Questions to ask before buying a car:

Does it have what you need?

There are “wants” and there are “needs”. You NEED a car that runs trouble-free, has had all the maintenance done on schedule, hasn’t been abused, etc. You may WANT a car with leather, sunroof, navigation, heated seats, convertible, etc. Decide what are WANTS vs NEEDS first to narrow your search down even further to make you decision easier moving onto the next several questions.

Mileage?

Now, I will say this first: mileage is not always an indicator of wear and tear on a vehicle. You can walk away with a low mileage lemon, or conversely, a high mileage gem. However, generally you’ll find that lower mileage vehicles have been either taken care of better or, at least, abused less. Anything above 15k per year is considered high mileage. However, I generally drive 20k per year on my vehicles but I treat them like gold!

How many prior owners?

Again, your experience may vary, but cars with multiple owners can mean several things such as the car was a lemon and kept getting dumped on people, it was passed around a family until it was on its last leg, or it could just mean that it was a lease, and then the dealer bought it and the DMV would show 2 owners (maybe even 3 depending on the original transfer before the lease). Single owner vehicles that are sold quickly could also mean trouble. It could have been a lemon, but then again, the owner might not have been able to afford it and traded down for a lesser model (and took a major hit on depreciation!).

Does the owner have the title?

If you’re buying from a third-party (not a dealer), you want to make sure the vehicle is owned outright. Otherwise, you have to wait for your check to clear, the owner to pay off the car, the bank to send the title and then the owner to hand over the title (without any problems). This could take a very long time and causes a lot of stress and risk.

You do have the option of putting down a deposit (get it in writing, preferably with a witness’ signature) on the car, then go to the bank directly with the owner to buy the car if possible so they can issue the paperwork immediately.

Is it a “clean” or salvaged/branded title?

A vehicle that has suffered damage that was too expensive compared to the vehicle’s value may be salvaged. This can happen through theft, car accident, and other reasons. Some salvaged vehicles are fixed to near perfect fashion and are perfectly safe to buy, but unless you have some knowledge of mechanics and bodywork I wouldn’t make this your first choice. In some states like Nevada, it’s even illegal for a private party to sell a salvaged vehicle.

Has it been in any accidents? If so, how was it repaired?

Accidents do happen. Sometimes they happen more than once. A car accident can range from a small fix to a complete t-bone. The small fix is generally repaired and the owner sent on their way, while the larger incident may result in the aforementioned salvage title.

A rule of thumb is replacement is better than repair. During repair,stuff called “bondo” can be used. This is where a (hopefully) excellent body worker fills in a crush or dent that can’t be pulled out. The vehicle is sanded, painted and sent out the door. Unfortunately, if you don’t have a great body shop, the bondo can warp and looks like putty. It is also a cheap fix and may be indicative of the state of other repairs.

Does it have service records available?

It’s best if you can get dealer-issued receipts, but in cases like mine, where I perform routine maintenance, I write down everything in the owner’s manual and hold onto all receipts. You’ll want this so you can later peruse through the car’s history and find out when maintenance and repairs were performed. It’s best to do it beforehand though, so you aren’t surprised later.

Why are they selling it?

You’ll want to ask why are they selling the vehicle. Most people will answer with 1) we need the money or 2) we want something new. Dig deeper and find out its history, but you’ll have to be prepared with well-worded questions that lead the seller rather than blatantly asking “what’s wrong with it?”. Rarely will people be totally honest with everything they know is wrong, unless they know you might hunt them down when something breaks as you drive away!

Can you have your mechanic look at it?

While the large franchise dealerships generally have reputable mechanics on site, you should be able to request a mechanic look at a vehicle any other time, whether small dealership or private party. If you like the car, tell the salesman: “At the end of our test drive, if I like the vehicle, I’d like to take it to my mechanic for an inspection. You are, of course, welcome to come with me.” A salesman working on commission is very unlikely to deny your request.

Buying the Car

You can buy a car from a dealer or from a private party. Buying a car from a dealer simply means you are buying from someone whose business is selling cars; a dealer can be a major operation with an automotive franchise, or a single individual who sells cars from his driveway. Buying from a private party means you are purchasing the vehicle from an owner.

Dealership

If you are interested only in a brand new car, a large franchise dealership is where you’ll head. Since they order direct from the manufacturer, in some cases, you can even custom order the options you want. However, the depreciation when it rolls off the lot can be a hefty bill to foot. A dealer can always sell a used car for more than you can. Why? When you buy a used car from a large dealer, the assumption is made that the vehicle needs little or no “reconditioning.” All of the major systems are in good mechanical order, the interior has been detailed or replaced as necessary, and you shouldn’t have to take it to a mechanic any time soon. Some dealers go a step further with “Certified Pre-Owned” vehicles which must pass a specific set of inspections.

Used Car Lot

So where do the small dealerships get their cars from? Almost every town has a street lined with small scale dealerships, or that one guy who’s always selling cars. These are not connected to a manufacturer, and generally do not have a (legitimate) body shop or mechanic on site. When cars are traded into dealerships, the dealer will weigh what they paid for the vehicle against what they can sell it for and how much time and money it will take to recondition. Sometimes the decision to ship out a vehicle can be as simple as, “We’re a Chevy dealership, and don’t have a really good chance at selling a Ford Focus with our current lineup.”

These cars are sent to dealer or wholesale auctions. They are sold at a great price to other dealers who then sell them on their lots. The quality of the cars available on these smaller lots vary greatly based on the quality of the lot that is selling them. They are still bound by all of the laws that a franchise dealership is, but if after looking at the vehicle you wouldn’t buy it from a man on the street, don’t buy it from anyone else.

Private Party

You can also buy a vehicle through a private party sale. That means an individual who owns a car is selling it for any number of reasons. Individually owned vehicles sell for much less than a similar one at a dealership due to the reconditioning that a dealer vehicle undergoes (theoretically). The real benefit of buying a vehicle from an owner is a chance to know the vehicle’s history. The service records and accident history can tell you a lot about what you are getting into. Even walking up to the owner’s house: if they’re lawn is littered with trash, how do you gauge the upkeep of your potential new ride?

Negotiate

No matter what you do: NEGOTIATE. I have never walked into a dealership that won’t “haggle” and I refuse to accept a price labeled “firm.” (except for my first car, which was a Saturn and had a no-haggle price. But they’re not around anymore, are they?…) My second vehicle was a dealer demo car with 2500 miles on it, but still sold as new. It was a hot model, just out for its first year, and I got it for $1000 under invoice.

Paying for a Used Car

It should go without saying, but you are always better to pay with cash in hand. If the vehicle you’re looking at is too expensive to buy with cash, take the time to assess if there is a vehicle that you can pay for with cash that will meet your needs. If not, your next step is financing.

All of my purchases were with financing, and up until the last few years, I would pay for years before having the car paid off (if I didn’t trade it in for something else). However, now, I might not have all the cash in hand because I’m selling a car outright while buying something new (to me, so it’s really used), but when I get the cash, I pay off the loan. My credit score takes a hit, but then it goes up because I have a closed account and more history on my record.

Ultimately, if there is any way you can avoid monthly payments, please do so. I have never taken on an auto loan that hasn’t gone underwater for a portion of the vehicle’s life span. If you’re heart is set on a vehicle that requires payments, take three months and pull the payment out of your monthly budget. Make sure it doesn’t throw your debt-to-assets ratio off, because that can hurt you in the future for qualifying for home refinancing, credit cards and other loans (you never know when there’s going to be an emergency). If it’s not bad, then go ahead with the comfort of knowing you already have three months of “emergency” payments set aside.

Websites to Help Your Search

When you go to buy a vehicle, remember that your buying power is directly related to the information you possess.

• Kelly Blue Book is a nationally recognized vehicle valuation tool. It will help you to gauge the trade-in value of your own vehicle, and how much you should pay for you next one through both dealerships and private parties.
• Carfax reports on what has happened to your vehicle. Where has it been titled? Does it have any accident reports? All of these answers and more are available.
• Autotrader.com has detailed specifications, reviews, safety information and classified ads to help you.
• Edmunds.com has similar information to Autotrader, along with a True Market Value tool to help better gauge the immediate local value of some vehicles. TMV takes into account how even the color of your car may affect it’s sale.

1. Thinking only about monthly payments. I used to think like this, and some of my close family members and friends have done so in front of me recently, but it’s the wrong way to think! Think about a) how much the overall cost is, then b) if you can really afford it in the long run (especially if something happens physically or financially) and c) how much will you be spending extra in interest.
2. Buying more than you need. Heck, I bought a new car thinking we were going to start a family, but that family never came and we were stuck with a gas-guzzler.
3. Adding on extra features without realizing the real extra costs involved. It’s easy to think “I might need All Wheel Drive (AWD) sometime in the 5-10 years I’ll own this vehicle”. You’ll spend extra on the vehicle, extra on gas and extra on repairs since an AWD system is more complex.
4. Buying new versus used. Generally, used will save you money, if you get it properly inspected first and it’s a reliable brand/model to start with, because someone else has paid for the depreciation. However, it all depends on what you’re buying and how much you’re spending. Sometimes, factory and dealer incentives bring the price of a new car almost down to the cost of a used car, but don’t forget you can also haggle on used cars.
5. Zero Down. If you’re buying, you should have first built up a decent savings for a down payment. Why? Because it 1) brings down your payments, 2) brings down the interest you’ll pay overall and 3) help with financing. Banks feel better about giving you money if you’re putting in a chunk of your own too.
6. Test Drives. There’s so much to say about test drives, but not enough room. You’re spending a huge sum of money, but you’re only allowed a few minutes of driving around the car? I call BS! I understand dealers want to keep mileage low, but if you’re serious about buying, then make it known and the dealer will be more comfortable with you taking it out on longer drive. Also, pay attention to every single thing and pretend it’s your daily driver. Don’t get suckered in by the newness of it all. Lastly, make sure you’re driving the model with the specs that you’ll eventually buy. We test drove a Passat 4 cylinder but bought a 6-banger without test-driving it. We wished for the next 12 months of ownership that we had bought the 4 cylinder because that car drank glass like your Uncle Bob drinks eggnog at Christmas!
7. Negotiating. Again, so much to say, but basically do your research on sites like Edmunds.com and find out invoice price. Know the dealer spent less than that (called “dealer holdback”), but don’t haggle DOWN from MSRP, but start with the rock-bottom price and see how low you can keep them.
8. Shop Around. You’d be surprised with how far a dealer would discount to get your business. Our neighbors recently used the internet to cross-shop a Honda Pilot across a dozen local dealers and ended up getting $5000 off and it was from the best-rated dealer in the area. It took time and patience, but it worked for them and got the car they wanted down into their budget.
9. Research Financing Options. Don’t just go with dealer financing unless it’s an amazing rate. If you’re part of a credit union, or your bank is having a financing offer, get pre-approved so you save yourself the hassle of refinancing later (and taking another ding on your credit score).
10. Trade In Value. I’ve sold a half-dozen cars now, and I know that selling on your own, rather than trading in, can be a pain. However, you’ll almost always gets much more out of a private party than as a trade-in. Don’t be impatient and just take what the dealer is offering. If you have a Carmax around, get the free appraisal so you have a starting point.

Whew! Any other mistakes you can think of? What about your personal stories?

While many boomers will say that the golden age of motoring is long gone, I would beg to differ. Speed, gadgets and safety have never been cheaper, as are interest rates, and supplies are staying high on many new vehicles.

So why wouldn’t you buy a new car if you’re looking at one?

Well, I have a few arguments against buying a new car. Some are common sense, some not. And being a car geek myself, I know that many of you will just try to reason yourself out of many of them anyway, but here goes…

Money

The first obvious reason, although maybe it isn’t that obvious to some, is the instant depreciation of your vehicle when it’s signed over into your name and you drive it off the lot. Maybe you negotiated thousands off the price or got a 0% interest rate, but you’ll still lose money on the deal thanks to the taxes you paid and the value lost from the title transfer (you’re now owner #1 and each new owner makes the vehicle lose more value).

Now, if you’re looking at 1-2 year old vehicles right now, you might also want to compare against a new vehicle due to the high price of used cars now (at least fuel efficient ones), but older than 2 years, the better for you thanks again to, you guessed it, depreciation. Luxury models take an especially hard hit.

For instance I was looking at 4-5 year old Mercedes S-Class sedans. These retailed for $80-$120k and are now selling for $25k-35k with only 50k miles on the clock. Another example are Porsche 911′s. Once going for close to $100k, you can find a ton for a half or third of the price. You can look like a baller without dishing out like one.

But what about repair costs? Well, do your research to make sure you’re not buying into a junker and you’ll find that the huge wads of cash you saved buying used will stay in your pocket. While you might love the idea of a factory warranty, it rarely helps you in the first few years so you’re paying for something you won’t use. You can always buy an extended warranty with the money you’ve saved to get some peace of mind, and stash away the rest in a “car fund” to take care of the remaining worries. Again, though, just perform your due diligence when you first inspect the car for purchase and you’ll find that a second-hand car will almost always be a better financial decision.

That Green Stuff Outside

When you buy a new car, you’re destroying the planet!

Even if you’re buying a hybrid, a Volt or a Leaf, you’re buying something new that had to be produced with new and recycled resources. If you’re buying a used vehicle (or deciding to just keep your existing car), the damage has already been done. You can’t change the laws of science: if it’s made, it’s made and if it’s not, it’s not and you have to use up new stuff to make it.

Sure, if you’re driving around in a Hummer for 200,000 miles versus a tiny Ford Fiesta, the emissions and oil usage (and the impact to the roads over time) may actually outweigh the environmental cost of making the Fiesta, but in the end, it’s usually cheaper and better for the environment to just keep what you have or buy used (and downsize) as it’s not taking up new resources.

Safety

The newer the car, usually the safer it is. However, in the last decade, most of the big safety improvements have been made and now it’s up to “nanny technology” to improve more. Things like adaptive cruise control and blind spot warning systems will help avoid collisions, but they’re expensive additions, weigh down vehicles and may even end up being more of a distraction than a help to some (think of when “Cruise Control” first came out. People actually thought you could set it and let go of the wheel and let the car drive itself). This leads to…

Driving Pleasure

Having the latest gadgets and gear is only enjoyable (for most people) within the first few hours, days or weeks of ownership. After that, it’s the same old thing. A Lexus can feel like a Toyota and a Mercedes can feel like a Chevy (not saying Toyotas and Chevys are bad…they’re just not considered “luxury transport full of new toys”).

Also, I mentioned “nanny technology”. Features that are installed to improve your safety usually take away from your control of the car and the ultimate fun you can have. If you’ve ever watched Top Gear, think about how many times they complain about traction control when they’re at a track and how some cars won’t let you turn it off anymore. Sometimes the older cars are just more fun.

But…

I’ll admit I love new cars, new technology and just reading about what’s the next big thing in vehicles. Every day I’m conflicted whether my next car should be new or used, and how long I should keep my truck. I love the “new car smell” (even though it’s really just the smell of deadly chemicals from the manufacturing process ) and can’t resist driving through dealer lots once a month.

I myself can’t guarantee my next car won’t be new and I’ll have gone against all I just wrote, but at least I’m putting out there what you (and I) should be thinking about when we’re in the car market.

Edmunds.com, purportedly “where smart car buyers start,” has a giant database of cars, including reviews, pricing, and specs. The site provides information on new and used cars, as well as advice on how to shop for and how to finance cars. Best of all, it can offer your searches tailored to your location!

Consumer Reports is pretty much the gold standard when it comes to rating consumer goods. Its website has a solid section on cars. Unfortunately, the most helpful offering – expert ratings – is available to subscribers only. But this site is still worth a look; there are many informative articles freely available.

Car Talk is a radio show about cars, but if you can’t catch the show, I highly recommend checking out the wealth of resources on their site. Look specifically at their “Actual Car Info” section for tips on buying, selling and more.

Car and Driver offers car news and brief online reviews of many makes and models. Best of all – no subscription necessary. If you don’t want to shell out the bucks for a Consumer Reports subscription, check here for a starting point on your car search.

Kiplinger’s Personal Finance has it’s own Car Buyer’s Guide. The guide is actually an extensive resource covering:

• Kiplinger’s rankings of new and used cars
• Tips on test-driving, negotiating, and getting car loans
• Information on mileage and features

Some of the articles have previously been published in the magazine or on the website, but now they reside with new content in one convenient location.

Bankrate.com has a section dedicated to auto loans. You can search for low rates, learn how to shop for the best loan, and read articles on making car ownership more economic.

Any other tips for research cars? I can also add forums dedicated to that car model, Cars.com, Motor Trend and more, as well as fellow blogs about cars. Ultimately, pick a car that fits your needs, driving style and budget.

Car Brands Offering Free Maintenance

BMW

BMW calls its maintenance plan “BMW Ultimate Service” which goes for the first 4 years of ownership, or the first 50,000 miles. Here is some info about the plan (from the BMW website):

• BMW Maintenance Program: One of the most comprehensive maintenance programs in its class covering all factory-recommended maintenance, oil service and fluid service, as well as items that need replacement due to normal wear and tear – such as brake pads, brake rotors and wiper blade inserts.
• Four years of the BMW Assist™ Safety Plan: Many 2007 and later models include a four-year, unlimited mileage subscription to the BMW Assist™ Safety Plan including TeleService, an exclusive BMW benefit which allows your vehicle to contact your BMW center directly when it needs service or maintenance.
• Unlimited-Mileage Roadside Assistance: Receive Roadside Assistance 24 hours a day, 365 days a year for the first four years of ownership, without any mileage limitation.
• New Vehicle Limited Warranty: Your warranty covers defects in materials or workmanship for the first four years or 50,000 miles, whichever comes first, so you can rest assured your BMW will perform as expected.

MINI

MINI is owned by BMW, and benefits from its parentage by also getting a free maintenance program. Unfortunately for MINI owners, the plan isn’t as generous as BMW’s, but it does cover  3 years or 36,000 miles. We have a MINI and can attest that the plan is transferable if you sell the car. We bought our MINI with 30,000 and were able to take it in for the regular checkups and oil change, etc.

You also have the option to extend the maintenance plan, but at an additional cost. Talk to a MINI service technician to find out how much it would cost. As a note, the cost does differ depending on whether the car is under or over the 36,000 miles when you buy the extended plan.

Land Rover (2008 Models Only)

While Land Rover was recently sold by Ford to an Indian automaker, they still offer the no-charge maintenance program for 2008 models for 4 years or 50,000 miles.

Land Rover says it’s not changing the prices for the 2009 models, but they are dropping free maintenance to save themselves some money. Personally, if there was any vehicle I would want free maintenance on, it would be a Land Rover, but at least you have their warranty coverage.

Saab

Surprise!  Saab provides free maintenance for 3 years or 36,000 miles. I bet you didn’t know that, did you? This goes for 2007-2009 models (so far), but it could change at any time in today’s economy.

Another perk for Saab owners is free OnStar for the first year. If those scary radio commercials that play real-life accident recordings don’t scare you into getting OnStar, then I don’t know what will.

Volvo (2009 Models Only)

New to the mix for 2009 is Volvo, which is providing free maintenance for 3 years or 36,000 miles.

Volkswagen (2009 Models Only)

Yep, VW has also recently added free maintenance to its 2009 models. The plan covers 3 years or 36,000 miles, and having owned a VW Passat myself, I know how expensive even the most minor maintenance items can be on a VW. They wanted $40 for a wiper blade! Just one wiper blade! And you can’t find many VW parts at your local auto supply shop either. That’s when we decided to sell the VW…over a measly wiper blade.

Who Doesn’t Offer Free Maintenance?

You’ll notice that a few major luxury makers don’t offer free maintenance. Some previously offered free maintenance, but have recently discontinued those plans. Also, you might run into some dealerships providing “free maintenance plans”, but it’s either just for that dealership, or they include the cost elsewhere on the bill of sale.

• Mercedes Benz – I’m very suprised that MB doesn’t offer free maintenance
• Acura – I’ve owned an Acura TL-S, and maintenance costs weren’t too bad, but having those costs paid by the manufacturer would be nice
• Audi – You can buy their Audi Care package for $650, which covers about 5 years or 45,000 miles. Why does VW get free maintenance, but not Audi?
• Jaguar – now owned by the same company as Land Rover (Tata, an Indian motor company)
• Lexus
• Infiniti
• Lincoln
• Cadillac

While automakers factor in costs like maintenance in their overall pricing plans, that little perk is enough to make many buyers choose a BMW over an Acura or Benz. The American automakers could make a believable attempt at stealing market share from the Japanese and Europeans by offering free maintenance too.

As a buyer, you need to also do the math on both the initial cost of the car as well as ownership costs such as maintenance and repairs. If you can get an Acura TSX for $5,000 less than a BMW 328i, then I think that’s a good deal. You won’t spend $5,000 on brakes and oil changes over 5 years. But buying is both mathematical and emotional, so choose wisely.

Getting a Discount on a Compact Car

While I must admit that your results will vary depending on your location and market, generally all small cars, such as the Honda Fit, Toyota Yaris, Mazda3 and even domestics like the Chevy Aveo and the Korean Hyundai Accent are selling for MSRP. At best, but still possible, you can negotiate down close to dealer invoice on these vehicles, but again it really depends on your market.

For example, if you’re looking for a Mazda3 sedan or hatchback, you’ll have more luck in an area like mine where there are 4-5 nearby Mazda dealerships than in Nowhere, Pennsylvania where the closest dealer is 30 miles away. I can pit the salesman against each other because they know I can more easily travel to the competitor.

Best Bet for Getting Discount

Other than going for an outgoing model year, your best bet on getting a discount on a highly sought-after car is to shop via the internet. These days almost every car dealer has an “Internet Sales Department” that negotiates vehicle prices via email. It’s a win-win because the dealer can negotiate with dozens of customers at once and YOU can collect prices from multiple dealers and on multiple cars. You don’t need to visit 4 Mazda dealers, and if you wanted to test out a VW Rabbit too, then just shoot an email to the local Volkswagen internet sales department.

You do all the research and negotiations from the comfort of your couch, kitchen table or toilet (hey, I’m not knocking how you browse!).

Checking Realistic Auto Prices

There are dozens of sites and services out there that are dedicated to helping you, the auto buyer, get the lowest price in the fastest and easiest way possible, but many require you to pay them first, or be a member of Costco/Sam’s Club/etc. or the local credit union. If you’re just testing the waters, I suggest checking out the pricing tools at Edmunds.com.

Edmunds provides the ability to price a new vehicle with options and then see what others are paying in your area. One problem with the options picker, though, is that it lists out the options, but some option configurations aren’t available anywhere, or you might pick an option (like heated seats) that is already contained in another option (winter package) and get a misleading price. You do, therefore, need to do a bit of your own research through the manufacturer’s website first to see what options are compatible, then go to Edmunds.

For example, I priced out a 2008 Mazda 3 with A/C, 6-disc changer and fog lights.  Here are the results:

MSRP: $16,210

Invoice: $15,054

TMV (what others are paying): $15,850

So you see that you CAN get a discount, just don’t expect to talk them down to their invoice price. It’s not a buyer’s market all-around; just on the bigger vehicles. And then you need to figure out financing which, in today’s economic climate, might prove more tricky than even negotiating the price! Hopefully you can just pay in cash…

And what makes this worse is that most BMWs, except for the 3 series, remain the exact same in 2009 as they were in 2008. That means you’re simply paying more for the same car just because it has a ’9′ in the model year instead of an ’8′.

2009 BMW Base Prices:

Base MSRP pricing does not include $825 destination:

1 Series

2009 128i Convertible $33,800
2009 135i Convertible $39,900
2009 128i Coupe $29,200
2009 135i Coupe $35,600

3 Series

2009 328i Coupe $36,300
2009 328xi Coupe $38,100
2009 335i Coupe $42,000
2009 335xi Coupe $43,800
2009 M3 Coupe $57,500
2009 328i Sedan $33,400
2009 328xi Sedan $35,300
2009 335i Sedan $40,100
2009 335xi Sedan $42,000
2009 M3 Sedan $54,500
2009 328i Sports Wagon $35,200
2009 328xi Sports Wagon $37,100
2009 328i Convertible $44,300
2009 335i Convertible $50,400
2009 M3 Convertible $66,150

5 Series

2009 535xi Sports Wagon $55,400
2009 528i Sedan $45,500
2009 528xi Sedan $47,700
2009 535i Sedan $50,800
2009 535xi Sedan $53,000
2009 550i Sedan $60,000
2009 M5 Sedan $85,100

6 Series

2009 650i Convertible $84,800
2009 M6 Convertible $107,500
2009 650i Coupe $77,700
2009 M6 Coupe $101,700

X3, X5, X6 SUVs

2009 X3 xDrive30i $39,400
2009 X5 xDrive30i $47,100
2009 X5 xDrive48i $55,800
2009 X6 xDrive35i $55,500
2009 X6 xDrive50i $66,200

Buying that X6 SUV is looking dumber and dumber right now. But that’s only my personal opinion.

Screw BMW. Screw Mercedes. Screw Lexus and Audi. To us mere mortals, we perceive drivers with a shiny new Mercedes E class, or BMW 5-series as either flush with cash, or more likely, carrying long leases with heavy down payments just to barely afford that luxury. While you drive around in your flashy car with your cigar ablaze, I’m stuck in my crummy Honda. Not that I’m bitter or jealous or anything.

But not any longer. Now there’s a new luxury player in town. Are you ready for this? Get ready cause you won’t believe it. It’s the 2009 Hyundai Genesis sedan! And it’s even rear-wheel drive!

Stop laughing. I know it’s a Hyundai. But this isn’t like when Volkswagen tried to shove a $60,000-110,000 über-sedan (the Phaeton) into the market, expecting people who buy those kinds of cars to want to mingle with the ones buying $15,000 Jettas. Why is it different? Well first, the Genesis starts at just $32,250. Want a V-8 engine? Tack on another $5k. That’s still half the price of the Phaeton (VW had to bump up the price into the $80ks to make up for currency exchange and other costs).

While I won’t try to compare the Genesis to the Phaeton in the build quality, features, size or engine power, after taking the 2009 Hyundai Genesis on a short drive at a local dealership, I can say the Genesis surely matches the European competitors. But the Genesis can’t be compared directly with either the Mercedes E class or the BMW 5-series.

The BMW is sporty, while the Merc is luxurious. The Genesis falls in between the two. It has a more rigid frame than the 5-series and more interior volume than even the BMW 7-series. And it’s loaded with features.

Hyundai Genesis Standard Features

As is customary with Hyundai, the car comes replete with all the standard safety features like traction control, stability control, anti-lock brakes, and a gazillion airbags. And Hyundai even threw in things like brake assist and “electronic brake-force distribution”.

In addition to safety, and the Hyundai five-year/60,000-mile bumper-to-bumper protection, 10-year/100,000-mile limited powertrain warranty, and seven-year/unlimited mileage anti-perforation coverage, the Hyundai comes with the following standard features:

• Bluetooth hands-free phone system
• Electrochromic rear-view mirror with a universal Homelink opener and compass
• Dual zone temperature control
• Six-speed CVT transmission
• iPod/USB/aux inputs (in the center console, not tucked in the glove compartment)
• Leather seats (it wouldn’t be luxury without them)
• Heated front seats
• Steering wheel audio controls
• Auto down AND up window controls for both front windows. Why can’t all cars have this?

But what lets me place it in the same category as BMW and Mercedes? Well, other than the styling, which is a mix of a BMW trunk, Merc front-end, and Lexus LS profile (at least in my opinion), the Genesis is dead silent with the doors closed. If I’m going to rate a car as “luxury”, I expect it to be comfortable and quiet. Standing in the dealer lot next to a major city thoroughfare, it was as noisy as an airport. But when I closed the doors and shut the windows, I seriously could not hear a bit of traffic, except maybe a nearby honking horn. I could even hear the ringing in my ears from years of noise damage.

In the short time in the car, I couldn’t find much hard plastic or a poor fit or finish. But I didn’t take much time to stare at all the seams and gaps. Instead, I was enamored by the extra features on my particular test model.

Bring on the Options!

My test model was the 3.8L V-6 (the V-8 isn’t out at the time of this writing), with the Technology Package. This package also includes the Premium and Premium Plus packages. Here’s what all three packages include:

Premium Package:

• Lexicon® 14-speaker surround sound audio system w/ in-dash 6-disc CD changer
• Leather-wrapped dash and door trim inserts
• Power tilt-and-slide sunroof
• Power tilt and telescopic steering wheel
• Integrated memory system
• Rain-sensing wipers
• Auto-defogging windshield
• Power rear sunshade

Premium Plus Package:

• Everything in the Premium package plus
  • 18-inch Hyper Silver alloy wheels with 235/50R18 tires

and the Technology Package includes:

• Everything in the Premium and Premium Plus packages, plus
  • 528-watt Lexicon® 17-speaker discrete 7.1 premium surround sound audio system with complimentary 1-year subscription to XM Satellite Radio and NavTraffic®
  • Navigation system with 40-gig HD and in-dash 6-disc DVD changer
  • Rear backup camera
  • Driver information system
  • Multimedia controller
  • HID auto-leveling headlights
  • Adaptive Front Lighting System (auto-cornering)
  • Front and rear parking assistance sensors
  • Cooled driver seat

If I were to get the Genesis, without a doubt I would get the Technology Package. While I’m sure the base Genesis is nice, I loved the rear backup camera, stereo (the salesman popped in a hip-hop CD) and of course the navigation system. The Genesis has a wheel to control the Nav system, but unlike BMW and Mercedes, the system is actually user-friendly.

What’s the Top-of-the-Line Price?

While you currently can’t get a final price through Hyundai’s “Build Your Own” website, the dealer was charging an even $40,000 for this top-of-the-line model. That’s still almost $5,000 less than the BMW 528i base price. Want heated seats and 18″ wheels? Bump that BMW price up to over $50,000!

Heck, the Genesis’ base price is the same as the lowest BMW 3-series model, the 328i.

How About the Drive?

I’ll be honest that I just drove around the dealer lot (it was a big lot), but I got to experience a few items of note. First, speed bumps. I did find that although the Genesis has fancy gas shocks, they weren’t tuned to glide over bumps, but the car didn’t shudder or feel out of control.

Next up, big potholes. I really hope the dealer fixes their lot, but I guess it gives people a good chance to really test the ride and handling of their cars. I went through a pothole about 4″ deep at about 10mph. Just like with the speed bump, the car didn’t glide over it, but it wasn’t an unpleasant experience like in “lesser” cars. The suspension wasn’t mushy like in a Buick, but it wasn’t overly firm like in a BMW. I’d say it was like a Lexus. There, I said it. It rides like a Lexus.

I hope to get a shot at a longer drive out on the main roads in the future, but I think I’d be worried I would want the car even more. And I need to stay content with the cars I have (namely a Honda Ridgeline truck and a MINI Cooper). The wife says I’m not allowed to get a new car this year. Dang.

Conclusion

Would you pay $40,000 for a Hyundai? That’s the billion dollar question that the Hyundai executives are also asking, because they’re planning on rolling our more luxury models in the future. But while automakers like Honda and Toyota rename their luxury plates with fancy names like Acura and Lexus, and try to fool us with new sheet metal and interiors on Accords and Camrys, Hyundai is risking their future business on keeping the Hyundai nameplate on all their models.

But you have two types of luxury buyers:

1. Those who want to show off their money (or make it look like they have money) and

2. Those who want to experience luxury, but don’t need to make a statement about it

If you’re in the latter group, the Hyundai Genesis is definitely for you. If you’re in the first group, maybe you should give the Genesis a test drive and see how much you’ve just overspent on your Lexus.

Granted, you’ll use up that $13,000 savings for gas in the first year, but still, if you wanted a luxury towing machine that makes a statement (“I don’t give a crap about the environment or small children in my blindspot”), then go for it!

Well, for laptops, smaller sizes mean less room to put the parts. If you want a 12″ laptop with a 120Gb drive vs a 40 Gb drive, you’re going to pay more than someone buying a 15″ laptop because the factory has to be more creative to find room to put that part. In addition, they need to keep the parts cooled, which is harder when there’s less air-flow.

Why Small Cars aren’t Always Inexpensive

Now let’s compare laptops with cars. If you want a small car that provides decent elbow and hip room, plus 5-star crash ratings, a premium audio system, room for 4-5 passengers plus luggage, a high-powered engine, and luxury car-like quality, then you’re going to pay the price.

Cars that fit into the “econobox” segment, such as the Honda Fit, Nissan Versa and Toyota Yaris, can be had for well under $20,000, but you won’t get everything that you would in a larger, premium car. If you want a sub-compact car that can do 0-60mph in under 5.5 seconds and still take a turn at 80mph without feeling like you’ll fly off the road, then you’ll need to be willing to pony up a few more thousand.

“Premium Economy” Cars

Over the weekend, as my wife and I were driving on the interstate, we saw a Volvo C30 drive by. My wife commented that it was cute (I’m still not sure about that odd rear hatch window thing) and that I could trade in my truck for one only if it averaged 30 miles per gallon. Wanting to see whether the car was worth the trade, I did some research.

First, I found out that the Volvo C30′s competition was more along the lines of the MINI Cooper S, Audi A3, and BMW 1 Series. Hmm, now I know what price range I’m in (NOT under $20,000). The C30 starts just over $22,000, and can exceed $40,000 with all the options and an upgraded engine.

Wow, that’s no Ford Focus! (Volvo is owned by parent company Ford, and the C30 shares many components, including engine, of the European Ford Focus and Mazda3).

So what do you get for $10,000-20,000 more than a Honda Fit? Well, a very fine interior (the “floating console” is pretty sharp), a much more powerful engine (double the horsepower and torque), “European styling”, and more confidence on corners and highway speeds. Oh, and about 10 less miles per gallon on average.

And this comparison goes across the board for most “premium economy” cars. You’re paying at least $10,000 more, but you’re getting the name, look and driving characteristics to match the price. But the question to ask is what do you need? Gas mileage or a small, fun car?

If you’re going after gas mileage, then a MINI Cooper or A3 aren’t the right choice. But if you want a fun little commuter (or everyday) car, and you’re willing to pay more while getting the gas mileage of a regular mid-size sedan, then go for the premium economy segment.

Personally, my wife has a 2005 MINI Cooper and she LOVES it. I can’t imagine her driving anything else (she’s tried). But when you’re sitting in traffic an hour each way to and from work, having the premium feeling around you makes the ride that much better. But we bought it used and saved $8,000 off a comparably equipped brand new MINI Cooper. You can still have luxury at an affordable price if you know how to look.