How To Buy a Car, New or Used

Buying a car should be fun, but it can turn into a real stressful experience. Here are some tips on how to help keep it fun.

Car Buying Tips

Decide What Kind of Car You Want to Buy

Before you even head to the dealership, know what kind of car you want. You don't necessarily need to know the exact make, model, color and options, but you should have a pretty good idea of the type of vehicle you fancy. Take into consideration the following questions:

Do you want an SUV, truck, family car, mini van or a sports car?
How many people do you need to transport?
How much driving do you do? How long is your commute?
Is good gas mileage important?
What safety features are essential?
Do you want a manual or automatic transmission?

Buying a car, whether new or used, requires knowledge in order to get the best car for you at the best deal. Find out what you need to know.

Finding the right vehicle is much easier today with the power of the Web. So have fun and search until your hearts content. Check out the manufacturer’s sites. They will show you absolutely everything you need to know including specifications and option packages. Other sites will show you car reviews and ratings. Many have tools that let you "build" your own car by adding features and options as you go. That way the price will be for exactly what you want. You can add or delete items and the price tag adjusts as you make changes. Equipped with this information, you're much better prepared to go shopping.

“I locked my keys in the car the other day. But it was all right; I was still inside.” Steven Wright, Comedian

Should You Buy New or Used?

Which car is right for you – new or used? That’s a personal decision that sometimes is difficult to decide. Below we give you some advantages and disadvantages for both to help you make up your mind.

Buying a New Car

Advantages	Disadvantages
You’ll get exactly what you want, the color you want with the features you desire.	They cost more and new vehicles may incur certain registration and licensing costs that aren't required for used vehicles.
There will be less cost for maintenance since new vehicles generally don’t need anything for the first several thousand miles. Following that, its usually only oil changes and tune ups.	Advertised specials typically cover only the vehicles in dealer stock.
New cars come under warranty for a period of time. If anything goes wrong it’s the manufacturer’s responsible to fix it.	Sometimes the dealership can be difficult to deal with and a lot of negotiation is needed to get a good deal.
During the fall, often there are great deals on new cars since next years new models start coming in starting in September.	Insurance costs are higher.
Lemon Law coverage. If your new vehicle is proven to be defective, you have legal recourse to be reimbursed or compensated	You’ll lose quite a bit on depreciation the minute you drive the car off the lot and up to 45% during the first three years.
Oh, that new car smell!

Buying a Used Car

Advantages	Disadvantages
Used cars cost significantly less than new cars so you can get more car for the money. A car that is a few years old can be purchased for almost half of the original price.	You may miss out on some of the latest-and-greatest safety features and technical gadgets.
When you buy used, someone else took the heaviest hit of depreciation.	Although a used car may cost less than a new one, the interest rate you pay could be higher, plus no cost rebates are offered.
If you're on a tight budget, then buying a used car gets you the most vehicle for the least amount of money.	The car may have history that can include abuse and/or neglect or some other unknown issue.
Insurance typically costs less.	No warranty, or if you do get one, it will only have the balance of factory warranty.
It may be easier to negotiate a lower price with an individual owner than with a car dealership.	No lemon-law coverage.
Used cars are holding up better than ever before. You can expect a late-model used car to last you many years and, if it is well maintained, typically up to 200,000 miles. In 2003, the average age of cars on the road was 8.6 years	The resale value will be lower. Cars that have had two or three owners become harder and harder to sell.

“I hooked up my accelerator pedal in my car to my brake lights. I hit the gas, people behind me stop, and I'm gone.” Steven Wright, Comedian

Your Credit Score

With most new cars costing $25,000 or more, most people need a loan to make the purchase. Your credit score is the most vital statistic when financing a car. It directly impacts how high the interest rate will be your car loan. A borrower with good credit may pay about 5% interest on an auto loan, while someone with bad credit could pay more than 20%.

Don’t show up at the dealership without knowing what’s on your credit report. They will check your credit before making any deal and a car dealer should never know more about your credit than you do. Although most car dealers are honest, some are not. They may claim that they checked your credit score and found that it is too low to give you their advertised interest rate. If you know what your score is, they can't pull that trick on you. (Personally, we'd not give that dealership our business!)