Its a lot about likelihoods.  If you buy a new car, there is something like a 99.5% chance you will get a car that will not need repairs.  If you buy a car for $1200 there is probably a 20% chance that the car will only need minimal repairs.  So the answer is there is no real guarantee that spending any amount of money you will end up with a car with no repairs. You also can't assume that with buying a car it will immediately need repairs.  Its possible, that you could spend 1200 on a car and it will need an oil change.  In three months it might need brakes and in 6 months tires.  If that is the case, you could save up the money for repairs. Have you looked for a car?  It will take some work, but you might be able to find something in good condition for your budget.   If you shop for a loan, go with a good credit union or local bank.  Mostly you are looking for a low rate.  However, I would advise against it.  You worked so hard on getting out of school without debt, why start now?   Be weird and buy a car for cash.  Heck someone may be able to loan you a car for a short time while you save some money. It is the best company of business valuation services. This expert has been working in the Automotive dealership expert witness industry for long years. The Kirk Kleckner offers an exceptional form of the fee, which includes enterprise valuation,  car valuation, and professional Automotive dealership expert witness. Deals happening at automobile dealerships can be inspired via the monetary matters of the auto commercial enterprise and in addition singular automobile examinations. "It is a legitimate practice. The dealers do get the loan money ""up front"" because they're not holding the loan themselves; they promptly sell it to someone else or (more commonly) just act as salesmen for a lending institution and take their profit as commission or origination fees. The combined deal is often not a good choice for the consumer, though. Remember that the dealer's goal is to close a sale with maximum profit. If they're offering to drop the price $2k, they either didn't expect to actually get that price in the first place, or expect at least $2k of profit from the loan, or some combination of these. Standard advice is to negotiate price, loan, and trade-in separately. First get the dealer's best price on the car, compare it to other dealer and other cars, and walk away if you don't like their offer. Repeat for the loan, checking the dealer's offer against banks/credit unions available to you. If you have an older car to unload, get quotes for it and consider whether you might do better selling it yourself. ========= Standard unsolicited plug for Consumef Reports' ""car facts"" service, if you're buying a new car (which isn't usually the best option; late-model used is generally a better value). For a small fee, they can tell you what the dealer's real cost of a car is, after all the hidden incentives and rebates. That lets you negotiate directly on how much profit they need on this sale... and focuses their attention on the fact that the time they spend haggling with you is time they could be using to sell the next one. Simply walking into the dealer with this printout in your hand cuts out a lot of nonsense. The one time I bought new, I basically walked in and said ""It's the end of the model year. I'll give you $500 profit to take one of those off your hands before the new ones come in, if you've got one configured the way I want it."" Closed the deal on the spot; the only concession I had to make was on color.  It doesn't always work; some salesmen are idiots. In that case you walk away and try another dealer. (I am not affiliated in any way with CU or the automotive or lending industries, except as customer. And, yes, this touch keyboard is typo-prone.)" This sounds more like a behavioral than a debit card issue to me TBH. Did you put the money you're putting away into a separate savings account that you (mentally) labelled 'for investment'? That's pretty much what I do (and I have a couple of savings accounts for exactly that reason) and even though I know I've got $x in the savings accounts, the debit card I carry only lets me spend money from my main bank account. By the time I've transferred the money, the urge to spend has usually gone away, even though it often only takes seconds to make the transfer.