teslaroadsterDespite hybrid vehicles being the standard of green vehicles today, the debate rages on. The big debate in the future of automobiles comes down to these two major technologies – electric batteries or hydrogen fuel cells.

Let’s get this straight, they are both electric vehicles. But the differences are how the electricity is generated and stored. Electric vehicles get and store electricity from an outside source, such as a household power outlet. Hydrogen Fuel Cell vehicles generate their own electricity by converting pressurized hydrogen into energy.

So what’s better?

hondafcxclarityIf you happened to catch the latest Top Gear episode on BBC or BBC America, the UK boys bashed the Tesla Motors’ Roadster for being irrelevant and unreliable. We know now that the unreliability was staged, and the ‘being irrelevant’ is just the Top Gear boys’ opinion. I loved it especially, when they traced the power source of the household power plug all the way to a heavy polluting power plant. It is very, very suggestive and misleading. Mr. May and Mr. Clarkson also suggested that hydrogen fuel cells are the wave of the future and introduced the Honda’s new FCX Clarity. Maybe, Top Gear is drinking Honda flavored Kool-Aid.

Can Jeremy Clarkson and the rest of the Top Gear crew tell us how they process pressurized liquid hydrogen? Or how the hydrogen might be delivered to the filling stations? Not to mention retrofitting the current gas stations to facilitate liquid hydrogen storage and dispensing. Electricity can be produced with solar, wind, and/or with hydro-power plants, which last time we checked, does not pollute our environment. A key factor that no one seem to be bringing up is that in order to produce liquid hydrogen, you need electricity!

toyotairealIn a ideal world, we would have two types of vehicles in our garages… or two types of mobility. One should be a electric personal mobile, commuter, or errand-runner. Much like the Segway, you plug it in to recharge at night then you take it to do errands or go to work in it. A fine example of this would be the Toyota iReal (see left). The other mode of transportation should only be used when you need space for more than one person and/or need long cruising distances. That could be either gas, electric, or hybrid drivetrain. But realistically, most people can or will have one vehicle. If that’s the case, make it electric. As the battery technology improve, so will the performance of the electric vehicles. With hydrogen fuel cells, you might have to replace the whole entire fuel cell or the vehicle, itself, for the same improvement of upgraded batteries on pure electric vehicles.

Sometimes, we make simple solutions get out of hand and make it complicated somehow…

-KF

The world of Automobiles is a male-dominated place. Automobile racing? Now there’s a place where estrogen is only found with Mr. Spock’s triquarter. Unless the ladies are in skimpy bikinis, or even nude, women are considered to be no more than decorations to the automobiles. Not only do these ladies  compete with and against men, but sometimes they outright dominate. Whatever inspired these ladies, on this page, they are driven to kick some man-ass!

Danica Patrick (IRL)
Danica started off like many, taking up Karting at age 10. After working through the feeder series like Formula Ford, Barber Dodge and Toyota Atlantic, she burst into IRL in 2005. Arguably the only reason why the IRL league is still alive, the petite racer is a lightning rod for controversy. Some say she’s selling too much sex, some still say that she needs to prove her worth. As a spokesperson, she is the face of GoDaddy.com and Peak Anti-freeze.

2005-07 IndyCar Rookie of the Year
IndyCar’s Most Popular Driver
1 Career Race Win
Numerous podiums
Placed 3rd in the Indy 500 this year
2 Sports Illustrated Spreads
Appeared in FHM

Lisa Kubo (Drag)
She dominated Import Drag Racing scene from the late 90′s to mid 2000′s. Piloting the FWD Honda Civic Hatchback and a modified Saturn Ion into history, she took down names and kicked ass year after year. The more impressive fact is that she is the very first female to earn a NHRA license. She was also the ‘racer of the year’ in 2000, 2001, and 2002. Lisa also is recognized as the first driver to make a 7-sec pass in a FWD car.

2000 Turbo Magazine’s Drag Racer of the Year
2001 National Import Racing Association Driver of the Year
2001 NHRA Import Drag Racing Series Driver of the Year Runner-up
2002 NOPI Drag Racing Association Driver of the Year

Ashley Force Hood (Drag)
Making her living a 1/4 mile at a time, this 2007 Funny Car Rookie of the Year has made quite an impression on the drag racing world. Whether it’s competing against her own father with a winning 4.779 ET, or being the first woman to ever lead the NHRA point standing, she is a driver to be reckoned with.

2007 Funny Car Rookie of the Year
First female to compete in a Funny Car Final Round
Star of A&E’s show Driving Force.

Verena Mei (Drift)
Clutch kicking her way into success, this actress/driver is known both on the track and the silver screen. Verena started out as an ‘Import Model’, now she can be found competing in D1 events, Redline Time Attack Series, or teaching at corporate driving events.

Cameo as one of the hotties in a Skyline in Fast and Furious: Tokyo Drift.
First place in D1 License Qualifier
3rd in Hankook Drift Nationals
Numerous podium finishes at Redline Time Attack

Milka Duno (IRL)
Getting off to a late start in racing at the age of 24, this highly educated former model from Venezuela has been racing her heart out in IRL since 2007. Moving up through the feeder series since 1998, she’s landed a good spot, and works hard to defend it.

Started off in Barber Dodge, and in four years advanced to ALMS.
2nd place finish at the 2007 24 Hours of Daytona, becoming the highest placed female in the history of the race.

Sarah Fisher (IRL)
Starting off racing at a young age, Sarah was off to a running start winning numerous Championships. Having grown into IndyCar and Nascar West, she currently drives for her own team, Sarah Fisher Racing. Subject of many Most Popular Driver awards, she was the media sensation in racing before Danica Patrick came along.

1991, 1993 & 1994 World Karting Association Grand National Championships.
1995 Dirt Track Rookie of the Year.
Youngest woman to compete in the Indianapolis 500 in 2000 at age 19.
Tested a McLaren F1 car at the 2002 US Grand Prix.
Appeared on many TV shows, and in magazines due to her accomplishments at a young age.

Corentine Quiniou (Rally)
At the age of 14, Corentine charged into a racing career in endurance Karting, competing in various Championships. Moving from Karts and into the dirt, this star has a very exciting career, and should be watched.

Finished 3rd in the 2004 Rallye des Princesses
Finished 1st in the 2005 Rallye des Princesses
Finished 1st in the 2006, 2007 and 2009 Rallye Aicha des Gazelles

-KF

(photo: flickr and lisa kubo)

hyundaiassuranceHyundai started it all. The Hyundai Assurance was the genesis (no pun intended) of the ‘payment protection plans.’ Now Ford has one called Advantage Plan and GM named theirs Total Confidence.

The TV ads seem so sympathetic towards the consumers and are well produced. They all look genuine, but they don’t tell you what the really important details are.

So which one is the best? Not withstanding the vehicles, of course, we will detail out the three plans, and we think you should be able to figure out which one is the best for you.

Hyundai – Assurance
-Hyundai will give you $500/month for 6 months
- Must have made at least 2 payments and is current on payments
- Can be financed with any bank or financial institutions
- 12 month coverage
- Anyone is eligible including the self-employed (only if bankruptcy was filed)
- Covers up to $7,500 negative equity

Ford – Advantage Plan
- Must be combined with Ford Motor Credit’s 0% financing program
- Ford Motor Company pays Ford Motor Credit directly up to $700 per month for up to 12 months
- Must be a full-time paid employee on the job for more than 90 days; part-time or self-employed not eligible

GM – Total Confidence
- GM pays the bank or financial institution up to $500 per month for up to 9 months
- Leases are covered for the payment protection but not the vehicle value protection
- Must be a full-time paid employee on the job for more than 12 consecutive weeks prior and 90 days after purchase; part-time or self-employed not eligible
- Vehicle Value Protection covers only if you trade it in for another GM vehicle and they will cover up to $5,000 negative equity if traded-in to a GM dealer, or $2,500 for private party sale
- Will not cover all the negative equity if you have financed more than 110% of the MSRP

A few things to note. Hyundai’s plan seem to have the least amount of restrictions. If you have lost your job, you sell the car back to Hyundai and walk away. Then, Hyundai will cover up to $7,500 of negative equity. You pay the rest if the negative equity is more than $7,500. Also, if you are self-employed, obviously the best bet is Hyundai.

Ford’s plan has a big catch. You must be able to qualify for and take advantage of their 0% financing program. If you don’t qualify and decide to use another bank, credit union, or home equity loan, then tough luck for you. Furthermore, let’s say that  you cannot find a job for more than 12 months, you’re stuck with the car and the payments.

Lastly, GM’s plan has the most particulars and the least coverage. After 9 months, you might be stuck with the car and the coverage… that’s if you have met all their guidelines.

-KF

Fender BenderPicture this scenario: A woman leaves her car securely locked and safely parked on a quiet side street. But the unexpected happens. When she returns, her car is severely damaged.

This scenario has a happy ending. After the initial shock, she calls her insurance agent. The agent guides the woman through the claim process and explains that her car policy’s collision coverage will pay the cost, after the deductible is met, to repair her car.

Why should you have auto insurance?
State laws require owners and drivers of motor vehicles to be financially responsible for damages they cause in a car accident. Insurance satisfies this requirement. In addition, optional coverages are available that can further reduce your risk of significant financial loss from a car crash, even if it is not your fault.

Types of coverage available to drivers:
There are various types of coverage available when purchasing an Auto insurance policy.

  • Liability: Pays damages for bodily injury to others and damage to property that result from a wreck that is caused by an insured under your policy. Also pays for other costs including legal defense and court fees in the event an insured is sued because of a car wreck.
  • Collision: Pays for damage, after a deductible is met, to your insured car when it strikes, or is struck by, another vehicle or object.
  • Comprehensive: Pays for damage to your insured car that was not caused by a collision. Some examples include damage caused fire, wind, hail, flood, vandalism, theft, or impact with an animal. There may or may not be a deductible for this coverage.
  • Medical Payments Coverage: Pays the reasonable and necessary medical expenses for an insured that is injured in a car crash, regardless of who is at fault for the wreck.
  • Uninsured Motorist Coverage: Pays damages to an insured that is injured in a car crash caused by a driver who does not have liability insurance.
  • Underinsured Motorist Coverage: Pays damages to an insured that is injured in a car crash when the person(s) responsible for the wreck accident has insufficient liability insurance to fully compensate the insured for the injury.
  • Car Rental Expense: Pays eligible rental car expenses if your car is not drivable because of a loss which would be payable under Collision Coverage or Comprehensive Coverage.
  • Emergency Road Service: Pays for items such as towing expenses, the cost to deliver gasoline, and specified labor charges to unlock your car if the key is locked inside the car.

When shopping for insurance, it’s important to look at more than the total cost. Become familiar with the amount and type of coverage that is being offered. Also, note what isn’t being covered, who is covered while driving your vehicle and the quality of customer service in the event of an accident. And always remember to make sure the company you’re insured by is financially strong.

The bottom line is that you should understand your policy and buy the amount of insurance you think you need.

If you have any questions about Insurance, Laura can be reached at Laura@KarFarm.com

-KF

When you finance a vehicle, you finance the vehicle, sales tax, licensing, and documentation fees. That adds up to about 110% of the selling price. With an average down payment of 20%, you are barely covering more than the sales tax and other applicable fees.

For the ease of math, let’s go ahead and use this example:
Selling price $22,000
Sales tax and other fees $2,200
Subtotal $24,200
Down payment $4,000
Total financed $20,200

The interest in automotive loans are front-loaded. Finance companies want their interest first, since that’s the part that makes them money. Essentially, the monthly payments for the first year or two are mostly interest. Compound that with depreciation during that period, you might be looking at a perfect storm. After 2 years of ownership with a typical monthly payment of $400 (for 60 months), and 40% depreciation from the above example vehicle, you have the following:

Payoff amount $16,500
Market value $13,200
Net difference $3,300

In any case that  your vehicle is declared a total loss by your insurance company, they will give you the market value. Whether it’d be a stolen vehicle, natural disaster, or an accident, there will be a point where the damage to your vehicle will be more than the cost of the repair. If so, you might be responsible for the net difference between the payoff amount and what the insurance company gives you. Actually, you’re responsible for that difference plus your insurance deductible.

The scenario becomes worse if your finance terms are longer than 60 months, your down payment is less than the example 20%, ownership of the vehicle is less than the example 2 years, depreciation is more than the stated 40%, or you are carrying negative equity from your trade-in.

Get the gap insurance if you:
- carry negative equity from trade-in
- have less than 40% down payment
- plan to finance longer than 48 months
- are purchasing high depreciation vehicle (high-end luxury models, domestic makes, third-tier imports, etc…)
- live in high crime rate and/or natural disaster area
- are purchasing for your teenage drivers

Of course, there are always rip-off’s. If the dealership charges you more than $600-700 for this service, then pass on it. You can get it with your own insurance carrier, but the only catch with that is you still have to pay your insurance deductible.

-KF

dealerfinanceYou ask your friends for opinions on the possible cars you might purchase, and most of them will recommend you something that they believe are reliable. The car companies and salesman will have you believe that today’s cars are more reliable than ever before. Therefore you can skip the extended warranty, right?

You’ve done all the research and due diligence. The car you are about to sign for, in the finance office, carries a very high reliability score on many surveys, magazines, and websites. But, the finance manager makes a convincing case on why you need the extended warranty. You never buy extended warranties for anything you purchase, so why should you purchase extended warranty on a car?

Ask yourself these simple questions.

How long are you going to keep your car?
That is the first and the most important question you should answer. Most manufacturer’s basic warranties (bumper-to-bumper) are 3 years or 36,000 miles and 5 years or 60,000 miles on the powertrain/drivetrain (engine and transmission). If you are going to keep your car for more than 4 or 5 years and/or 50,000 miles, you should lean towards getting the extended warranty.

The reasons for the extended warranty will vary between the make and model you’re considering, but most new vehicles since 2005 will carry at least 8 computers (electronic control modules) and over 200 sensors onboard. Some makes protect these electronics better than others, and some cut cost by using inferior pieces. Another big factor is that most people think that drivetrain warranty is enough. Remember, your car is more than just engine and transmission. You have suspension, steering, braking systems, cooling systems, interior and exterior trim pieces, and other electronics.

Most manufacturers realize that the average vehicle ownership in the U.S. is only 2.8 years (until 2007 and in 2008 it rose to 3.7 years), and major automotive ownership surveys talley scores for the first 3 years of ownership. The most famous industry survey, the J.D. Power and Associates’ Initial Quality Score is only for the first 90 days of the ownership.

What are you buying?
If you are buying a Japanese brand such as Honda or Toyota, you probably will shun away from purchasing extended warranties. On their bread-and-butter vehicles like Civics, Camrys (4 cyl), Corollas, Accords (4 cyl), Tacomas (4 cyl), you will probably be okay foregoing the extended warranty. The general rule of thumb is that no matter what you’re purchasing the more power, moving parts (4 wheel drive), and/or electronics and gadgets the car has the more you’re in need of extended warranties.

Because of the abuse these vehicles take from their owners, sports cars, and 4-wheel drive (and AWD) vehicles are often in need of repairs. Vehicles that have reliable reputation are also excellent candidates of extended warranties. The Honda/Acura V6 equipped vehicles are notorious for transmission failure at around 75,000 miles, the Toyota Camry V6′s are known for having sticky valves right under 100k miles, most German cars have annoying electronic gremlins that pop up at any mileage, and domestic vehicles traditionally have issues with parts quality/longevity.

If your last vehicle purchase was pre-2002 and had absolutely great reliability and think that you don’t need extended warranty on the new one you’re purchasing – think again. Due to globalized economics, no matter what brand of vehicle you are purchasing, the parts suppliers are shared by most manufacturers (Toyota and GM share more than 300 suppliers).

They are charging too much money for the warranty, how much should I pay?
Do not skimp out on the coverage, be sure to get the top coverage and $0 deductible. Make sure that you are getting the manufacturer backed warranty. There maybe too many annoying issues with the aftermarket warranty. The catch is that some F&I Managers (finance managers) are greedy and try to overcharge you for these protections.

Visit the manufacturer’s website before you go into the finance office. They actually have Manufacturer’s Suggested Retail Prices for their own extended warranties. If the finance manager asks more than what the website says, then reject the whole purchase of the vehicle. That will force the finance manager to drop the price to MSRP, but you should question his/her ethics and turn that offer down. He/she will be pressured into discount even further. However, if they offer it at MSRP or below it from the start, then you should feel comfortable with the purchase.

Some dealers actually have a money-back guarantee service. If you really are unsure about the extended warranty, ask for it. If the dealer you are dealing with does not carry the reimbursement guarantee, then shop around for it from other dealers. You do not have to purchase extended warranty from the dealer you bought your car from.

-KF

The sales department is often called the ‘front end’ of the business. It is the face of the dealership. Once this part of the dealership was overrun with dishonest people who were in it for the quick money. Not unlike the mortgage brokers of today.

Back about one or two generations ago (15-40 years), the sales department made a ton of money for the dealerships. There were no regulations on financial services or products, Monroney Stickers (MSRP), standardized VIN#’s, or business ethics laws to protect the consumers. You may thank your politicians for some good they have done over the years.

Sales Representatives
These people are the grunt workers. Some will learn bad habits of old sales reps and/or managers, some aspiring sales guys will have enough brains to develop their own way of talking to customers, and the rest are just hopeless.

Despite the notion that these people are brainless drones, that don’t know anything but how to make a quick buck, they are still people and often are paid very low. The average commission and bonus for a sales rep adds up to only about $230 per car sold, and average monthly sales are about 10-12 units.

It maybe frustrating to talk to these guys, but try to get to know your sales reps, and be their friend… they will surprise you once they open up. Just imagine yourself in their shoes, these people get treated like they are worthless by customers and sales managers all day.

The sales reps just do not have much control over your deal. Their jobs are to set you up for the sales managers. Don’t shoot the messenger, and you may go hard balling with the sales managers directly – if you wish to do so.

Assistant Sales Managers
They are the senior sales reps. These guys are not quite sales managers, but team leaders and are called ‘the Closers’. Yes, the sales reps show you the car and prepare you for the closers to come in and close your deal. The assistant sales managers do not make decisions on pricing, they are also messengers. Same as above, you may skip this step and ask for the sales manager, if the store is not overly busy.

Sales Managers
People you want to talk to are sales managers, or often called ‘desk managers’. Most who occupy these positions earn six-figure income, so they have some egos. Without being abrasive, just ask for a fair deal and they will provide you with a competitive figure.

One catch, they are playing games with you if they state that they have to get a clearance from the owner or the general manager. Then just walk away from the desk and leave, it should clean up their act. If not, you haven’t lost anything – just go to the next dealership.

General Sales Manager
From this position and on are mainly for your complaints, questions, and/or concerns about the sales process and the staff. The general sales manager (GSM) is the top sales manager. One step below general manager, and the general sales manager is the general manager depending on the ownership structure of the company. If you have any complaints about the sales reps and/or assistant managers, GSM will handle that. But if you have a problem with the sales manager, GSM and even the general manager (GM) might protect the sales manager. Go straight to the manufacturer for these cases. Most owners will stay out of daily operations.

General Manager
This position actually runs the store. They coordinate duties of all departments, make the advertisement decisions, do budget reports, sales reports, and meets up with the manufacturer’s representatives on a regular basis. Some GMs will take consumers’ complaints, and some will let the GSMs take care of them. The GM position can be viewed as a problem solver of the store. Remember, the GMs will almost never interact directly with consumers.

-KF

dealerinvoice1“Why is the dealer’s invoice different than the amounts I see online?”

“The dealers show you the fake invoice; don’t fall for it. According to this website, the car’s invoice is this…”

“Dealers only pay half of the car, you can get a better deal.”

The above are some of the things you often hear from your smart friends.

KarFarm wants to teach you the basics of pricing structure, so you can save time by effectively negotiating with the dealership. If you hear anything other than what you read below, then they are blowing smoke up some body part you don’t want smoke in.

The website says the invoice is this…
Yes, the websites are correct. Some are more accurate than others. So why such discrepancies?

Most of the websites (such as KBB.com, Edmunds.com, etc…) have the base price right, and even the correct dealer’s cost on optional equipment. But there are some hidden fees that are charged to the dealers, which are not disclosed to the public. See below for some of them.

Dealer’s cost is 50% of MSRP, and the invoice they show you is not the true invoice.
That statement is the most common myth I hear all the time. With the advent of the internet, this myth almost becomes a battlecry to many car shoppers. The cold-hard truth is that dealer’s profit margin on an average vehicle is about 8-13% of MSRP. Since dealer cost is tiered, some people perceive this as being ‘not the true invoice’.

Here are the facts about Dealer’s Cost.

1. The margin from Dealer’s Invoice to MSRP is about 7-11%. Oddly enough, the cheaper the vehicle, the less profit margin – even in percentage. Some vehicles are only marked up by a few hundred dollars, usually the entry level car of a particular make.

2. There is Holdback. This is basically a rebate to the dealer after the sale, to help out with the incurring finance charge on the inventory and other operating costs. The Holdback is usually about 2~3% of MSRP.

3. The Delivery Allowance. It means exactly what you think it means. After every month of business, the manufacturers will give the dealers a bonus of about 0.5~1.5% of MSRP.

4. The Advertising Fee Reimbursement Program. This varies between manufacturers, but it’s usually less than 1% of the car. Also this is paid much like the Delivery Allowance, on a monthly interval.

5. Dealer Incentive. The Dealer Incentive is not Dealer Cash. Dealer cash is much like an instant rebate for the dealer, which is not disclosed to the public, although you can easily find it on the Web. But, Dealer Incentive is extra money for the dealer from the manufacturers for moving slow selling vehicles. This money is not on every vehicle, only on few certain vehicles that manufacturers choose for that selling period.

Now even with all that, and if the dealer sold you the car for MSRP, the dealers make about 11-15% of MSRP.

Then, what’s the true cost for dealerships?
When the dealer sells the vehicle at the invoice amount, they still profit between 3-6% of the MSRP. But when you factor in the cost of operating the dealership and payroll, the net profit margin is not what most people think it ought to be. The major profit generating departments in a dealership are the used vehicle and service departments.

How much over, or under, invoice should you offer?
That largely depends on the vehicle purchasing. What I would advise would be to check your newspapers, or KarFarm’s AdSpace, for the weekly specials. Often, they are far below dealer’s true cost (yes, they will actually lose quite bit of money on these units). These are called ‘loss-leaders,’ they are to entice you come into their respective showrooms. So, when you are ready to purchase and start negotiating, give them a figure between the loss-leader price and dealer’s invoice. If you are purchasing a vehicle that is not a loss-leader car, then offer them a few hundred dollars over invoice and slowly increase your offer.

One last fact – when the dealer shows you their invoice, make sure to spot any evidence of forgery on it. If you don’t find any white-out, mismatching font type, or extra delays on producing the invoice then you can be assured that they are showing you the copy of the original invoice (most dealers will have a small stamp with their accounting numbers on them). It is illegal for the dealers to change or fix the stated invoice amount. So if they show you the invoice, thank them and believe that it is, in fact, the amount they are paying the manufacturer.

-KF

The Myth:
It’s better to buy a one or two year old car than a brand new one.

The Truth:
It depends! If you’re looking to buy a domestic vehicle or a second/third tier import, you are often better off purchasing used.  But if you’re looking to purchase a top tier import such as a Corolla, Camry, Accord, Civic, or Altima, you should be better off buying a new one.

Here’s the math. Top tier imports lose about 15-20% of their value in the first year. We’ll take an average MSRP of Camry, Accord, and Altima at $21,000.

$21,000 – 20% = $16,800

A dealer would purchase the used vehicle for around $16,500-$17,000.  They then incur expenses for reconditioning, smog & safety checks, transportation, and the factory used car certification process. This will add a minimum $500 to the cost of the car  — bringing up the true cost to about $17,000-$17,500.  In order to make a profit, the dealer will generally post a retail price of about $19,995.

Now… nobody pays asking price, right?

The deal will almost always be closed at about $17,500-$18,500, netting a profit of about $500-$1,000 for the dealer; which is fair and reasonable.

The trouble is most one to two year old cars on the market were previously owned by car rental agencies, as fleet vehicles, or service loaners. Although some may have been well taken care of, you just don’t know who drove it or how well it was maintained.

Many used cars often come with a factory used car certification and a longer warranty. This requires that the dealer check the car out thoroughly; therefore we would never discourage you from purchasing a used car. However, if you add $500 or even a $1,000 on to the price of a 1 year old car, you can buy a brand new one!

No matter how high the resale value is on the type of car you’re shopping for, the vehicle should have lost at least 35-40% of its original retail price before purchasing a used car begins to make financial sense.

The sweet spot for a used car of any type is at the age of 3.

-KF

“Should I lease or purchase?”

This is one of the questions I get asked all the time.

If you tend to keep your cars less than 4 years and drive less than 20,000 miles per year, then you could be a perfect candidate for leasing!

Most people don’t understand leases and upon hearing nightmarish stories about them, many shy away. What makes it worse is that most salespeople don’t understand them either, or if they do, they can’t explain them. If more people understood how leasing works, more people would lease.

The national average of new car ownership in the U.S. is 3.7 years. When you purchase a car you also pay sales tax on the full purchase amount, plus registration and misc fees. This totals out to about 10% more than the selling price of the vehicle (those lucky states who don’t have state sales tax do not apply). People who finance often wrap these additional expenses into their loan, thus incurring finance charges on both the purchase price of the car and on the  fees.

When you lease, you only pay sales tax on the monthly payments. You will still pay registration, plus a lease acquisition fee, but it is often quite a bit less than sales tax. When leasing though, you are required to pay the first month’s payment, the lease acquisition fee, and registration charges up front – in the form of ‘Initial Payment’ or ‘Due at Signing’. When negotiating the cost of a lease, you could ask your dealer to make the Initial Payment for you – at a higher monthly lease payment.

To determine if leasing is right for you, ask yourself these questions, in this order:

How often do I change cars?
If you tend to keep your cars for more than 3-4 years, you are probably not a good candidate for leasing. But please read on, because the purpose of your car might be the reason why you should lease.

What is purpose of my car?
With the exception of a very few vehicles, automobiles depreciate in value over time. Leasing allows you to finance the car’s depreciation. If you are a business owner or a commission-based worker (who files a Schedule C at tax time), you may write off up to 100% of your lease payments (please consult your tax accountant to make sure this is valid for you). Additionally, you can lease a car, then sell the car to someone else when the lease is over.

How many miles do I drive per year?
Notice that the mileage discussion comes last. Miles are not the first question to ask when it comes to leasing, but they can have a negative connotation.  If you drive less than 20,000 miles per year, you’re a perfect candidate for leasing.

A standard lease agreement is set at 15,000 miles per year, plus a penalty of 15 cents per mile for every mile driven over 15,000.  A pre-purchase option is often available for an additional amount that allows you to pre-purchase penalty miles at 10 cents per mile. If you lease a car and drive over 25,000 miles per year, leasing may still be cheaper than buying so long as you have stellar lease rates.

If you go over your mileage, you may decide to sell or trade-in your leased vehicle rather than turn it back in.  You can sell the leased car just like a regular financed vehicle. Thus, the mileage is not as important if you have a popular car.

How much is the ‘money factor’?
As you review your lease versus buy options you should shop what’s called your ‘money factor’. This is your lease rate which is similar to interest rate. Be careful though, a money factor of 2.5 is not equal to 2.5% interest rate, so do your homework to ensure you are getting the lowest rate possible.

One last perk!
Another benefit of leasing versus buying? Depending on the miles you drive, your car will always be under warranty! Most leases are structured to keep the owner under warranty for the term of the lease, meaning no unexpected repair costs.

-KF

statefarmbillboardIf you’re like me, you’re always looking for a smart way to save money. Sometimes, saving money can come in the most unlikely place – such as your insurance.

There are several ways you may be able to cut your auto insurance costs. Higher deductibles can lower your premium as will selecting only the coverages you feel you need. Many insurance companies offer different discounts. When shopping for auto insurance, be sure to ask about the availability of these discounts and whether the insurer offers them.

* New business discount: May offer you a discount as a new policyholder if you have been accident-free for a specific period of time.

* Accident-free: Policyholders who have been accident-free while being insured with the same insurance company for several years may be eligible for reduced premiums.

* Discounts for other insurance lines: Premiums may be reduced if you insure your home, life or health with the same company that covers your car.

* Multiple cars: Premiums may be reduced if there are two or more private passenger cars in the household insured by the same company.

* Air bag/passive restraint: Cars that are 1993 or older and are equipped with air bags or automatic seat belts may receive this discount. Certain makes and models of 1994 model year and newer may receive the Vehicle Safety Discount because of the lower medical payments associated with them.

* Antitheft devices: Some insurance companies offer discounts on comprehensive coverage premiums when certain antitheft devices are installed or built into a vehicle.

* Defensive driving course: Premium discounts sometimes are offered for the voluntary completion of specified driver improvement courses.

* Good student: Full-time students (high school or higher level) maintaining at least a “B” average may qualify for reduced premiums with many companies.

These are just a few of the common discounts offered by insurance companies. For more details contact your insurance company or agent. Above all, drive safely.

If you have any questions about Insurance, Laura can be reached at Laura@KarFarm.com

-KF

Having spent countless hours over many years posting on car forums, I’ve come across some universal truths to get you from the new kid on the block phase, to a seasoned vet quickly. While the process may seem a little daunting at first, there are many benefits to becoming part of the community. Whether you are a proud new owner looking to show off your ride, or someone who needs advice on tuning, the information is out there. Why brave unknown modifications when you can simply run a search to see what is popular?

Here are the basics of what to expect in case you haven’t joined a car forum yet. Sadly, it’s all too common for a new guy (n00b) to start off on the wrong foot, get flamed, and quit before they learn anything.

1. Don’t sign up! Lurk the forums for a week.
After using search engines to find a forum specific to either your brand or model, you need to see their content firsthand.  There are many out there, but some are much better than others. Some either don’t have enough active posters, have an immature group, or are too young to provide any real useful content. Last thing you want is to join a small forum full of teenagers adding Pep Boy intakes to their parents old commuter car. What you want to look for is a forum that does in fact answer questions, has a friendly atmosphere, and that the threads get replies quickly. Threads can last for weeks if not months, but if threads only get a few replies a day, your questions will probably go unanswered.

2. Use the search button. It is your friend.
The true mark of a noob isn’t just their post count, it’s the posts they make. When someone has just joined after buying their new car, and asking what their first mod should be, you’ll end up with more rude comments than you can reply to. Why? Search for a few minutes, and you’ll usually find numerous threads answering the exact question you have. This not only saves you time, but a little bit of embarrassment after the jaded forum veterans remind you “Learn to search noob.”

If you are looking to add a cold air intake, exhaust or a different ECU, someone has done it before, and has given their advice. By reading this before you make your first post, you can ask the community questions weighing the pros and cons of a setup, and generally get better answers from the start.

3. Make a profile, and make your first thread!
First things first here. Car enthusiasts love pictures. Do not forget to add a few original pictures of your car. Showing off even a bone stock car tugs the heart strings of the enthusiasts, and proves that you love your car. Lacking a picture might invoke the unspoken “rule number one,” a simple rule that states all car content must include a picture.

While your first post doesn’t need to say “Hi I’m John, this is my GT-R, I like long walks on the beach and the Beatles,” you should let the community know what your intentions are. If you are thinking of modding your car, ask questions based on what you searched. If you plan to keep it stock, let everyone know. If you are interested in local track events or autocrosses, bring it up.

Last part on getting a few replies. Type in a somewhat educated manner. While forums host people from many different countries and walks of life, threads that start with “Yo dawgz chek da whip, I jus pickit up” are not usually going to end well. Simple rules the roost here. “New guy with a GT-R, have a few questions” will serve you much better.

4. Repeat after me: I will not feed the trolls.

Stop trolls by ignoring them.

Stop trolls by ignoring them.

Whats a troll? Just like the creatures that live under bridges, forum trolls are the members that climb out of the woodwork and post just to annoy others. Whether or not they do it on purpose is deeply entrenched in troll folklore, but the end result is one good troll can ruin a thread. If you see a member being combative, being rude, or making personal attacks, ignore them. Getting into a fight with them will only get the moderators involved, which generally means locking up your thread so all discussion stops.

Easiest way to spot a troll is their demeanor on the forums. If they are acting like a spoiled child, ignore them. If they are acting like they are the smartest man in the world, but their post doesn’t make sense, ignore them. The more you post back to them, the more you feed them. So, repeat after me, as I’ve learned the hard way: Do not feed the trolls.

5. Have fun and enjoy the perks!
Having amassed over 15,000 posts on various boards, I’ve had a blast helping people down the path of what to mod, how to improve your driving skills, or bantering in the off topic forums. I’ve attended car control clinics, driven rare cars (Ruf BTR-2 was a highlight), and spent time at more local car shows than I care to admit. Spending time around like minded car enthusiasts not only keeps you motivated to have fun with your cars, but also helps you pick up the friends needed for late night repairs that always crop up at the wrong times. It’s odd to think that some of my best car buddies were met after talking online, but the fact remains: If I want to go canyon carving, replace a clutch, or help someone buy a car, I’ve met people online who make this possible.

-KF

A typical car is made up of over 30,000 parts. Vehicles released in the last couple years have no less than 12 computers, over 250 sensors, and their electronics are at least five times more complicated than the Voyager Spacecraft. The various mechanical and electronic systems in a vehicle are vital for peak performance, efficiency, and passenger safety.

Another thing that doesn’t help is that each manufacturer has a different moniker for similar systems and uses acronyms, making for an alphabet soup that would even give a seasoned veteran a hard time. Once again, KarFarm to the rescue! Please note: this is a beginner’s guide to the automobile systems, so keep your advanced knowledge to yourself.

Steering Systems
There are two types of systems. In the not too distant past there was non-assisted and power assisted steering. These days you’ll be hard pressed to find a car without hydraulic pump-driven power assisted steering. Still to this day, more than half of the new cars on the market will have ‘hydraulic power assisted steering’, or just ‘power steering’ (PS). The new system that’s becoming more prevalent is ‘electric power assisted steering’ or ‘electric power steering – EPS.  The advantage of EPS is that the assist comes from electric motors that don’t require the engine power to operate. EPS is more efficient than the hydraulic pump.

Braking Systems
We’re not going to bore you with the history of automobile brakes. More than 90% of current vehicles on the market will have anti-lock brakes (ABS), and the rest will have them as a option. ABS is very important because the system allows you to steer while braking. Note, though, that this system is not meant to help you stop shorter, it merely allows the driver to steer under emergency braking situations. Along with ABS, there are two other important acronyms – BA (Brake Assist) and EBFD (Electronic Brake Force Distribution). BA measures how fast you step on the brakes, not how hard, and apply maximum braking force under emergency situations. The EBFD calculates the load of the vehicle and the road conditions then redistributes braking power where you need it most.

Traction Control Systems
If you’re on a slick road and/or carrying too much speed into corners, the computer unit will measure the slippage of the wheel and use the ABS system and throttle to slow down your speed and to gain traction. Traction Control (TC or TCS)  mainly uses ABS for straight line traction from a standing start. Vehicle Stability Control (VSC or ESP) uses ABS and the throttle to keep you in the line before you spin out of control. Vehicle Dynamic Control (VDC or VDIM) employs ABS, the throttle, and various sensors to keep you from ever going out of control. This system is active, meaning that it monitors the vehicle and the driver’s input and is based on factory pre-programmed parameters. When the vehicle doesn’t go where the driver’s input tells it to, the system will use the above mentioned vehicle system to bring the car back to the driver’s intended input. Because the TC and VSC are reactive, the systems only kick in after the stuff has already happened.

-KF

2008-prius-hybrid-1

If you are asking this question… then NO!

You would have to drive more than 25,000 miles per year and the price of the gas would have to be well over $5 per gallon for it to be worth it from a cost perspective.

For comparison sake, let’s look at the Toyota Corolla — KarFarm’s pick for you commuting champions — and the world’s best selling hybrid, the Toyota Prius.

2009 Toyota Corolla LE
with Automatic Transmission, Cruise Control, Keyless Entry, All Weather Pkg, and Carpet Floor Mats
MSRP: $18,314
KF Observed Price: $14,800 (Northern California as of March, 2009)
EPA Economy Rating: 27 City/35 Highway
KF Observed Economy Rating: 31 MPG combined

2009 Toyota Prius
with Option Pkg #2 and Carpet Floor Mats
MSRP: $24,469
KF Observed Price: $22,800 (Northern California as of March, 2009)
EPA Economy Rating: 48 City/45 Highway
KF Observed Economy Rating: 43 MPG combined

The average driver in the US logs about 15,000 miles per year in driving. Also, as of April 2009, it is safe to say that the price of gas isn’t likely to go over $2.45/gallon. So at 15,000 miles the Corolla driver will spend about $1,185, and the Prius driver will spend $854 based on the KF observed ratings. The annual savings of about $300 and some change doesn’t seem like much, does it? Even at 25,000 miles per year we are looking at $1,976 and $1,424 respectively, a savings of about $550.

What if gas prices rise back up to the levels of last summer (July 2008), at about $4.65/gallon. The respective gas expenses rise to $2,250 (Corolla) and $1,622 (Prius) at 15,000 miles per year and $3,750 and $2,703 at 25,000 miles per year.

The MSRP difference between the Corolla and Prius is only about $6,000 or so, but in real world prices the difference is closer to $8,000. So unless the gasoline prices are above $5.00/gallon and you drive over 25,000 miles per year, you’re just wasting your hard earned money.

“What about the new Honda Insight?” one might ask. Yes, it is about $2,000 cheaper than the Prius, but it is not as fuel efficient as the Prius. Honda fanboys will argue that the Insight was observed by other magazines and blogs to achieve more than 56 MPG. But, KarFarm also got more than 60 MPG with the Prius on multiple occasions, and EPA’s rating will be much different than the Insight’s 40 city/43 highway numbers if the car can regularly hit the 50+ MPG numbers.

If your sole mission is to clean up the air, then all arguments point to driving a hybrid. The EPA estimates that the Prius will emit about 4.0 tons of CO2 per year. The Corolla pollutes the air with 6.1 tons of CO2, while the average midsize sedan will emit about 7-8 tons of CO2 per year. If you factor in how poor the Prius drives compared to the Corolla… no contest!

Don’t buy a Prius (or other hybrids) because it’s the ‘in thing’ or your favorite celebrity has one. He/she probably has about 10 adopted Asian/African kids, or they might not wear underwear in public and flash their business for the tabloids to publish – would you?

But then again…

-KF

Maintenance can be a daunting task for a lot of people. Here at KarFarm, we are all about explaining technical stuff in easy to understand manner, so we’ll break it down in simple terms.

Usually depending on the make, you would do regular maintenance in the 3,000 or 5,000 mile increments. Very few manufacturers will have a 10,000 mile interval, but they do exist. In the past, some manufacturers had two maintenance schedules depending on what type of driving you do… throw that out the window. You should do your servicing every 3,000 miles, 5,000 miles, or 10,000 miles depending on the make you are driving.

If you do not see ‘maintenance’ items below, it’s not maintenance… you need repair!

Items that must be replaced

Oil and Oil Filter Change
This is done at every service interval (3k, 5k, or 10k). There are conventional oils, synthetic oils, and there are blended oils. If you have a turbocharged or supercharged engine, please use synthetic oils. Also oil weight, which is designated as 5W-30, 10W-30, 10W-40 and so on, 95% of us are going to use 5W-30 (colder climates) or 10W-30 (milder and warmer climates) weights. This is Maintenance 101, so we’re not going into turbo timer and those things.

Fluid Check
A visual check of the various vital fluids under the engine bay, such as washer fluid, brake fluid, coolant, transmission fluid, etc… If it’s low, fill it to the top of the recommended levels, and have a mechanic inspect the vehicle to see where the fluid loss is coming from.

Tire Rotation
Rotating the tires have to be done to ensure even wear and longevity of the tire life. Do this at every service levels.

In-Cabin Microfilter
Most new cars since 2002, will have these things. It keeps the air inside the passenger clean. You should replace this every 6 months or at 6,000 miles.

Items should be inspected and replaced when necessary

Engine Air Filter
As the name states, this is essential for not only for performance, but fuel economy. Dirty filter means the airflow coming into the engine will be partially blocked. Think of a vacuum cleaner, the dirtier the filter the less suction power. The engine air filter should be checked at every service interval and be replaced at around 15,000 miles or sooner.

Tires
Depending on the vehicle you are driving the tire replacement will vary. Summer compound, race compound, or high performance tires will last you about 10-15k miles. All-seasons and touring tires will go for about 30-40k. The low resistance tires will last you about 50-60k. Off-roaders will go until at least 75k miles. You should know what type of tires you have, they are the most important safety items on your car!

Brake Pads and Brake Rotors
You will notice a slight high pitched metallic grinding noise when it comes to time to replace the brake pads. But for most drivers, that don’t ride the brakes or slam on the brakes excessively, the brake pads will last you for about 30,000-40,000 miles. Remember the first time you replace the brake pads, you have to resurface the rotor or you will feel vibrations every time you step on the brakes. But the second time you replace the brakes, you should replace the rotors as well. There is not enough metal to resurface the rotors twice and be safe for repeated emergency braking.

Fuel Filter
This is your last step to a clean fuel before entering in the engine. This little device actually catches a lot of junk, however the fuel filters should last you at least 60-90k miles.

Brake Fluid Flush
Sometimes when you replace the rotors, your technician might recommend a flush as well. By the time you replace the rotors you will have close to 90-100k miles, a good time to flush out the brake fluid and replace it with fresh fluid. It’s like cooking oil. When you repeatedly heat the cooking oil (deep frying), the oil loses viscosity and won’t be good anymore. Same thing applies here, after so many repeated use of the brakes break down the brake fluid and make it pretty useless giving you a mushy brake pedal feel. After this procedure, you will have firm brake pedal feel again.

Transmission Flush
The number one enemy of transmission is heat. Same thing with all vital fluids, with repeated heating the oil becomes thin and will not lubricate and cool the transmission effectively. This should be done at every 60k miles, sooner if needed.

Fuel Injector Flush
The fuel injector flush is tricky, because some manufacturer’s don’t recommend it. Please check your owner’s manual about this. The injectors should last you at least 120k miles or so, even throughout the life of the car. But if your manufacturer does recommend it, do it at every 60k miles.

Power Steering Flush
Some new cars since 2005 will have Electric Power Steering, you will not need this service. For the rest, please see brake fluid flush.

Coolant Flush
Coolant is sort of easy. Because of its color it is easy to check on. Make sure you look at the color, if it’s dingy or brown, replace. If your technician is recommending it, please have them show you the condition of the coolant. Most drivers will flush at around the 75-100k miles mark, or sooner.

Struts and/or Shock Absorbers
For passenger cars don’t need this replaced for at least a 120k miles, and SUVs and pickup trucks around 80-100k miles. But as with everything in this section, you have to replace when necessary. If you hear squeaks when you go over bumps or there is excessive bouncing, then it’s time.

Spark Plugs
If you own a vehicle that was born in this century (2000 – present), the chances are that you don’t need spark plug replacement until at least 90k miles. Even about 15 years ago, vehicle owners had to do a ‘tune-up’ every 30,000 miles or so. With advancements in automotive electronics and other mechanicals, a true tune-up is done at every 90k-120k miles thesedays.

-KF