Of all the major purchases people make in their lives, few are more based on emotion than buying a car. Even though their car is the most important piece of machinery most people own, the reasons they give for choosing a certain model often boil down to appearance, speed, and prestige. From a strictly financial point of view, however, these factors carry almost no weight at all. When purchasing an automobile, it is important to remember that a car is a tool that provides safe, comfortable, and efficient transportation.
Many people choose to buy a used car since they can be less expensive. In fact, it’s been estimated that, on the average, a new car loses up to 25 percent of its value the instant you drive it off the lot, which means that a fourth of what you pay for a new car is solely for the privilege of buying it new. Still, you must be careful that you are not buying someone else’s problems. The key is to do your homework. Following are some tips for purchasing a new, used car:
Determine what you can afford. Review your spending plan and determine how much you can allocate towards transportation. Don’t forget to consider the price of gas, insurance, registration and maintenance.
Know what the vehicle is worth. There are many resources to help you determine how much a car is worth. For example, you can research used car values at Kelley Blue Book’s website kbb.com.
Get the facts. Ask the seller why they are selling. Also request records from maintenance or repair work. For peace of mind, you can also order a full report on the vehicle’s history. To do this, jot down the Vehicle Identification Number (VIN) and enlist the services of an information provider, such as CARFAX.
Have the vehicle inspected. The most important consideration when buying a used car is its mechanical condition. You may want to have a mechanic you trust take a look at any car you’re seriously thinking of buying. If the seller won’t let a mechanic of your choice inspect it, they’re probably trying to hide something, so you may want to look elsewhere.
Most important, don’t jump at the first car you see. Keep your eyes open for bank repossession sales or auctions. Take your time and make sure the car is in top condition for the lowest possible price. If you’re patient, you could end up with a diamond in the rough.