Buying a New Car - Things to do first
Research the model you are interested in through JD Power, Edmunds.com and similar resources for model dependability and how well it holds its value.
Decide what you will be using the car for and what features you really need.
Spend a little time learning the complicated car pricing system used by dealerships.
Find the True Market Value of the car before you purchase it. Use incentives and rebates to save money on the purchase.
Don't just look at vehicle price, also look at what vehicles hold their resale value best.
If you plan on trading it in within a few years, to avoid being upside down when you do, put as much money down as you can afford, and finance for the term that matches your trade in cycle.
If you're planning to trade in your old car, you'll want to get an idea of how much the dealer is likely to allow you for it.
If you are getting a loan, get the loan approved before trying to buy that new car. Having your financing already in place gives you more leverage when you're negotiating for the best deal. Plus, You don't want to be ready to drive home that brand new car, only to find out that the bank turned down your loan.
If your car is an older model but it is in great shape, you might do better by selling it yourself.
Buying a Used Car
Get a Pre-purchase Inspection (sometimes called a Used Vehicle Inspection or diagnostic inspection) before purchasing. Expect to pay more than $65 for a thorough inspection, but it can save hundreds or even thousands down the road.
Ask for Maintenance records if buying from a private party to see if scheduled services have been performed.
If you finance it, as with a new car, make payments high enough to not ever owe more than it is worth.
Check for NHTSA Safety Problems & Issues. www.nhtsa.dot.gov/cars/problems/
Get a Kelley Blue Book report for value. www.kbb.com
A Pre-Purchase inspection at Wayne's Garage includes a good road test where performance, handling and accessories such as speedometer, cruise control, heater-defroster, Air Conditioning, etc. are checked. We then pressure test the cooling system, inspect for any fluid leakage and check fluid levels, charging and starting systems, belts, hoses and underhood accessories. The car is then hoisted where the undercarriage, steering and suspension is inspected and checked for wear or breakage, brakes are disassembled as necessary for inspection and lining, drums and rotors are measured and brake hydraulic system is inspected. Tire condition and all external lighting is also checked.
What is your old Car worth? Should you keep it or sell it?
There are four major factors taken into account when evaluating the worth of your car: mileage, market data, the condition of the vehicle and how well it has been maintained.
The value of your car is not always what Kelly Blue Book lists, but what it would cost YOU to replace it.
Depending on the condition of your car, putting a couple thousand dollars in your car to repair it, even if the value doesn't warrant it can be more economical than buying a new or used car you have no history on. (read more)
It is hard to fully appreciate what the costs of owning and operating a car amounts to over the course of a lifetime. The estimated average cost of owning and operating a standard-size automobile over your expected driving lifetime now is over $250,000 - a quarter of a million dollars! All told, you probably will spend more of your disposable income on automobiles than on virtually anything else, except food and shelter.
Take the time to really identify your transportation needs now and in the future. You will be less likely to get tired of the vehicle and want to sell it after only a year or two.
Take into consideration the insurance rates when buying another car. A Honda may be significantly cheaper to insure than that sports car that caught your eye last week. Talk with your insurance agent to find out about how cars are classified. Sports cars generally raise premiums while family cars tend to lower them.
Who will service the vehicle and where will parts come from? If there is no dealership in your area for that brand of car, repairs may take a day or two to get parts. In some areas it may be hard to find someone to work on some car models that are not very common.