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1.
Should I Buy New or Used?
Few things are as
exciting as buying a new car. It can be a real thrill when you
first pull that trendy ride off the lot, admiring the shine of
the paint and breathing in that new car scent. But it can be
depressing when you realize that the moment you drive it away,
that car has lost significant value. In fact, a one-year-old car’s
re-sale value can be 14 percent less than a new vehicle’s.
So, if you’re
looking to save a few bucks, buying a used car might be the way
to go. By purchasing last year’s model used, you enjoy
thousands of dollars in savings, and the factory warranties
typically still apply. While an argument can be made that used
cars generally have a higher interest payment than new ones
(some dealers offer 0 percent financing on new cars for
qualified buyers), for some people, a brand new car just isn’t
financially feasible.
However, if you do
your research and ask a few key questions, you can drive off the
lot in a pre-owned vehicle that is not only solid and reliable,
but also won’t break the bank.
Always research the
type of vehicle you are considering, and never buy a new car
because your neighbor or friend just got a sweet new ride. Be
sure you really want, need and can afford a new vehicle before
beginning your search. This will help keep you from impulse
buying and making a mistake.
2.
Where Should I Buy My Car?
Word-of-mouth is a
great way to find a reputable used car dealer. If a car
dealership in your area has a good name and you know a lot of
people who have done business there and were treated fairly,
then that might be a good bet.
“We take our
reputation very seriously,” says
Ted Marsh of Yenko Honda. “It’s like that old saying goes,
‘For every one person who is dissatisfied, they will tell 10
more, who tell 10 more, who tell 10 more.’ Pretty soon, there
are a lot of people hearing negative things about your business.
For that reason, we go the extra mile, do independent
inspections and work hard to ensure that every vehicle we sell
is of the highest quality.”
Long-established
dealerships with good reputations have gotten that way through
years of offering fair prices and good service. Terry Peters at
Bowser Cadillac feels that is the backbone of their business.
“Our reputation is
too important to us to put a vehicle on the lot that isn’t top
quality just to make a quick buck. We won’t do that and people
know it. That’s why they come here.”
If you don’t know
how reputable an establishment is, contact the Better Business
Bureau to see what kind of track record the dealership has. If
they have a large list of complaints, it’s probably best to
find someplace else to purchase your car.
3.
How Much Should I Pay?
Have a firm idea of
how much you’re willing to spend before you ever go to look at
vehicles, and don’t veer away from that figure. All too often,
people get to the lot and fall in love with a shimmering new
Lexus SUV when their budget clearly says used Dodge Neon. That’s
an easy way to put yourself in the poor house. It’s also a
good idea to figure in a budget for operating costs, general
maintenance and inevitable repairs. Take that into consideration
when making your decision as well. For instance, if you drive a
lot, gas mileage is going to be key, as will oil changes, new
tires, brakes, and so on. If you’re buying this car with a
loan, you’ll have to have full insurance, not just liability,
so factor that in as well. By doing a little math ahead of time,
you can eliminate unsavory surprises down the road.
4.
Which is the Right Car for Me?
The price tag is
obviously important, but that can’t be the only factor
involved in purchasing your new ride. Just because you find a
great deal doesn’t mean it will fit your needs. How many
people will your new car need to transport? Are you going to
need a cargo area? Do you plan on expanding your family anytime
soon? If you are buying a fairly new car that you hope to keep
for five years or more, be sure to purchase a vehicle that will
be able to handle the future needs of your growing clan.
It’s a good idea
to ask for the car’s Vehicle Identification Number (VIN) on
cars that are marked “as-is,” then go home and do a
Carfax.com check on the vehicle’s history. This can give you a
picture of the vehicle’s history and whether it’s been
involved in any serious accidents and had any major repairs. The
reports aren’t comprehensive, but they can be helpful. If the
dealer refuses to give you the number, then he could be hiding
something. However, if the car comes back clean and the deal is
right, then hustle back to the dealership before it’s gone.
5.
What Type of Warranty Should I Get?
This depends on
several factors, including how long you plan to keep your car.
On some newer used cars, the factory warranty might still be in
effect when you purchase it. If you have two years left on your
factory warranty and you’re only planning on keeping the car
for 12 months, then obviously you don’t need an extended
warranty.
If you’re going to
hang on to the car for a while, you may want to consider a “certified
pre-owned” vehicle that includes an extended factory warranty.
This might be the simplest solution, and it’s just an
extension of the warranty the car originally came with, with the
same terms and conditions.
Beyond that, there
are extended warranties offered by dealers and by private
brokers. If you opt for one of these options, read the terms
carefully – what parts of the car are covered, how much will
the warranty pay for, how do they pay for it, is there a
deductible, and where can you have repairs performed.
The cost of an
extended warranty can be rolled into your monthly payment. A
good warranty is worth its weight in gold if high-ticket items
like a transmission or engine need repairing or replacing.
“Owning a car isn’t
like it was 20 years ago when you could do a lot of the work
yourself,” says Ted Marsh, of Yenko Honda in McMurray. “These
days, with the technology on vehicles, you almost have to have a
computer to help diagnose problems and then have certified
technicians make the repairs. For that reason, having not only
the factory warranty, but also additional warranties on a
vehicle are very important. I know. I bought the extra warranty
for my car.”
6.
How Much is my Trade-in Worth?
Oftentimes, you can
turn a bigger profit if you sell your car yourself. But this can
be a hassle. The question is this: Is it worth your time and
aggravation to try and squeak X amount of dollars out of this
deal? Consider the cost of advertising the new vehicle, the time
involved in showing it and the stress of dealing with hagglers
and tire kickers.
Additionally,
something many people aren’t aware of is the fact that a tax
break exists on your trade-in. For instance, if you purchase a
new car for $20,000 and you’re getting a $5,000 trade on your
old car, then you are only taxed on $15,000. That is because you
already paid taxes on your old car and in Pennsylvania, there is
no such thing as double-taxation. So when all those variables
are figured in, a trade-in is sometimes the right move.
It is a good idea to
find the Kelley Blue Book value on the car you are looking to
purchase as well as the vehicle you wish to sell. This can give
you a guideline to follow that will help make the best decision
for your situation.
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