We know that selling a car is a big decision, which is why we emphasize a great seller experience. At Shift, there are no shady deals and no negotiation hassle. We take care of the legwork and get you a better price, which frees you up to live your best life. We’re excited to announce that we are bringing our delightful seller experience to even more areas in Northern and Southern California.
Author: Shift Advisor Team
How to Pay for a Car — Everything You Need to Know
A car is the second most expensive real asset that most people have, and one of the biggest purchases most people ever make. It’s a big decision and can have a meaningful impact on your monthly budget and financial position. So, how do you pay for a car? We’ve compiled out best tips and tricks.
To finance, or not to finance?
Many of our customers choose to pay for their car with financing even if they have cash on hand — there are a few benefits to doing so.
- Build your credit: Financing an auto loan can build credit in a few ways. Expanding your available credit and maintaining a history of on-time payments can improve your FICO score. Auto loans are a type of “installment credit,” which means they are paid in fixed installments over a fixed time period. Many lenders view installment credit more favorably than “revolving credit,” like credit cards. You can learn more about credit score basics at Transunion.
- Build an emergency fund: Personal financial managers generally recommend keeping enough money to cover 3-6 months of living expenses in the bank or a liquid investment account to help deal with unexpected major life disruptions, such as illness or job loss. If you don’t have an emergency fund, it may make sense to prioritize your money to start one and avoid going into debt when unplanned expenses occur.
- Get a better return on your money: Many Shift customers get low interest rates on their auto loans, starting at 2-4% for well qualified buyers. Instead of paying for the car in cash, some choose to invest that cash to try to earn a higher return. The average term of an auto loan is 5 years. Morningstar Index Performance Return shows that the annualized returns of major stock indices over the past 5 years range from almost 9% to over 18%.
For example, Jane Smith is deciding between paying cash or financing her $20,000 car purchase at a 3% interest rate. If she chooses to invest, such as in a low-cost index fund, she could grow that $20,000 to more than $32,000 after five years (assume 10% rate of return, where 10% is the average long term return in the stock market). She would pay less than $1,600 in total interest for the loan. That leaves her with more than $10,000 because she decided to invest instead of paying in cash. Consult your investment advisor to see what makes sense for you.
- Protect your investment without paying everything upfront: Almost half of our financing customers choose to include a vehicle protection plan or gap coverage in their loan. These plans can be a good way to protect against the unexpected costs of owning a car, from breakdowns to accidents. They can typically be included in your financing package, so you don’t have to pay the full cost up front.
Although there are many benefits to financing your vehicle, there are also things to keep in mind.
Cars and taxes: your guide to maximize your money.
What to consider in deciding how to pay for a car
- Budget for interest cost: Unlike the 0% APR loans you may have seen advertised for new cars, interest rates for used cars won’t be lower than 2-4%. This means you will pay some amount of money every year in interest. Check out our car loan calculator to understand the cost of interest for your loan.
- Be aware of hidden fees: Prepayment fees, balloon payments, or other hidden fees can catch borrowers off guard. Prepayment fees, for example, are charged by some lenders if you decide to fully pay off your loan prior to a certain date. If you finance with Shift, you don’t have to worry – Shift financing does not include hidden fees.
- Shop around: Different lenders may offer different interest rates and terms to the same borrower, so there is a benefit to shopping around. When you apply for financing with Shift, we instantly provide you with the best offer from multiple lenders, so you get the benefit of shopping around without the hassle.
If you’re still deciding how much you can afford, we’ve built a handy car loan calculator to help you find a car that works for your budget. Even if you can afford to pay in cash, financing may make sense if you have better uses for your money, as long as you pay your monthly installments in full and on time. If you decide to finance, you can easily apply today from your Buyer Dashboard or from shift.com.
Please be sure to read your loan contract for the full terms of your specific loan.
Image via Alexa Mazzarello
Cars We Love: BMW 3-Series
When you think of a sports sedan, chances are, you think of one car: the BMW 3-series. There’s a reason for that. Today, we express our appreciation for BMW’s game-changing sedan. Continue reading “Cars We Love: BMW 3-Series”
Best cars for Uber or Lyft
If you’re considering throwing some spare time into the ridesharing space, then you’re likely asking yourself: What are the best cars for Uber or Lyft?
Most drivers primarily consider mileage. While that’s definitely an important factor, you also need a reliable, affordable car that can hold passengers and meet Lyft/Uber’s vehicle requirement guidelines.
That still leaves you with enough options to make you dizzy and give up on the whole initiative. Fear not. Our list takes all of your needs into consideration. We’ve rounded up some of the best cars for Uber and Lyft driving.
1. Toyota Prius
So you’re probably thinking, “Duh.” Fair enough. The Prius is definitely not a shocker on this list, but there are some important things to consider when buying one. Because the Prius has been around longer than any other hybrid, older models can now be had for less, which isn’t true of most hybrids.
However, the Prius still commands a price premium over its non-hybrid rivals, which increases your up-front cost. Also, if the hybrid battery needs to be replaced, you can expect to pay around $4,000, so you’ll want to look for a car with fewer miles, or a new hybrid battery. The Prius offers little in terms of joie de drive, but it delivers fuel economy that can’t be touched by the competition, particularly in city driving. This is what makes it the hands-down best car for Uber or Lyft.
In short, the Prius is an ideal option for those putting many hours in behind the wheel. If Lyft/Uber is more of a part-time gig, another car might be a better option.
2. Ford Focus
The Focus is holding down the fort as the little American car that could. It combines good interior space, solid fuel efficiency (24/35mpg on 2011 models, for example), and a competent chassis that is sporty, while still soaking up the bumps. The steering is sharper than most economy cars, making the Focus very maneuverable in city traffic. It offers a spacious 36.1 inches of rear legroom, and many newer models are available with Bluetooth for audio — some of the key reasons the Ford Focus is one of the best cars for Uber or Lyft driving.
3. Toyota Corolla
The ninth-generation Toyota Corolla is as ubiquitous as Beyonce. Look out your window right now, you see a Corolla, don’t you? Toyota sold about a billion and a half of these cars, and there’s a reason why: they are reliable, cheap, and fuel efficient. 35.4 inches of rear legroom means your passengers will be comfortable, and the 26/35mpg fuel efficiency means you’ll save at the pump.
While the Corolla isn’t exactly known for pizzazz, if you’re looking for more enthusiasm, pick up an XRS model, which offers 170 horsepower. Just be aware that the XRS doesn’t offer the same stellar fuel economy. The Corolla has best in class cost of ownership according to KBB, which is another reason we regard it as a great car for Uber and Lyft.
4. Honda Fit
The Honda Fit is a fantastic choice for your ride-share workhorse. This little Honda combines great mileage with surprising interior capacity and a splash of fun. The Fit delivers better fuel economy than the larger Honda Civic, and actually has more rear legroom than its big brother (34.5” in 2011 models). The Fit is touted for superior cost of ownership in its class, so you can be sure your earnings are going into your bank account, not your mechanic’s. Toss the Fit into a turn, and it feels nimble and willing to have a little fun. If you don’t mind rowing your own gears, Honda also makes one of the best manual transmissions in the game.
If you are looking for a little enthusiasm, perhaps even a little zoom-zoom, check out the Mazda 3. You and your passengers will be greeted by a wonderfully designed interior with high quality materials. The Mazda 3 also offers fantastic chassis dynamics, sublime steering, and spirited acceleration that will make you believe you’re driving a sports car, not a ho-hum econobox. It’s as if Mazda managed to splice some Miata DNA into their compact car’s double-helix. The Mazda 3 just begs to be driven, and that matters when you’ll be driving so much.
It’s worth noting that the 2012 and newer models with SKYACTIV engines achieve a fantastic 40 mpg on the highway. Combine this amazing fuel efficiency with a low cost of ownership, and you have what might be the perfect car, ride-sharing or otherwise.
What Does Carfax Tell You?
The last time we wrote about Carfax, we covered what it includes and why it’s a crucial part of making an informed purchase. Although Carfax reports are a great insight into vehicle history, they don’t tell us everything. So what does Carfax tell you, and what is it leaving out?
Does Carfax tell you about every accident?
Not necessarily. Let’s say two drivers get in a crash and there’s damage to the cars. Call the insurance company, right? Not always. For various reasons, some crashes are settled between the drivers themselves with DIY fixes or at smaller garages that may have fewer scruples about officially reporting the repair. When this happens, there’s a chance that Carfax is none the wiser about the incident at all.
Sometimes, people will try to sell a car right after an accident has occurred. That way, they get rid of it before it’s appeared on Carfax and the buyer might never know. This is more common when the damage isn’t obvious, such as undercarriage damage. At Shift, we perform a thorough 200-point inspection so that you’ll always be informed about hard-to-spot damage.
On that note, Carfax is only as accurate as its data sources, and not all DMVs and insurance companies contribute their data. Carfax has 92,000 or so sources of vehicle information, but it’s not omniscient.
For example, a history report may list a car as accident-free, but if a collision was fixed by an insurance company that doesn’t contribute data to Carfax, it won’t show up in the report. The same is true if the owner of the car never reported it to the insurance company. As the saying goes, you don’t know what you don’t know. The good news is, the vast majority of what’s out there is indeed captured, so the chances of missing something aren’t very high.
Does Carfax tell you about “lemons” and buybacks?
Well… not always. Cars are complex pieces of machinery. Sometimes, something in the car’s mechanics just ain’t right and it’s constantly plagued with problems as a result. That’s a lemon. To protect car buyers from purchasing lemons, states have a set of laws called Lemon laws.
These laws make it possible for a buyer to return a non-performing car to the manufacturer. When this happens, that car is considered to be a “lemon law buyback”. In most states, this is required to be put on the title. In some states, however, there is a loophole to this rule. Instead of labeling a car a lemon law buyback, cars in those states are labeled “manufacturer vehicle, sold at auction.”
It’s a trade secret that’s well understood among sophisticated car buyers and dealerships know that you now also know: when a Carfax report labels a car “manufacturer vehicle, sold at auction,” it very well may be a lemon. The good news is, we’ll never list these cars, so you can browse Shift with confidence.
Be a diligent buyer
As Carfax themselves put it: Carfax should be seen as one tool in the buyer’s fact-finding toolkit, not the only one. Make sure you take a comprehensive test-drive and have the car checked out by a mechanic. If you’re looking for high-quality cars where the degree of mystery is minimized, browse our selection of Shift Certified cars near you.
How Does Carfax Work?
When it comes to a car’s condition, people often mention the Carfax report. So just how does Carfax work? A Carfax report is your window into a car’s past. Like a private eye, it gleans data from insurance companies, DMVs, and even the police to tell you about a car’s background.
In the most extreme cases, it can save you from buying a lemon. That’s why we include a full free Carfax report for every car we list on Shift so customers know exactly what they’re getting (and what they’re not).
How does Carfax actually work?
A Carfax report is essentially a data snapshot of a number of different available data records. It gathers information from police departments, insurance companies, DMVs, and auction houses to piece together a history on nearly every car out there. Their data-gathering team in Virginia adds about 3.5 million records a day, with a compiled total of about 15 billion records.
How does Carfax help in buying a used car?
The records included in a Carfax report tell you things you wouldn’t know by just going for a test drive or having a mechanic inspect the car. A Carfax report is a little like a crystal ball that can give you a picture of a car’s past, such as:
- Odometer readings and repair history
- Number of past owners
- Any accidents reported by DMVs, insurance companies, or police departments
- Whether the car’s a lemon or been salvaged or junked
- Whether a car was ever used as a fleet vehicle, autos used by businesses and often subject to lots of abuse
- Lien and repossession history
- Emission inspection statuses
- Manufacturer recalls and buybacks
All of this info lets you avoid getting scammed and helps you make a more informed decision about the car you’re about to buy. At Shift, every car we list has gone through a rigorous 150-point inspection by ASE-certified mechanics, is reconditioned and comes with a complete vehicle history report.
Where does all that data come from?
Carfax must have an army of data crawlers trolling the internet because the company culls data from about 92,000 sources—everything from motor vehicle agencies, to many police and fire departments, collision repair facilities, and auto auctions.
Here’s their list of all of the sources:
- Fire departments
- Law enforcement agencies U.S. motor vehicle agencies
- Canadian provincial motor vehicle agencies
- Auto auctions and salvage auctions
- Collision repair facilities
- Service/maintenance facilities
- Insurance companies
- Automotive recyclers
- Rental/fleet vehicle companies
- State inspection stations
- Extended warranty companies
- Car dealerships Import/export companies
How much does Carfax cost?
Carfax has a three-tiered pricing model. If you’re going to test drive more than one car, and you probably will, you might want to get the second option, which provides five reports.
- MyCarfax: A free app that provides info on maintenance and recalls for vehicles, as well as estimate repair costs and help finding local repair services. Doesn’t include Vehicle History Reports.
- 1 Carfax Report: $39.99
- 5 Reports: $59.99 (valid for 60 days)
- Unlimited Reports for 60 days: $69.99 gets you unlimited by searching by license plate
- Shift: Free. Zip. Zilch.
At the end of the day, the Carfax report is one of the most important pieces of documentation you can get on a used car, so be sure to get one when you go shopping.
#tbt: Oh Behave, a Mini Cooper Retrospective
Ah, Thursday—our favorite day of the week to reminisce about automotive classics. On this #tbt, we examine a car you likely know well but whose Hollywood history and evolution story you may not: the Mini Cooper.
Continue reading “#tbt: Oh Behave, a Mini Cooper Retrospective”
Best Back to School Cars
Back-to-school season presents a dilemma for parents and kids: how do protective folks and their trendy children agree on a safe yet stylish ride? Take a look at our top picks for the best back-to-school cars that are sure to satisfy helicopter parents without causing their children irreversible shame.