Is It True That Those Dealers Will Really Finance Anyone?

Illustration for article titled Is It True That Those Dealers Will Really Finance Anyone?
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As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing dealers that will finance anyone, renting vs. buying for a car you only need for three months, and the best compact crossover for under $20,000.

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First Up: How Can Some Of Those Dealers Claim To Really Finance Anyone?

I need a used car, and I need it now. My 2006 Hyundai with 199,000 miles needs new brakes, which will cost more than the car is worth. It can’t pass inspection because the exhaust is leaking, and a collection of other things are breaking. The trouble is I have awful credit, and I doubt I could get a real loan. Which brings me to those used car lots you see with 10 or 20 cars that offer “We’ll finance anyone!” Is that true? Apart from appalling interest rates (I live in Massachusetts so that would be 20 percent max), is there anything else that’s a problem? It seems like the solution to my problem, but there’s always a catch.

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I don’t interact with those kinds of dealers, but as we have covered in more in-depth sub-prime loan pieces, yes, there are dealers who will basically give you a loan as long as you have a pulse.

While I am sure there are a handful of operations out there just trying to “give buyers opportunities” the vast majority of these dealers are often predatory. They sell poor-quality cars with super high-interest rates. In fact, some of these stores thrive on the fact that people will buy a car that they can’t pay for, so it gets repossessed and sold to the next person, then the cycle continues.

If you go down that road, you will likely end up with a bad deal trifecta by getting something that is already overpriced, likely not in good shape, at an APR that is sky-high. You are probably better off just fixing the brakes and the exhaust on your Hyundai, banking some money, and building your credit.

Is It Better To Rent Or Buy For Short-Term Ownership?

My 20-year-old daughter has a summer engineering internship lined up in San Diego, which is not in driving distance from either her college (Massachusetts) or our home (Seattle). She’s going to need a car for the summer, and we’re trying to figure out the best options for her. It looks like most long term rentals are $500-700/month if she can even get one being under 25. Would it be best to just buy a car at the beginning at the summer and sell it at the end? Any suggestions for safe used cars that wouldn’t lose much value over the three months when it comes time to re-sell? We could budget $10-15,000 if we knew we were getting most of that back at the end of the summer. Any quirks we should know about buying in CA?

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So this is a tricky one. Assuming she can get approved for a rental, you would be looking at a maximum cost of $2,100 for those three months, but that would be a car that someone else owns, and takes care of. You would not have to worry about any out of pocket expenses.

However, you could buy a nice sub $15,000 car that wouldn’t drop in value all that much and best case scenario break even on the sale, or only lose a little bit of money and hopefully, it would be less than $2,100.

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Normally, when making recommendations for shopping at this price point I look at cars with harder depreciation curves like Hyundai, Kia, and Nissan as you tend to get something newer with fewer miles for your money. However, in your case, I would stick with the tried and true Hondas and Toyotas as they will hold value better and while you may get something with higher miles, long term ownership isn’t a concern. In regards to quirks about buying in CA, the only thing you need to be aware of is that regardless of your home registration you will be paying CA sales tax.

Lastly: What Is A Good Sub-Compact Crossover For Under $20,000?

My mother wants to replace her 2013 Subaru Crosstrek soon because of all the engine issues/recalls, some body damage, and other quality issues that Subaru seems to be having with its cars lately.

What are your recommendations for another car that is similar, used, not Subaru, for $20,000 or less? We’re only considering sub-compact CUVs because things like the CX-5/CR-V probably won’t fit in our tiny little NYC garage. My 2015 Mazda3 hatchback barely fits.

I was looking at the Honda HR-V, and Hyundai Kona. The used HR-V prices seem pretty high for what you get, and the Hyundai Kona only has the turbo engine in the higher trims. Should we try to go over budget a bit and spring for the new Mazda CX-30? It seems like the perfect car. Would love to hear your thoughts.”

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The CX-30 is a very good car, but it’s not cheap with a starting price of $24,400 for a base model with AWD. I also imagine that deals on it aren’t going to be super generous right now since this car just launched. You would be likely looking at a total cost with all tax and fees in the mid $20,000 range even with some good negotiation. The other issue is that the CX-30 is just a lifted Mazda3 so if your Mazda is a tight fit, I don’t think the CX-30 is going to be much better given its 173-inch length.

The Kona is a nice ride if she digs the styling, and at only 164 inches it will probably be a better fit. Since Hyundais depreciate a bit faster, you can likely get a lightly-used model that is well-equipped under $20,000.

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Another alternative is the Buick Encore. These are super comfortable and come with some great features, they also provide solid values in the used market and at 168 inches they’re still compact enough to be easy to park.

Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)

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DISCUSSION

Oh jeez. Another one of these “I’m not paying more for repairs than I can sell it for” people. He needs to just fix his car. We’re not talking an engine replacement here. This is precisely the kind of person that falls into the used car lot trap. An idiot.