Hey Cool Car Fans,

I thought I would take a few minutes and write an article about how credit cards can affect your credit report and how your credit score can affect your interest rate on your car loan.  Many people will come to me to get an auto loan and they are amazed when they discover that their credit score is not as high as they thought it should be.  This is often because they will have a credit card maxed out to the top of the credit amount limit that they have been offered, instead of using no more than 30% of what is available to them.  This affects their credit score dramatically.  They would be better off having two credit cards and splitting the balance between the two of them to keep it at 30% or less and dropping the total credit limit available.

For example, if you have a $10,000 credit line of your VISA card, you do not want to have more than $3,000 on that card at any given time, so that it doesn’t drop your credit score.  You would also be better off to have a $5,000 limit instead of $10,000, if you don’t have $3,000 on the card that you need to use.  The same is true for your other cards that you might have.  In particular, the consumer cards that you might get at an electronic or furniture store.  What often happens is someone will go to the store to buy some furniture for their new home and they will be given a $15,000 line of credit and then they buy as much as they can to max out the credit card.  They then come to see The Cool Car Guy to get a vehicle and they are shocked that their FICO score has dropped from 750 to below 700, which can greatly affect their purchasing power, based on the interest rate that they will now qualify for to get an auto loan.

I recently heard that home buying is going to go the way of auto buying where the interest rates will be tiered like auto loans.  Let me explain how this works with a Credit Union and a real life example.  I had a client recently that came to me and he thought he had a 750 FICO score when he had pulled his credit bureau online.  His report was through TransUnion, but when I pulled his credit report through Experian it was only a 685, so instead of getting a loan for 2.99% the credit union was at 7.94%!  That’s a huge difference in purchasing power.  Fortunately for him, I could pull a TransUnion credit report and his FICO score had not been updated yet with TransUnion to get closer to what Experian was reporting, so I was able to get him a rate of 3.49% instead of 7.84%.

His rate was still not as good as someone with a higher score who would qualify for 2.99%, but he was still able to get the vehicle he wanted at the price that he wanted, so it worked out in the end.  If he had gone to that credit union by himself and got qualified like most of the “experts” suggest that people do, he would not have gotten the 2.99% rate because banks and credit unions are in business to maximize a profit on their interest rates.  The chart below from ComplexSearch.com illustrates how people have credit scores that vary drastically.

Some banks and credit unions though will only use a specific bureau and not all dealerships have access to lenders like I do through the dealerships where I have my license placed, as an Independent Contractor.  This is one of the things that people often overlook about the services that I can offer.  They are only shopping the price of the vehicle and not the entire package.

The people who really get creamed on interest rates because of their credit challenges are people who have had a bankruptcy or have student loans that are not paid off.  I’ve see interest rates of 21% that people pay on auto loans through a number of dealerships.  They like the salesperson and think that they are getting a great deal, but it is costing them more money than they realize.  Had they worked through me and I could have obtained a rate of say 19% based on their credit score, I would have saved them about $1,500 that they are giving to the bank for doing the same loan on the same vehicle.

Sometimes people with credit challenges fail to realize that they could have gotten an even lower rate on a different vehicle than the one they are wanting to purchase.  They get too emotional about a specific vehicle when they could be saving money on a vehicle that makes more sense for their situation.  Again, this can be significant as well.  At 18% the difference is almost $2,000 over the term of the loan compared to 21% and usually these are people who really need an additional $2,000.  In fact, if you’ve been in a high interest rate loan for six month or a year and you’ve been paying your loan on time, you should be calling me to trade it in on a different vehicle.  This way you will not be paying such a large amount in interest based on your credit score.

Managing your credit report is very important today.  The key is to get as low of interest rate as possible, so that you’re giving the banks less money, pay off your consumer debt and keep your FICO score healthy.  If you have questions or comments let me know and I’ve included a loan repayment calculator, called Pre-Payment Calculator here at CoolCarGuy.com under the links section on the right.  You can put in your loan and calculate how much of an extra payment will help accelerate your auto loan, which I plan to write a different article about here later this month.

If you want to save time, money and hassle for your next vehicle give me a call and I can put you in a better position financially with your automobile situation.  Be sure and sign-up for my notifications when I post new articles here.  Have a safe and healthy 2014!

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Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Hey Cool Car Fans,

One of the most amazing things that I’ve witnessed over the years is how automobile manufacturers lose their customer base over service issues.  I thought I would end the year by writing an article on this topic because I find it fascinating.  I could write a book as The Cool Car Guy on sales and marketing and how dealers and manufacturers do such a wonderful job ticking off their clients.  Any other industry would probably take the time to figure this out because they care about their customers, but I’ve watched this happen year after year in the automotive industry.

I’m talking about how fast an automobile manufacturer is willing to give up their clients to a competitor, after the sale.  The automobile industry spends hundreds of millions of dollars on advertising to try to get a customer.  If you watch any football game, you’re going to see beer commercials, prescription drug commercials, credit card commercials and automobile commercials.  These ads are not cheap.  Automobile manufacturers will spend millions of dollars to try to get people to drive a VW, Lexus, Infiniti, Audi, BMW, Mercedes, Subaru, Chevy, Ford, GM, Chrysler, Kia, Honda or Toyota. When I start naming off these brands, it’s very easy to think about the commercials that we’ve seen for each brand mentioned above and any that I may have left out.  The Lexus “December to Remember” or “Jan” sitting at the front desk talking to someone coming into the dealership to buy a Toyota, how someone has fallen in love with their Subaru, how Ford trucks are built “Ford Tough” or how you can “sign then drive” off in a new VW, each brand trying to earn our new business.

You know what I’m talking about because everyone knows these brands and their advertisements.  When you buy one of these vehicles, the manufacturers even hire a third-party company to take surveys from their customers to rate the salesperson and the dealership on the experience they had.  If the salesperson doesn’t get a “10” out of “10” it will show negative on the dealership and the salesperson.  What the manufacturers are failing to realize though is that this is not the real problem with their brand.  It’s not the initial sale that is the issue, but it is what happens once someone owns their vehicle.  The real problem is the service side of their product.

Let me illustrate what I’m talking about with my own experience with Apple computer.  I’ve used Apple products since the Apple IIe, which was way back in the 1980’s.  I sold over $12 million in PC computers in the early 90’s when I worked for a company called ZEO’s International and I still used Mac’s for my personal computers at that time.  I’ve owned iPods, iPads, iPhones, Macbooks, iBooks, just about everything that Apple sells, but recently they really ticked me off.

Now you would think that if someone has spent tens of thousands of dollars with your computer company over the years that you would want to take care of the client?  Apple doesn’t care though because they are Apple and that’s how most car companies act as well.  What changed my opinion of Apple Computer?  My daughter spilled water on my computer by accident and fried it, so I went into the Apple Store and they basically said, “Sucks for you Mr. Customer.  We are Apple and you need us, but we don’t need you.  Spend another $2,000 on a computer and we’ll help you out.”  Now, anyone who has ever sold anything in their life knows that if you treat your customers like they are not important that they will find another place to spend their money.  You risk that your customer will do what I’m doing, which is telling potentially hundreds or even thousands of people who read about my bad experience with Apple.

This is exactly how automobile manufactures treat their clients and it is pretty psychotic.  I mentioned last month that I had a client recently that needed a $5,000 repair on their Mercedes Benz.  They loved their Mercedes, until they found out that the differential on their vehicle went out with under 100,000 miles on it.  Since it was out of “warranty” it was going to cost them big time.  Do you think Mercedes Benz is smart enough to make sure that they save this client by figuring out how to reduce a $5,000 repair through their Dealer network?  Nope.  They instead allowed a third-party, an automobile mechanic at a local shop, to offer them a better deal than their own dealer network.  Does this make any sense?  Wouldn’t it be worth it to save a client by doing the repair at your cost and keep that client in your vehicle, so that they can get another Mercedes-Benz in the future?  Instead Mercedes-Benz will give millions of dollars to an advertising agency to try to get a new client, while ticking off their existing client. The client went and leased a Toyota Highlander and I doubt that they will ever own a Mercedes Benz again.  The customer is gone. So much for the survey when selling that new vehicle because it doesn’t matter.  Who cares, if you are going to lose them down the road when the vehicle needs a costly repair?

It’s not just Mercedes-Benz that does this, but they all do it.  I had a woman tell me recently her nightmare about owning her Chevy and how she will never buy a Chevy again.  It was almost identical to the people with the Mercedes-Benz, but a different problem with her vehicle.  She had a repair that was required on her vehicle and it was thousands of dollars, but the dealership cost was more than the third-party vendor.  She had nothing good to say about her Chevrolet and she hates the company because of the repair her vehicle needed.  What about the Subaru that needs the head gaskets replaced at 80,000 miles and is a $2,500 repair at the dealership?  How about the transmission that went out on the Nissan Pathfinder that I delivered to a client new and several years later when it was out of warranty based on the miles, the dealer gouged them to get it repaired?

How about the client who purchased a Ford Escape from me and two years later they called me angry because the transmission went out on it and the dealer quoted them $3,000 for the repair?  I knew of a third-party repair shop in Colorado Springs and they fixed their transmission without having to rebuild it completely for about $700.  Ford may want to send me an advertising fee for saving their client for them.  If we couldn’t have done that though, I would have traded them out of it and they probably would have never purchased a Ford again.Why couldn’t the Ford Dealership have done that for them? Why would you allow a third-party service provider to offer a better deal on repairs to your vehicle brand than your own dealer network?  Think Apple Computer is all I have to say about that one.

Automobile manufacturers are arrogant, but where would GM and Chrysler be without the American taxpayer loaning them money to stay in business?  Where is Pontiac, Oldsmobile, Hummer, Saturn, and Suzuki?  If you don’t take care of your customers they will find another place to go with their business.  My entire business model is based on service.  People pay for me to bring them their vehicles and they utilize me to save them time, money and hassle.  If the automobile manufacturers asked me for my opinion, I would suggest that they take some of those advertising dollars and spend money on keeping their existing customers happy.  It’ s much easier and more cost effective to save an existing client than to find a new one.

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Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Hey Cool Car Fans,

Many of my clients contact me toward the end of the year wanting to take advantage of the end of the year rebates that manufacturers place on their vehicles.  Rebates serve a great purpose for the automobile industry and they typically come when the new line of vehicles are coming out for the following year.  A rebate really has to do with the fact that a vehicle has depreciated over the course of the year, so the manufacturer is trying to sell their remaining vehicles to get ready for the next model year.  You are really just getting a discount on the vehicle because of the depreciation that has taken place throughout the year.

However, rebates can be a great way to roll negative equity in a trade.  For example, if there is a $2,000 rebate on a vehicle and someone has $2,000 in negative equity, it could mean the difference between qualifying for a loan and not qualifying.  Many times rebates are also placed on vehicles that are available for lease and they will call it “lease cash” or some other type of incentive.  This additional money from the manufacturer can again be a fantastic way for someone to solve a nightmare that someone may find themselves in with their current vehicle.

I had a client who had this problem recently with their Mercedes Benz that needed a $5,000 repair.  Rather than paying for the repair on the vehicle, they traded out of it and took the hit on the trade value of their vehicle, so they had about $5,000 in negative equity.  They were able to lease a new Toyota Highlander because of the incentives that were on the vehicle and their payment on the new car only went up slightly from what they were paying for their older, broken Mercedes Benz.  In three years they will be able to start over, while driving a new Toyota that included two years of free maintenance, with a lease that was structured to fit the number of miles that they drove each year.

This is a great example that many people often overlook when they are in a difficult situation with their vehicle related to repairs. Why fix an old vehicle that you still owe money on when you could start over with a lease and drive a new vehicle under warranty that can even include free maintenance?  Too many people are “anti-lease” when they really don’t realize the benefits that leasing can often offer.  It all depends on the structure of the lease, the situation of the person and the incentives that are included in the overall package.  I recently did a lease like this for someone who was only paying about $450 in interest over three years on a $45,000 vehicle, where if they were to finance it they would have been paying more more than that in interest each year for five years.  Many manufacturers will also offer 0%, 1.9% or 2.9% financing options as well, so it’s important to look at all the offers available.

Rebates and incentives can be a fantastic tool that many people can take advantage of as we head toward the end of the year.  Many manufacturers like Honda and Subaru clear out of their 2013’s fast, but other manufacturers still have inventory that they have incentives on that you can leverage before year end.

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Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Hey Cool Car Fans,

The Chevrolet Volt is sold as an amazing “electric car”, but it’s really just a hybrid vehicle like a Toyota Prius that has been around for years. Now before the die hard Volt fans start screaming that the Volt is totally different, let’s just look at the reality of how these two vehicles work.  The Volt and the Prius both allow you to plug them in before going for a drive and then you travel a certain distance on electricity before the batteries are exhausted.  Once you’ve run out of juice, the gasoline engine will kick in and you carry on like a familiar hybrid vehicle.

What’s the big difference between the Chevy Volt and the Toyota Prius then?  For one thing, the Chevy Volt uses a different battery pack than the Toyota Prius.  A standard non-plugin Prius has a 1.6 kW-hr, nickel-metal-hydride battery. The Volt’s battery is a whopping 10 times larger.  It’s a liquid-cooled, 16.0-kW-hr lithium-ion (chemistry by Argonne National Lab and fabrication by LG Chem).  This allows it to go up to 40 miles before the engine kicks in, which is pretty fantastic on a single charge before burning gasoline.  This allows many people to drive to work and back on virtually zero gasoline, which is the big rage about the Chevy Volt.

The plugin Prius version uses a different battery that is manufactured by Panasonic for Toyota.  It is 73 percent smaller than the battery used in the Chevy Volt and it’s only a 4.4-kW-hr, actively air-cooled lithium-ion battery.  What’s the big deal between the two?  How about the price tag? I would say that is something pretty important to look at, wouldn’t you?  If you need to replace a battery pack in a Chevy Volt down the road, you’re maybe looking at about $6,000 and they spent another $4,000 on the battery pack structure and those are the costs that GM paid.  This is according to Bob Lutz, when he wrote about the vehicle in Forbes in September of 2012, after GM was accused of losing more than $40,000 per vehicle.   He stated that the raw battery is about $350 per kW-hr, which is more like $600 in reality when you start adding all the other costs associated with making the battery work, but who’s counting.  His article was funny though because he tried to claim that the cost of the vehicle was about the same as a Chevy Cruze, which it looks like a Chevy Cruze, but there isn’t a $10,000 battery pack in a Chevy Cruze.  It’s kind of like the difference between a duck and a goose.  “They both have wings, funny looking feet and seem to handle the cold water pretty good.”

It was reported that GM had spent an estimated $89,000 per vehicle to produce the Volt and I’m not sure if anyone really knows what the real costs were in the Land of Oz.  The bottom line is that a ton of research and development, along with other manufacturing costs went into producing this vehicle.  What I do know is that if you ever need to replace the battery in the Prius, it’s about $2,500.  When I called a GM Dealer and asked what it costs to replace a battery in a Chevy Volt, I was told by the Service Department, “We have no idea, we haven’t had to replace one of those yet.”  I should have asked if he knew the difference between a duck and a goose.  I guess you could take that as good news and bad news.  It is good news that the battery is working, but bad news that you are driving blind.  If you ever do have to replace one that isn’t covered under their warranty – it could be very expensive.  I know that some of you are saying that it’s covered under the warranty, but you obviously have never gone into a dealership and had them tell you that “Oh yeah, that’s excluded for this reason.”, which I encounter several times a year. Forgive me if I have a slight distrust of automobile manufacturers and their warranty claims.

Which brings me to the question of whether or not the Chevy Volt is a vehicle that you should be looking to own?  I do mean own and not lease.

If the Munchkins in The Wizard of Oz were to sing us a song about General Motors (The Wizard) and their Chevy Volt, it might sound something like this – “If ever there was a lease there was, a lease there was, because, because, because, because…because of the unknown things it does…” Yes, the Great and Powerful Oz has spoken that this is a vehicle you should be leasing and not looking to purchase anytime soon.

In my opinion, you do not want to own a Chevy Volt. Even if the State of Colorado is going to give you a tax credit to own one, unless you have money to burn, don’t do it.  If you do have money to burn and you really want to own one, please call me and I’ll be happy to sell you one for over retail, so that you can feel really good about owning one.  And I will feel really good about taking your money.  Seriously, you should never dream of buying this vehicle or it could turn into a nightmare down the road.  However, you should seriously consider leasing a Chevy Volt.  Right now you can lease a Chevy Volt for under $300 a month, which is totally crazy to drive a vehicle that costs an unknown large sum of money to produce.  There are people right now driving this vehicle for around $5,050 for two years that cost GM an unknown sum of money to manufacturer.

The problem though is that GM is an unpredictable company, a bit like The Wizard of Oz.  Which is why Bob Lutz can some out and say that they didn’t really lose $40,000 per vehicle because he doesn’t really know anymore than I do.  This is a company that needed $60 billion in Government assistance to keep going, so who knows if they will keep this vehicle and continue to service it long term.  After all, the Feds ordered them to kill Pontiac in order to get the money they needed and guess who got screwed on that deal?  The customers who purchased a Pontiac and watched their brand die, along with the equity they had in their vehicles.

I recently had a friend who owns a Saturn and needed a part for her vehicle and she has had it in the shop going on two weeks waiting for GM to find the part for her car that they discontinued. GM has disposed of Pontiac, Hummer, Oldsmobile, Saturn and these were complete lines of vehicles, that actually had profitable products with a large following of customers.  Why in the world would they continue to produce a vehicle that they are losing money on, each time they make a sale?  I could be wrong, but I don’t think they will keep this product long term unless sales really take off, so if you are thinking about the Chevy Volt, make sure you lease one.

Toyota on the other hand has been committed to and producing the Prius for years with a great track record for customer service and knowing that people are loyal to their brand.  They understand their hybrid customers much better than General Motors.  I wouldn’t think twice about recommending that my clients purchase a Toyota Prius and I have many clients who own the Toyota Prius and they have had great success with them.  I don’t dislike GM, but I don’t trust them when it comes to this particular vehicle.  If I were writing about the GMC Yukon, the Chevy Tahoe, Suburban, Corvette or Camaro that’s a completely different story, but the Chevy Volt is an oddball car for this car company.  It’s buyer beware, but it’s a fantastic vehicle to lease.

There are other hybrid vehicles on the market and they are becoming more popular, with quite a few more options that will be available in 2014. This technology will continue to get better, but be sure and look before you leap, know the company that you keep, as with any vehicle purchase.

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Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy

Hey Cool Car Fans,

There are a number of great reviews and videos on the Tesla Roadster on Youtube, but I thought I would post this one on The Cool Car Guy Network for our visitors and Members to check out.  The Tesla Roadster was the first really cool electric car on the market.  It was only manufactured from 2008 to 2012 and then Tesla switched to a Sedan, the S Model.

The car is based on the Lotus Elise body style and I have to say that I was disappointed that they discontinued this vehicle because it’s a super cool ride, as you’ll see by watching the video. According to the U.S. EPA, the cool little Roadster could travel up to 244 miles or 393 km on a single charge of its lithium-ion battery pack and then you charge it up like your cell phone each night in your garage.  This fast sports car can accelerate from 0 to 60 mph (0 to 97 km/h) in 3.7 or 3.9 seconds depending on the model.

I always get a kick out of this with electric cars, but the the Roadster’s efficiency, as of September 2008, was reported as 120 mpg, which really made no sense because it runs on electricity.  The Roadster was the first production automobile to use lithium-ion battery cells, which was pretty cool.  It was also the first production BEV (all-electric) to travel more than 200 miles (320 km) per charge, which was revolutionary and Tesla sold out of these vehicles every year.

One other things that was really cool about this car was the way that it was sold.  Tesla has stores like Apple in high-end shopping malls, like Park Meadows Mall in Lone Tree, Colorado for example.  It’s right across from the Apple store, so they catch the techies as they leave one tech store to go see another tech product, which just happens to be an electric car.  The Roadster had a 2010 base price of US $109,000 in the United States.  However, financing was only done through Bank of America at the time and I’m honestly not sure who will finance a used one right now, but I’ll have to check into that and update this post or comment on it.

I have seen a few of these running through the Dealer Auctions and they still command a pretty penny.  The 2010 in this photo only has around 3,100 miles and it’s listed for about $75,000 through the dealer auction.  It’s a sweet ride though for the money.  Enjoy the video.

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Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy