It is done

It took almost seven weeks, but our family’s 2018 Hyundai Tucson - which was a lease - is finally sold off. Made a decent bit of profit too, which is nice. The car market is indeed super crazy right now: the absolute worst time to buy a car, but the best time to have a car to sell. The local CarMax gave us $25,000 for the three-year old Tucson that had an MSRP in the $28,000s. The lease buyout was only $16,500, including tax. Do the math!

It had to be said though our Tucson has relatively low mileage (~18,200) and is practically pristine. Your mileage (pun intended) will vary. Don’t look to get around the same money if your Tucson had significantly more miles.

The $8,500 in profit isn’t without some excruciating waiting and patience. Due to the aforementioned crazy car market, leasing companies have stopped the practice of lease buyouts by a third party. No longer can you take your lease vehicle to CarMax (and the like) and have them cut you a check for the difference in present value and the payoff price. The contract buyout price the leasing companies has is with you; they are not legally obligated to sell to third party for that same price.

And at present time, the lease companies aren’t willing to sell at all. They want to impel the customer to return the car to the brand’s dealership. Because there is an absolute dearth of new car inventory due to the chip shortage.

In order to sell the Tucson and get some money back, we had to do it the roundabout way: buy the car outright from Hyundai, then sell the car to CarMax ourselves. Paying for the car was easy - electronic bank transfer - but then we had to wait over two weeks for Hyundai Finance to mail us the title. With the pink slip in hand, there was another problem: CarMax (and the like) only accepts a clean title: the paper cannot include the leasing company as a registered owner, even though they’ve signed it off to you, and there’s a bill of sale.

Getting a clean title required a trip to the local DMV. After paying $25 to transfer the title to my father’s name only, it was then another prolonged wait for the unencumbered title to arrive in the mail.

That took another three weeks, but thankfully the new pink slip came last Friday. We immediately schedule an appointment at CarMax the very next day. Two hours on the premises later, and finally we unburdened ourselves of Tucson. A whole month after my father have already leased another car! Thank god I had the parking space at work to store the Tucson during this time.

So yeah, if you have a car to sell, now is the best time! I just hope you’re not also looking to buy one as well…

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Today’s office.

Sell the M2?

Due to a global semiconductor shortage causing, amongst many other things, a shortage of new cars, the used car market is absolutely on fire. A twitter friend recently got offered more than what he paid on his Jeep Wrangler. Granted, he didn’t pay MSRP, but still: to have essentially driven the Jeep for only the cost of gas and insurance is pretty nice. It goes to show how desperate dealers and wholesalers are for vehicles.

The return of tourism and the demand for rental cars are also a contributing factor.

I’m massively tempted to check the value of my own BMW M2 Competition. I wonder how much I can get for a six-month old car, especially when German luxury brands like BMW are notorious for rapid deprecation. If it’s only a few thousand dollars (I paid about $63,XXX), that would be amazing. Amazing enough to make me think hard about actually selling it. If I do, it would be the shortest amount of time I have ever owned a car.

Truth is, I just don’t put that many miles on the M2. Being that I walk to work, and there’s a mall with a Target and Trader Joes three blocks away from home, I hardly ever need to drive. That’s by choice, of course, but nonetheless that means the M2 is parked on the street for about 90% of the week. I am paying way too much in insurance to have the car sit for so long. But then, what am I to do? Drive around in a loop for the heck of it? The recent high gas prices aren’t conducive to that, either.

I’ve gone without a car before, but that was in the process of saving up for a Porsche 911. The M2 is likely the endgame of internal-combustion cars for me. My next car - if I ever do purchase another - will be fully electric for sure. As a car enthusiast, I don’t think I can go car-less on sheer principle.

Good thing then that whenever I do drive the M2 Competition, I am reminded how much of a riot it is. It truly is the best modern M-car this side of a BMW 1M. I simply can’t sell it, even if its actual utility factor is very little these days.

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Now that is a good custom plate.

Buying a used car for the first time

Thus far I’ve been supremely fortunate to only ever had brand new cars. My parents didn’t believe in used cars on the virtue of you never know what the owner before you did to it, so it’s worth paying extra to be the first person to fart in the seats. Therefore even my very first car, which my parents lovingly purchased for me, was factory fresh. It was a testament to my parents’ sheer tenacity: raising two kids with not that high of an income, yet still able to save enough money for such a kingly gift.

Following from that ethos, when it came time to upgrade to faster car using my own money, buying used wasn’t even remotely on the radar. The car was a Subaru WRX STI, a sporting all-wheel drive performance sedan; I couldn’t risk buying a second-hand version where the previous owner might have driven it with reckless abandon, leaving my wallet to salvage the pieces.

Back then I was obsessed with buying a car new and keeping it as new as possible, a Sisyphean task in hindsight. I remember getting special cleaner and sealant just for the already super expensive paint protection film I had installed on the STI’s entire front-end, which was really stupid because that’s like getting a case for my phone and then agonize over keeping that perfect.

Indeed it’s the ignorance of youth, and it’s cost quite a bit of money. I was completely unfamiliar with the used car buying process, especially pertaining to performance cars like the Subaru. I didn’t know pre-purchase inspection was a thing; a detailed once-over of a car by a certified mechanic, informing potential buyers before plopping down hard-earned cash whether the car is a suitable sample worthy of purchase, or a neglected pile of junk best avoided. Turns out buying used isn’t akin to gambling, as what my parents had me believe, as long as I perform the proper due diligence.

However none of that factored into the car I bought after the STI, because there weren’t any used ones to be had. The 2016 Mazda MX-5 was completely redesigned from the ground up, so my only option was a fresh unit shipped from the factory in Japan. Had that not been the case I would’ve purchased a used version to save on the not unsubstantial depreciation. Case in point I bought the car for nearly $25K in late 2015, and two and a half years later I sold it for $16K. That’s quite a steep drop, a significant saving that I could’ve leveraged had the opportunity existed.

The opportunity will exist In the next car I’m going to purchase - 911 GT3, and I’m planning to maximize the depreciation savings and let the first owner take the brunt. I’m buying a used GT3 mainly because I can’t remotely afford to purchase a GT3 brand new, so slightly used 2015 models are what I’m relegated to. I shall be buying a used car for the first time, and it’s all quite exciting. Stay tuned.

Everybody’s gathering around.

Why are used car sales taxed?

It’s occurred to me that California charges sales tax on used car sales, and it makes absolutely no sense. I understand if a dealership is selling the used car, but why must I pay tax even if its from a private party? Surely I don’t have to pay the State anything if I were to purchase a flat-screen television sold by some dude on Craigslist who’ve probably stole it. 

Maybe we are obligated to report and pay sales taxes on those sort of purchases and it's just that nobody does it and it isn't at all enforced. We are however forced to do so for cars because each motor vehicle is required to be properly registered with the localities, ergo the government knows everything. 

Well, that really sucks, because the State is essentially double (or triple) taxing a product. Hasn’t a merchandise done it’s duty to society already (in form of the sales tax) when it was first sold? I think it should be illegal for government to double-dip on this, and yes it’s mainly because I don’t want to pay. My next car will likely be used and priced into the six-figures so the tax bill - especially when registered in San Francisco - is going to be enormous. 

I understand the other side of the coin: by instituting sales tax on used cars, not only does California reap the revenue benefits but it also prevents auto dealerships from titling their inventor (thus converting new cars into used) thereby lowering the out-the-door price for customers. Imagine the adverts of “pay no sales tax” plastered in front of dealer lots next to the giant inflatable figures.

Perhaps I'm in a truly small minority: people that care about taxes during car shopping. I bet the majority of consumers simply look at the sale price and regard taxes and license fees as something insignificantly tacked on afterwards. You can afford to do this in Oregon where there is no sales tax, but for me living in San Francisco the final tax bill when buying a car is nearly 10 percent of purchase price. 

10 percent of $100,000 is $10,000, and that’s all going to the State on a car they’ve already taxed at least once. I consider that to be thievery in the highest contemporary order. 

Follow the light. Climb!