Well we did it. I hemmed and hawed about it, but we really do need a second car. We may not need 2 cars every day, but our schedules are only getting busier, and the inconvenience, time, and money spent driving out of my way every day over the winter was just too much.
My husband researched the car he wanted based on fuel economy, price, and value. With a key factors being:
- resale value
- cost to own
- cost to insure: contact your insurance company, USAA rocks for this.
Why is value so important? It can save you THOUSANDS of dollars over the life of a car. I’m going to say something controversial in the personal finance world: buy new.
While a $5,000 beater seems like a steal, it is because it will only last you a few years, and could cost you a ton in repairs. With used cars there is no guarantee that you will have a “clean” car, even with CarFax, or other reports. Unless you happen to have a grandmom selling a car, or know someone who does, it’s much better to buy new (assuming you have good credit).
A lot of bloggers, and frugal people will argue that driving a new car off the lot means we spent $3K or more on depreciation. While that is true for SOME cars, it is not true for all cars. If a car holds its’ value well buying a 2 or 3 year old model may save you next to nothing. Factor in good interest rates (again, if you have good credit), and you they are about even. In some cases you may even get a 0% loan, and then it is definitely cheaper to go new.
We decided on Friday to buy a car, Monday morning hubby drove his car off the lot with 4 miles on the odometer. We could have had it Saturday, but we ran into an issue, which I’ll tell you about later this week.
We bought a Honda Fit. It’s rated well in everything important to us, and has enough room for several kids. It’s fuel efficient, will hold its’ value, and my son will be driving it in less than 4 years. (I wrote that but I’m pretending it’s not true)
If you’re in the market for a car, here are the steps I’ve used twice with great success.
How to buy a new car without getting ripped off:
These are the steps we took to buy our car, and I highly recommend you follow them too if you are purchasing a car (new or used).
- Figure out how much you want to pay for a car. Are you going to save up to pay for it in cash? Are you going to finance it?
- Research, research, research to find the model car that best suits you and your lifestyle, and your possible future. (you may be single now, but think ahead to a time when you might need a 4 seater)
- Once you’ve narrowed it down to 1-3 models, take them out for a test drive. (do NOT get sucked in here, people)
- Check out what people are paying online for the car in your area. This will give you an idea of what the price actually sells for versus what a salesman might tell you it’s selling for.
- Get pre-approved. I can not stress this enough. Don’t go shopping without your own financing. Yes, the dealer will try to beat it, and might, but go with your own money in hand. (whether it’s cash or a check from a bank)
- Look up dealers, and start emailing them. Ask for their drive off the lot pricing. I can’t emphasis that enough. You want to know what the car, fees, taxes, and registration add up to. Also, don’t be afraid to look outside your local area. Would you drive 200 miles to save $3,000? You betcha.
- Once you have your lowest price go to the dealer. Do NOT go in there thinking you will leave with a car. Be willing to walk away, have a cup of coffee, make a phone call, or play on twitter.
- If you are selling your current car, do NOT mention it to the salesperson. Negotiate that after your sale, or better yet sell it privately. You will get a ton more for it. Yes it’s a hassle, but it can pay off.
- Make sure you read everything you are signing. EVERY word.
- Do NOT buy extras on the lot. Our car came without floormats. We saved $100 by not having the dealer install them.
- Drive off laughing. Seriously, if you followed all that, you probably got a pretty sweet deal.
Here’s an excellent video I found via Lifehacker that outlines most of these steps, but in a way more amusing way.
Alright, bracing for it. Tell me what you think. Do you buy used? Do you buy new and run it into the ground? Do you think I’m crazy for buying new?
Kelly
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