We all know that when you buy a brand new car, it can depreciate as much as 20% as soon as you drive it off the lot. Since we are all concerned about making the best financial decisions, we don't buy new cars...right?? If you are buying a new car, the best thing to do is pay for it in full from your savings and drive it until the wheels fall off. Meanwhile, you should be making "car payments" to yourself so when it is time to purchase another vehicle, you won't need a loan.
If you are in the market to purchase a vehicle and are looking for a safe, reliable used car, be sure you are taking the proper steps to protect yourself.
Research. If you know what models you are interested in or if you need ideas on what your next car should be, start online. Edmunds.com has forums where owners can discuss problems they've had and a warranty and service section where you'll find recall data and technical service bulletins. If the car you are interested in has a history of problems, you may want to try another model. You can also check the complete list of safety recalls at the National Highway Traffic Safety Administration.
Get the History. Just like you will want to know the history of your next potential boyfriend/girlfriend, you'll want to know the history of your vehicle. Get a Carfax report to reveal the complete history of your next vehicle. If you don't want to purchase a vehicle that has been in a previous major accident, had flood damage or some other major problem, you want to get this report. Carfax will give you the estimated mileage, ownership history, title and accident history and the service and repair information reported for that car. If there are no DMV-reported incidents (such as a flood, fire, salvage or manufacturer buyback), the car qualifies for Carfax's Buyback Guarantee. If one of those incidents comes to light after you buy and it wasn't on the report, Carfax will buy the car back from you for up to 110% of the Kelley Blue Book value.
Don't Overpay. After you've done your research on the history of the vehicle, you need to know the fair market value of the car you are considering. Again, the internet can be a great help in determining what the car is worth. Be sure to check vehicle valuation sites like NADA, Kelley Blue Book and Edmunds. Knowing the value of the car you are about to purchase will give you negotiating power with the seller. If the seller knows you've done your research, they will probably be more willing to give you a better deal.
Insurance. You've done all your research on the history and the value of the vehicle and you are ready to make a deal. If you are getting a good price on the vehicle, you don't want to blow all your savings on outrageous insurance costs. Get a free auto insurance quote at Esurance or InsureMe.com to be sure your new (used) car won't break the bank when you insure it.
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Bought a new 2009 Corolla last Wednesday after my car died. I paid within $100 of the price of a 2008 Corolla sold by carmax and a another dealership here in town.
I did not have enough money saved to pay for it in cash. So my first stop from finding out that my car's engine was shot was to my credit union. They gave me a nice piece of paper that had my credit score and the percentage rate of the loan they could offer me. I took that to the Toyota dealership and they beat the rate.
I will never again drive a car until the engine is gone. It was a stressful experience. If my family was not in town to help me through it, it would have been even worse.
My plan now is to have enough money saved to replace this car at 150,000 miles. That way, if it goes, I won't be scrambling around wondering what I'm going to do. If it lasts longer, then that's all the better.
... then take a moment to pat yourself on the back for NOT buying new. I saved $35k on my car by buying one 6 months old and with just 1,700 miles on the clock ... that's not a typo: $35k!
Well, I would recommend against this. Just buy new and get your warranty, or buy used and make sure you have a darn good lawyer . . . er warranty.
I purchased a 2002 Ford Taurus in 2004 for 12,600 . . . which isn't a bad price to pay. Only in the last 4 years it's cost well over 9 grand in maintenance items that were not just the general fluids, brakes and junk. That's on TOP of what you normally would have to do with a car. All in all I've spent near 30K on it, I may as well have just bought a new 2004 car in 2004 and spent the money and not had all the crap. Even now, my battery light is on, my engine light is on, it has suspension noises coming from the front . . . but it's sucked my coffers dry, so it has to run as-is until I can save enough to do the work.
Carfax is no help, it just tells you if it's been in an accident. (Which mine hasn't, according to carfax).
@ traciatim - Sounds like you got a lemon. I purchased a 1995 Honda Accord in 1999 with ~60K miles. I didn't pay anywhere near $9K in maintenance and I drove it for 8 years and to ~170K miles. My younger bro is now driving it and it's still going strong.
Part of the car buying process (whether you buy new or used) is do your research. When buying a car, I only consider makes/models that are known for their reliability (good examples - Honda, Toyota).
I just purchased a 2002 Toyota Avalon on Saturday. It has 58k miles and I paid $12,500. The original sticker price was over $33,ooo. As much as I didn't want a payment, I am comfortable with a small payment knowing that the car will last much longer than the two years of paying the loan. I was also fortunate to work with the owner and know them though friends which helps with the background of the car. I had been looking for about 2 months as my 1996 Concorde was on it's last legs. I did my research on Edmunds and MSN auto and was very comfortable with this purchase.
great post man.. one of my passions is sport/luxury cars and i will never buy brand spanking new.. it's just a waste of money considering the fact that the car loses the most of it's value the first two years
i bought a 1998 lexus gs400 back in 2002.. 50k car brand new but i bought it for half that price.. the car has been paid off for 3 years now (nice not having a car payment)
now that the car is getting up there in mileage.. i've been looking at an infiniti G35 sedan (2007 models and above).. 306 hp v6.. i even joined the nissan/infiniti forums to do more research on the car itself
i heard they are coming out with a g37 (sedan) next year w/ a 7 speed automatic (which will help gas mileage hopefully).. i can't afford one brand new.. so i might have to wait a few more years
i still don't think i'll be able to pay in cash.. but i will have a nice down payment in hand by that time for sure..
i'm one of those people that don't mind paying a little extra for a nice car (quality)
im thinking of buying a car myself and your tips will guide me to choose the best bargained car. wish me good luck
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