All Things Car

Plain talk help about buying or owning a vehicle, from shopping tips to ownership information and more

Archive for the category “Car Shopping”

Will it tow my boat? Important information to know before buying a truck to pull your boat or camper

This is the time of year that camper and boat salespeople love.  Truck salespeople don’t mind so much either.  But so many people who come in to talk trucks have no idea how to make sure they pick the right vehicle to tow their new trailer.  How can you avoid this pitfall?  Here is some information you need before you buy your new rig.

There are several important terms to know when you truck and trailer shop.  The first is GVWR (Gross Vehicle Weight Rating) of the trailer.  The second is the Maximum Trailer Weight of the truck.  You also need to know the Maximum Payload Rating of the truck, and the Gross Combined Weight for the truck with a trailer.  What do all of these mean?

  • Probably the most important thing to determine is how much weight you will be pulling.  This is where people have the most trouble.  Frequently, I am given the “curb weight” of the boat or camper.  The curb weight is how much the trailer weighs all by itself.  Sounds fair, right?  But then you add fuel for the boat motor, water in the live well, gear and tackle, water and waste water in the camper, groceries, luggage, or whatever else will  be in the trailer being towed, and you find yourself with less truck than you need  to pull the trailer.
  • The number you need when you go shopping for your truck is the GVWR, or Gross Vehicle Weight Rating of the trailer.  The “R” at the end is the key.  How much is this trailer rated to weigh at its maximum, with everything in it.  Sure, you won’t have it loaded to maximum capacity all the time.  But if your truck is rated to tow your trailer fully loaded, you are good to go in any situation.  When you start looking at your new tow vehicle, come armed with the GVWR of your trailer.  A good truck salesperson will thank you.
  • When you put a trailer behind a vehicle, a portion of the weight of the trailer rests on the vehicle towing it.  As you shop for a tow vehicle, ask what the Maximum Payload Rating of the truck is.  This number will be the maximum amount of weight you can put on the truck.  This number will be used up by options on the truck, passenger weight in the vehicle, cargo in the box, cargo in the cab, and the tongue weight (or kingpin weight if you will be pulling a 5th wheel camper) of the trailer.  Make sure you will not be exceeding the Maximum Payload Rating of your tow vehicle.
  • Finally, there is a rating for how much the whole picture can weigh.  This number is the Gross Combined Weight Rating.  The weight of the truck, payload (including everything we just talked about), and the trailer altogether can’t exceed this figure, or you can have trouble either with the truck, with the trailer, or with the D.O.T. (if you get pulled over and they think you are over the maximum).

I know this sounds like a lot to know, but you want to do it right.  If you have too much trailer for your vehicle, the trailer ends up controlling the truck, instead of the other way around.  Worse yet, you could prematurely wear out important things like suspension or transmissions if you don’t have the right truck for the job.

Ultimately, while it is important that you, as the consumer, are educated enough to ask the right questions, it is the job of the truck salesperson to put it all together and make the right recommendation.  Don’t settle for “Oh yeah.  It’ll pull it.”  Ask some questions.  Put some numbers on paper.  Use the power of the Internet to find this information, if your salesperson isn’t savvy enough to get this information for you, and put it together so you know what you are doing.  On second thought, if your salesperson can’t do this for you, perhaps you shouldn’t be buying a truck from them in the first place.  It’s too expensive to make a mistake.

I know this is a little more technical than some of the articles we have shared together, but it is important – especially this time of year.  Got questions?  Feel free to ask.  Otherwise, happy shopping!

Mike Bidwell
Mankato Motor Co.


Should I Lease? Part 3 of 3 ~ Is Leasing Right For Me?

ImageThe big question is, “Is leasing right for me?”  The answer is easy, and not so easy.  There are pros and cons to any type of vehicle financing.  But if any of the following fit for you, it might be worth keeping an open mind, looking at all finance options for your new car, and seeing what makes the most sense.  As we discussed, people lease for a variety of reasons.  Here are a few of the most common lease customers, but this list is by no means comprehensive.

  • If you like to get a different vehicle every 2 to 4 years, it’s probably worth your time to look at leasing.  If you fit this category, and hate the hassle of determining trade-values (and then hoping that value is more than you owe on the car) you definitely need to consider leasing.  At the end of your lease, you may or may not have equity in your car (kind of like a loan, right?), but unless you have driven more miles than you paid for, or have damage or abnormal wear-and-tear (even if you do, it’s just a few cents per mile, or the cost to bring the car back to normal), you will never be in the position where you owe more than your vehicle is worth at the end of a lease.  The lease company assumes all responsibility for any negative equity!
  • If the car that really fits your wants and needs carries more monthly payment than your budget can handle, again, it is probably worth considering the lease option.  Often, the lease payment is more affordable than the loan payment, and at a lower interest rate.  Then, at the end of the lease term, you have the option of continuing to make a similar monthly payment until the car is paid in full.  This works just like a loan, but with the option in the middle to decide whether you want to keep that vehicle, or get another.
  • If you drive a lot of miles, and need to replace your vehicle every few years, leasing may provide the best way to control the cost of high-mile driving.  Yes, your monthly payment is higher than it would be for a low mile lease.  The way this works is:  the lease company charges a certain amount (usually 12-15 cents per mile) for each mile over 15,000 miles per year.  The thing is, it is the same cost per mile if you drive an extra 500 miles or an extra 5,000 miles!   For many vehicles, a car that is only a few miles over normal is barely effected in value.  But if that same vehicle has a great deal higher than average miles, it often won’t sell unless the price is drastically reduced.  Leasing can keep a high-mile driver from taking that value hit, and still replace the vehicle every few years.

What it comes down to is that people lease for a variety of reasons.  My advice, in most cases, is keep an open mind.  When you have selected your new car, have the dealership run both loan payments and lease terms, in order to make the comparison.  It’s always a good idea to have all the facts before making a purchase of this magnitude.  If the lease can save you some money, save you some hassle, and make the process easier for you, you just may find yourself to be like me – a lease customer.
I hope this information is helpful.  Don’t be afraid to check with me if you have any questions.  And as always, happy shopping!

Mike Bidwell
Mankato Motor Co.

Should I Lease? Part 2 of 3 ~ What happens at the end of my car lease? – A discussion of your lease-end options

     As I mentioned last time, todays vehicle  leases are “closed end” leases.  What that means is that the residual, or lease-end value we discussed last time, is guaranteed by the lease company.  This guarantee opens up options for you as your lease expires.  Here’s where the fun begins!   With options at the end of a lease, this financing option becomes a viable option for a majority of car buyers to at least consider.

     The option most people are familiar with is the option to turn the vehicle in at the end of the lease.  That means you make your payments every month (or one payment up front, in a “single payment” lease – more on that later), paying your way down to the predetermined lease end value.  At that time, if the car is worth that value, or less, you get to hand the keys back in, pay a small disposition fee (often waived, if going with the same car company and lease company again) and pick out your next car.  While there is no equity with this option, and you are walking away from the payments you made, you are also not in a position where the car is worth less than you owe, and therefore have no money from your old car to roll into your new financing.  As long as you haven’t driven more miles than paid for in your contract, your maintenance is up to date, and you have no abnormal damage or wear & tear to your vehicle, you are free and clear of your obligation to the old car.

     Before turning in your old lease, however, it may be worth your while to check the market conditions.  The residual value is printed on your lease contract (hopefully you kept it), or would be available from your dealership or lease company.  It would be a good idea to see what dealerships would pay for your car.  If they will pay more than the amount on your contract, the extra money is yours!  Sell it to them.  They’ll send the residual amount to the lease company, and can write you a check for the remaining balance, or apply it as down payment toward your next vehicle.  Here’s the thing, though.  When you are getting this figured out, find out how much they will buy your car for, even if you don’t get anything from them.  Some dealerships will try to use discount from the car you buy (that they can give you anyway) to make the value seem higher than they are really paying.  Don’t fall into that trap.  Get the amount they will buy your old leased car for, and then look into a car you may be interested in purchasing.

     As long as we are talking about selling your car, some people choose to sell their car to a private party.  This is an option open to you as well.  Be aware that, depending on state tax laws, you most likely have not been taxed yet on the residual amount, so if you do it wrong, you will have to buy it out, pay the taxes and fees, and then sell it to the customer.  But there is an option.  Many dealerships, if you are buying your next car from them (and especially if this is the dealership you leased your old car from in the first place) will allow you to bring in your customer to buy your old car from the dealership, rather than straight from you.  In this case, as a reseller, the dealership buys out the lease, pays no sales tax on that amount, sells it to your customer at your agreed-upon price, and collects the taxes and fees only from your customer.  The profits above your residual are then given to you (again, typically as down payment on your next car, but can be as a check).  Many dealerships will not take a cut of your profits in this transaction, since they are selling you a new car in the process, and sold you the old one as well.

     But what if you like your car, and would like to drive it a few more years?  What if you like it more than the new cars you are looking at, and don’t want to give it up or sell it yet?  Again, this is your option.  Most lease companies also offer car loans, and would be happy to send out loan documents for the residual amount (plus taxes and fees for your state), setting up the loan balance into monthly payments similar to your old lease payment.  Then you just keep making payments until you pay it off.  In fact, many people lease their car when it is new, knowing full well they will choose this option when the time comes.  With the low rates and low payments offered on a lease, this can be attractive, and it offers an “option point” in the middle of the ownership experience, in case needs or wants change, and they decide a different vehicle is desirable after just a few years.

     Whichever option you choose, the fact that you can choose is the great part.  If you simply take out a long term loan to make the payments affordable, you have no options until the loan balance catches up with the depreciation, or until you decide it’s ok to roll the negative equity balance into your new finance contract.  If you decide to lease your new vehicle, at the end of the lease, which option fits you is completely up to you.  Want to keep the car, and the residual is a good value for a car like yours?  Turn it into a loan and keep driving it.  Needs or wants change and you decide a different car is in order?  No problem!  Do you have a buyer for your car, or can the dealership pay you a profit at lease end?  Go ahead and take advantage of it.  It’s all up to you!

     But should you lease in the first place?  We’ll take up that conversation next time.  Thanks for reading!  I hope this helps.  Questions?  Just ask!  And happy shopping.

Mike Bidwell
Mankato Motor Co.

Should I Lease? Part 1 of 3 ~ What’s all the fuss about leasing? Why would I lease my vehicle? What is it anyway?

Lease Keys

You can’t hardly watch TV, listen to the radio or read an article these days without one car company or another touting the latest and greatest lease payment.  But should you lease?  Should you stick with the traditional loan?  What are your options, and why do so many people talk about leasing anyway?  Over the next few weeks, I’ll discuss several aspects of this mysterious topic.

For today, let’s start with the basics.  Just what is leasing?  Basically, a lease is simply another way to finance a car.  We all know some people pay cash for a vehicle, and we already know how that works.  Other people take out a loan with their bank, credit union or through a lender the dealership connects them with.  Again, we are familiar with this.  Still others use their home equity line to pay for a car.  I don’t typically recommend this option, but that’s a discussion for another day.  Leasing is very much like financing, but with options built in at the middle.  You can decide after only a few years if you want to turn it in, sell it or keep it.  At the end of the lease term, your obligation is over, if you want it to be.

Leasing simply works like this.  Based on recent history, the lease company figures what the vehicle should be worth at the end of the lease.  That dollar amount gets set aside.  Your payments are on the difference between what you pay for the car, and that amount that has been set aside, plus the cost of funds (interest).  In the most basic terms, that’s a lease.  Many people have the misconception that leasing is like renting, but this couldn’t be farther from the truth.  The idea behind a lease is to pay just the depreciation on the car, rather than paying for the entire thing.  They know what it should be worth at the end, guarantee to you that it won’t be lower than that amount, and month by month, you pay the balance down to that amount.  After that, you decide what happens next.

The biggest advantage to a lease (other than affordability)  is that leasing gives you options.  At the end of the lease, you are completely in control of what happens.  You can choose to turn the car in and walk away from the car, the manufacturer and the dealership, if you so desire.  You can sell the car to a dealership or to someone you know, and potentially make some money at the end.  Or you can choose to continue to drive that car, if it is still the car you want to drive for a few more years.

The key to these options is the dollar amount we discussed earlier that has been put aside.  The lease company figures out that a car like this, that is this old, with this many miles is typically worth this amount to a dealership.  This figure is called the “residual.”  By establishing the residual value of the vehicle, you now know the projected depreciation of your car or truck.  Your monthly payments are not going into the wind, as if you were renting the vehicle.  Every payment is paying down the balance closer and closer to the residual.  At the end of the lease, you have paid your vehicle down to that dollar amount.

In the past, leasing gained a bad reputation, with some companies writing “open end” leases.  They got to arbitrarily pick a number out of the air to be the residual.  If the car wasn’t worth that at the end of the lease, that was your problem.  This put a lot of people into a lot of hurt, and caused them to never want to hear the word “lease” again.

These days, leases are “closed end” contracts.  Here’s where the magic happens.  When you lease your vehicle, the residual is guaranteed.  That means if the car isn’t worth what the lease company figured it would be, that’s not your problem – it’s theirs.  You get to hand them the keys and go get something else.  No questions asked.  No strings attached.  Thanks very much.  It’s been fun, but I’m going to drive (insert vehicle name here ) now.

The most common complaint I hear from people is due to a lease that wasn’t set up right.  A lease should be structured to fit how you drive, rather than trying to fit your driving into a lease.  If your lease doesn’t include enough miles, you will feel like you shouldn’t drive the car, even though you are making a payment every month.  I would rather set up the lease to have more miles than you need, so you feel like you have miles to burn, and don’t have a fear of “going over.”  If you drive more miles than you contracted for, the lease company will bill you for the extra miles.  This means if you drove 1000 miles more than you paid for in your payments, they will charge you about $150 at the end to compensate for those miles (check with your dealer for lease end cost – I used 15 cents per mile).  Additionally, at the end of the term, if you have a dent in the fender, or a hole in the bumper, you should have that fixed (insurance?) before turning it in, or they will bill you for fixing it.  Your insurance company probably paid you for it anyway, or at least should have.  Nothing scary here.  If you owned the vehicle, and were looking to trade it in or sell it, those things would effect the value anyway, so this is not a cost exclusive to a lease.  It’s just more visible because it becomes a bill, rather than a deduction from value.

Next time we will start to look at the question “is leasing right for me” and the implications and ramifications it may have for typical customer situations.  Who should lease?  Who shouldn’t lease?  We will also discuss the lease end options I alluded to earlier.

Mike Bidwell
Mankato Motor Co.

What is the difference between horsepower and torque, and what’s with all this RPM talk anyway?

     When you read anything about car shopping, everybody wants to talk about the power of an engine. But it gets very confusing making the comparisons. One car emphasizes how many horsepower the engine produces. Another talks about low-end torque. Some cars look like they should have the same power, but feel very different when I drive them. And then there is the @4000 RPM tag after the number. What does that mean?
Putting it simply, torque is the power an engine produces to get a vehicle moving, while horsepower is the ability to keep it moving. From there, it all depends what is important to you. If you like the “seat of your pants” thrust at the stop lights, or if you are purchasing a vehicle to pull a trailer or haul a heavy load, torque is your answer. If you are looking for more of a touring car, and passing power is more up your alley, then a high-horsepower sports car (2 or 4 doors – they make both these days) will be more appealing.
There are a number of other factors that can complicate matters, and that’s a topic for a different discussion, but the type of transmission, the gearing in the differential/transaxle is a factor (often discussed in pickups and large SUVs), and of course, that RPM term we see next to the horsepower and torque ratings.
RPM (Revolutions Per Minute) refers to how fast the engine is revving when it hits that peak horsepower or torque number. Low-end torque means that you don’t have to wind the motor up very far at all to get to the peak torque, and get the load moving. Many diesel trucks emphasize that you will be producing a lot of torque right at the engine speed the engine idles at. That means that when you first put it in gear, you have essentially all the “get it going” power you need to start towing or hauling. You don’t have to “step on it” to get into the power to get moving.
Horsepower, you will typically see with a relatively high RPM number. Some are “high-revving” motors, which mean that as you wind up for aggressive driving, the horsepower is there to finish the drag race. A daily commuter car will be just fine having the peak horsepower at a more moderate RPM, and may even provide a fuel efficiency advantage as a result of this design.
Which is more important to you will depend on what you need the car to do. I hope this brief explanation of the two is helpful as you research your purchase. Above all, however, remember that research is important, but nothing will tell you as much as a 10-15 minute test drive. Make sure the salesperson takes you on a route that will allow you to experience the elements of the car that best fit what you are going to need it for. If you need torque for carrying a load or pulling a trailer, make sure you are able to climb a hill on your drive. If you are more of a spirited driver, make sure you get the chance to accelerate up to highway speeds. If you are looking for a travel vehicle, make sure you get to drive on a variety of road surfaces, and at both city and highway speeds. Then combine your reading with your driving, and see if you are in the right car. From there, your decision will be easier. Happy shopping!

Mike Bidwell
Mankato Motor Co.

Post Navigation

%d bloggers like this: