Here's What I've Learned So Far In Setting Up My Used Car Subscription Program

"Torque Affair" (torqueaffair) 09/11/2016 at 14:46 • Filed to: None

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People have all kinds of different hobbies—like shooting guns, waiting in eager anticipation to read Hillary Clinton’s emails or putting up pictures of their half-eaten banana on Instagram. I have mine. I like driving different cars, so I have decided to buy, enjoy and sell cars as frequently as I can. But there’s a little more to it than that.

I also want to partake in this activity in the cheapest possible manner. You might be thinking that trying to be cheap while buying and selling cars is like eating Burger King every day and hoping to lose weight. That’s generally true, in that, after the 4th consecutive Double Whopper, you’ll want to stop eating forever, thereby instantly shedding the pounds. With buying and selling cars, you don’t have to go broke if you play the game correctly. You’ll just be filled with regret for not spending your money more wisely.

What I’m doing here is essentially creating my own used car subscription program where I’m paying some amount of money each month to be able to go through a couple of different cars a year. This carefully designed program has only one member—me. And my goal with the used car subscription program is to pay the least amount of money possible to drive cool cars. I’ll admit–this isn’t easy, but it can be done.

So, how do you get this right? An unforeseen maintenance issue on a high performance machine while you own the vehicle could easily set you back thousands of dollars. Your transmission could fall out of your car one day as you’re driving, or maybe your car’s electrical system decides to permanently shut down. Although you can’t stop bad things from happening to your car, you can take steps to minimize the chance that you will see your front right wheel roll away as you’re driving at 70 mph on the freeway.

My used car subscription program began with the !!!error: Indecipherable SUB-paragraph formatting!!! which I bought and held onto for roughly three months. After I sold it, taking into account taxes and maintenance costs, I paid a little less than $300 a month to own the car. That’s not bad. If that was going to be my monthly subscription payment to the used car program, I could live with that.

With my next car, a !!!error: Indecipherable SUB-paragraph formatting!!! , I had hoped to continue paying about the same amount as the 335. But after selling the car, I calculated the cost of ownership to be a little over $600 a month which was higher than I would’ve wanted. There were a few mistakes I made along the way, so it looks like my used car subscription program will need some tweaking and optimization to keep the costs low. Here’s what I’ve learned so far.

Don’t overpay for the car

Of course, this goes without saying, but I still failed to heed such common knowledge. I paid $28K for the car in an act of desperation which was about $1K more than I should’ve paid. I lacked the patience that I needed and ended up pulling the trigger on an overpriced IS-F. This was my biggest mistake.

Buy cars that are in high demand

To be able to sell the cars quickly it’s important to own something that is highly desired. I was completely wrong about the amount of interest people would have in the IS-F. When I put the IS-F up for sale, I thought it would be a matter of days before an auto enthusiast would call me and say: “How about $10K and a broken iPhone?” But, I didn’t even get much of a chance to ignore them.

The only inquiries I received came from existing IS350 owners or Lexus fans who said “my mom drives a Lexus and loves it.” No one else was interested. I guess I was one of the few who wasn’t a prior Lexus-lover but found the IS-F cool enough to drive it for while.

Don’t be in a rush to sell

The only way to make my subscription program sustainable is to make sure I can sell the car for almost as much as I bought it for. I wanted to sell the IS-F for $26.5K but realized that IS350 owners and people whose parents loved Lexuses were willing to offer only $25K. There was one person who came close to buying my car at $26.5 but backed out at the last minute due to the lack of a warranty. I couldn’t convince him that this was probably the only high-performance car he could be perfectly fine owning without a warranty.

So I waited for a few months and wondered why nobody was calling. It was like going on a bunch of first dates and then…. crickets . My autotrader stats were dismal for the IS-F—over a thousand views with only 3 emails! Why didn’t anyone want my car? It was terribly disappointing.

Finally, Craigslist came to the rescue as it always does and I found someone who paid me $25,750 for the car. If I had more time to wait, I might have found the right buyer at the price I was wanting. But, I was running out of time. That’s because I ran into a problem...I was starting to wear out my tires and brakes too much which brings me to my next point.

Make sure you buy a car with newly replaced tires and brakes

When I bought the IS-F, the tires and brakes had about 50% of life left in them. When my car was up for sale, that percentage of life remaining was much lower and replacing them would’ve cost me $2600. That would’ve definitely disrupted my used car subscription program since I wouldn’t be able to put that much money into the car and then immediately sell it.

$1200 a month for a subscription payment? Hell no.

Besides, I would want to enjoy driving the IS-F for a while longer with brand new tires and brakes.

All this means that my next car must have newly replaced tires and brakes so I don’t run into this problem again.

Get a pre-purchase inspection

This is a no-brainer. The inspection will help reduce the possibility of something major going wrong while the car is in your possession and will help keep the cost of the program low— which is the key to this whole thing!

Buy a car that’s at least 7-8 years old or get one with a warranty

There is a tradeoff here. An older car means the depreciation curve will be flatter but it also means that warranties will be harder to find. So either you lose money on steeper depreciation with newer cars or you lose money on repairing a car without a warranty when the alternator breaks, leaving you stranded in the middle of a thunderstorm. Take your pick. Something’s gotta give with either option, unless you’re able to find a great deal on an older car with a certified warranty— now that’s hitting the jackpot!

Don’t buy a car in one year and sell it in the next

I purchased the IS-F in Dec 2015 and right when the year turned over, I noticed an immediate dip in the value of the IS-F I owned. Suddenly my car went from being a 7 year old car to an 8 year old one making me wish I had thought of that before I bought the car. An easy, simple mistake that I shouldn’t have made.

Now that I’ve sold my IS-F, it’s time to learn from everything that went wrong and do things right this time. I’ll be delighted if I can stick to $300 or less a month to continue driving high performance used cars with the ultimate goal being $0 a month. I’m hoping I can follow my own advice but it’s hard because I really want to pull the trigger on this orange Raptor. But the dealer won’t budge on the price and I can’t break the first rule, which is by far, the hardest one to adhere to.

Damn.

I guess I must wait...

Or change the rules!

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!!!error: Indecipherable SUB-paragraph formatting!!! is about exploring my fascination with cars. I’m always on the lookout for things that interest me in the car world.

Follow !!!error: Indecipherable SUB-paragraph formatting!!!

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DrScientist > Torque Affair 09/11/2016 at 16:31

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if the warranty isnt transferable, or the remainder refundable, is it worth it?

also, do you have to pay registration/emission fees in your state? in mine, that’s usually 100-120/year. what about listing fees for the non-craigslist sites?

Torque Affair > DrScientist 09/11/2016 at 17:14

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if the warranty doesn’t already come with the car, then it might not be worth it - especially for a temporary ownership type scenario. Yeah my registration is like $75 a year, and Autotrader was $75 for me to get the max exposure. That was a waste since Craigslist did the trick!

DrScientist > Torque Affair 09/11/2016 at 17:30

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wow, 75 is a bunch for a listing. is that forever? or a set time frame?

Torque Affair > DrScientist 09/11/2016 at 18:00

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It goes for about a year - in my case May 2017

Corvair6069 > Torque Affair 09/11/2016 at 20:28

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I’ve been wanting to do the same thing. The thing that screws me up is starting with say $8k surplus, zero down financing, if I’m not careful I’ll blow threw that $8k after about 4 cars if I’m lucky. After depreciation and fees maintenance and all

Torque Affair > Corvair6069 09/12/2016 at 06:56

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Yeah, there’s definitely a risk. But it’s worth it if you can pull it off - good luck!

itranthelasttimeiparkedit > Torque Affair 10/02/2016 at 20:44

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Are you in Austin too? Damn there are a lot of us on here...

Torque Affair > itranthelasttimeiparkedit 10/02/2016 at 21:29

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yep!

itranthelasttimeiparkedit > Torque Affair 10/02/2016 at 22:10

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Have we done an austin meetup outside any of the races? I’ve met some of the e30 guys from here before

Torque Affair > itranthelasttimeiparkedit 10/03/2016 at 07:12

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I haven’t been to any, but let me know if something is the works - would love to join.

itranthelasttimeiparkedit > Torque Affair 10/03/2016 at 22:04

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Same here. The first (and only) time I have met random people off the internet was some E30 dudes from here, I did not get murdered so I consider it a success.

and 100 more > itranthelasttimeiparkedit 11/01/2016 at 13:56

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I know its a month after you posted this, but Chairman Kaga was talking about setting up a watch party for The Grand Tour:

http://oppositelock.kinja.com/austin-grand-tour-watch-party-1788183873

Rykilla303 > Torque Affair 11/01/2016 at 14:30

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I do this on a much lower budget and a different goal. Always 5-600, always non-running, always something that’s just a challenge to get back on the road.

last few:

$500 87 ford ranger (fall 2014 project)

$250 02 grand prix (fall 2015 project)

$500 85 jeep cherokee (just bought!)

Wrong Wheel Drive (41%) > Rykilla303 11/01/2016 at 15:01

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I like this method far better. Lower outlay in funds but still easy to have just as much fun as long as newness isn’t important.

Demon-Xanth knows how to operate a street. > Torque Affair 11/01/2016 at 15:04

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I did the math once and found that buying $2k cars, driving them until they require any maintenance whatsoever, and then just getting a new one, DOES make financial sense if you can accept that they’re all going to take a shit on you eventually.

TysMagic > Torque Affair 11/01/2016 at 17:47

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interesting! I was doing the same on a much smaller scale, until the wife said stop it. I looked at it as a game more than a subscription program.
I was playing in the $5k range. That seemed to be the sweet spot for craigslist cash buyers who weren’t going to be doing a whole lot of pre-purchase stuff I didn’t want to deal with: loans, ppi, expecting perfection, etc. I was also going for a positive end take. It’s pretty doable to spiff up a $2.5-3K car to a $6k obo I’ll take $5k everyone is a winner flip.

A tip I would add is do not do trades. Sell. Then buy.

Orange Exige > Demon-Xanth knows how to operate a street. 11/01/2016 at 21:15

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That’s a very safe philosophy to hold.

The thing with $2000 cars though is that they can be worth as much - if not more - in parts. Especially if it has preinstalled aftermarket parts. $2k car craps out and with enough time, you make be able to break even parting it out - especially if it’s a relatively popular car.

I know this for a fact from my wrecked NA Miata (RIP). I broke even after selling a few of the aftermarket parts separately, then the rest for a lump sum. I never even got around to selling the LSD separately or really any other (still good) body parts or much else - otherwise I would have 110% made more money than I spent.
But ultimately, I wish more than anything I didn’t crash that car and could still have it :’(

Torque Affair > Demon-Xanth knows how to operate a street. 11/01/2016 at 21:54

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great idea! should try that some time.

Torque Affair > TysMagic 11/01/2016 at 21:55

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Trades are insanely terrible! They will never work for what I’m trying to do.

VonBootWilly - Likes Toyota, but it's still complicated. > Torque Affair 11/02/2016 at 06:13

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I’ve always bought and sold cars, more as a second income, since before I even had a license. Probably started when I was about 14. I found that the cheap cars (2-4K) go so fast when they are clean, have low mileage and look problem free, they sell themselves. I became friends with a public auction (like literally first name basis from being there for a few years) and I blind lowball bid on Gov’t surplus almost weekly.

Every car I buy for profit makes me money, the cars I buy for fun never cost me more than $100/month, but I don’t buy cars over $10K because they never made me any happier.

TysMagic > Torque Affair 11/02/2016 at 08:55

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terrible regardless! Not a fan

Danger > Demon-Xanth knows how to operate a street. 11/02/2016 at 11:14

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Did that with a 1995 civic and 1991 accord. I paid $1500 for each of them, drove them for about 2 years each, and put about $500 of maintenance into each. They were great. Sold one for $500, one for $1000. Great times.

BLCKSTRM > TysMagic 11/02/2016 at 11:52

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How did you do?

And if you were able to stay in the black, what’s your estimate for $$/hr?

When I’ve done these calculations I can end up in the black, but it’s the equivalent of like $3/hr.

TysMagic > BLCKSTRM 11/02/2016 at 12:37

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idk about per hour, but I averaged a profit of about $750 per car. Sometimes greater, sometimes less. On a broad scale, buy a car for $2500 to $3000. I’d invest $1,000 to $1500 in parts depending on needs. Typically only OEM improvements: better factory wheels, radio, new mats, paint in the right places. Nothing aftermarket though and most parts were used from ebay or craigslist. Average I was keeping them for 3 months, again sometimes more sometimes less. My profit/loss list factors in tax and insurance, but I did not factor in gas.

Echostar > Demon-Xanth knows how to operate a street. 11/02/2016 at 14:41

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You also have the benefit of never needing collision insurance.

BLCKSTRM > TysMagic 11/02/2016 at 16:27

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I’d say you’re accounting for it all correctly. That’s not a bad deal - may have my son try that out as a hobby when he gets old enough. Even at six he loves fixing things. And I’m always under the car...

TysMagic > BLCKSTRM 11/02/2016 at 16:34

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That’s how I got really hooked! My dad flips cars left and right

hgrunt > Torque Affair 11/02/2016 at 21:13

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I’ve done something similar the last few years! Kind of glad to hear I’m not the only person crazy enough to do this. The cars I’ve ‘subscribed’ so far have been an 04 330i ZHP, 03 C5 Z06, and I’m currently driving a 04 Forester XT (manual transmission). The C5 was the most expensive and came out to about 310 a month for a year, after replacing the tires, wheel bearings, etc (I should have replaced wheel bearings but not tires). Also learned a lesson about niche sports cars like the C5... spending a little more for one with the shortest cleanest carfax possible, the opposite of what I did, makes selling it far easier.

I’ve also considered if it’s an actual viable business model to come up a ‘used car subscription service’ sort of like a scaled down version of those supercar timeshares. For the price of an average car payment a month, you can get something different every few months or years, etc. Moreover, as a business, it means access to auctions for cars (lowering cost) and depreciation is a tax writeoff, etc. But I’m also really lazy.

Looking forward to reading about your continued adventures in car “renting”!

Akio Ohtori - RIP Oppo > TysMagic 11/11/2016 at 17:10

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I really should not have read this. Really really should not have read this. I already own too many cars (4) but they’re all “permanent”. The idea of having a rotating one is... very tempting. I also love the game of buying a car so.... Hmmmm....

TysMagic > Akio Ohtori - RIP Oppo 11/11/2016 at 17:21

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It’s great fun!

Human on Display > Torque Affair 02/23/2017 at 05:20

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Just got around to reading this. A few issues with the ISF demand, you got 1000 views because people do want them, just not the 2008-2010 MY. People with money are buying the 2011+ model year, because of the LSD and revamp suspension setup that makes it comparable to an M3. The gap in price between a 2011 and a 2009 is nuts. Oh, also most car guys I’ve spoken to haven’t driven one, driven in one, and in some cases even seen one in person.