So, you’re in the market to buy a car, where do you get started? New or used? Sedan or SUV? There are a million questions you need to consider even before starting to look for a car. I’m hoping you give you an idea of some of the key factors you need to identify to make sure you’re getting exactly what you want and or need at the best price.
Let’s start with the obvious, your budget. How much are you willing or able to spend on your new vehicle? The average cost of a new car is around $35,000 dollars. So, like many of us, your budget may automatically answer the question of used vs new. Sadly, here in the USA unless you’re in the top 20 percentile of richest people (or terrible with your money) you’re probably going to be buying used. Used cars can be a great way to save a ton of money and still purchase a reliable car or even the car of your dreams that was unaffordable a few years ago. Cars are a depreciating asset and unless you are an enthusiast like me, you may just be looking for a reliable car with good mpg and low maintenance cost. But regardless of the vehicle, most cars follow a simple depreciating timeline. The high-end depreciation can be as low as 45% in only 3 years if the car has excellent resale value and reliability. Most cars fall somewhere between 35-50%. That means a new car that costs $70,000 would only cost half if not less within 3 years. Not a bad deal. Obviously purchasing used can also have its own issues if the car has been driven hard or not well maintained so make sure its in good condition with only expected wear and tear.
Secondly, I’m going to throw some assumptions out here to create an example of the steps you need to take to make sure you’re getting a good deal. You’re in the market to buy a used car under $25K or less, sedan style. A safe assumption, since were buying used, is that we want our car to be reliable. Doesn’t matter how good a deal you get, if your car is a money pit of maintenance issues and repairs it’s not a good deal. A great way to research reliability is the U.S. Car News. They are a reliable source of information with unbiased reviews of all makes and models and provide in depth reviews with a plethora of information and suggestions (PS you don’t want any car with less than 3 stars MINIMUM). You are also going to research any possible recalls or known issues that can be reoccurring. This website can be a good reference to get an idea if any car has a well-known documented issue that you may want to avoid or know about. The website can also inform you of any TB/TSB which are small minor issues or software updates required which are covered by the manufacturer. Usually these are dependent on the timeframe of the when the car was built or VIN.
Next, let assume you’ll want a reliable semi-performance foreign luxury brand and you’ve narrowed it down to 3 sedans, a 2010 Mercedes E350, a 2012 Lexus IS350 and 2012 Audi A6. They all have similar reliability ratings, owner reviews and overall ratings. Now you want to identify the average price for these vehicles using set parameters to make sure you’re comparing “apples to apples”. A good website to reference for this is Kelly Blue Book. This website allows you to input car features, mileage and condition to provide a fair market value. Keep in mind to use this website as a reference only as these prices can be inflated and fluctuate constantly based on simple supply and demand.
Now you’re getting somewhere! You’ve narrowed it down to 3 decent reliable vehicles and it’s time to find some actual local vehicles for sale. Obviously, you can search nationally, but remember to add the cost of shipping. You’re going to want to find a few locals sellers for these vehicles and go check them out. Craigslist is my personal favorite to get a good idea of where the market is for the car(s) you’re interested in. This website although utilized by dealers as well, mostly consists of private local sellers. This allows you room to negotiate and avoid dealer fees. CarGurus is another good website that both private and dealers can post their vehicles for sale on and the website itself provides a price range (overpriced, fair, good, great) for the car you’re interested in. This creates a competitive market space that helps buyers get an idea of what kind of deal they are getting. Both websites have their own pros and cons so it really depends on how comfortable and how much support you feel the need for. Craigslist is more of a “free market” where you can list any vehicle for any price. This may allow you to find some great deals for vehicles that may be underprice or someone just looking for a quick sell. CarGurus although allows you to list a car for any price, will provide a “label” for how it perceives the pricing to match the car and condition forcing its pricing on more of a bell curve model.
Lastly, once you’ve picked your vehicle you want to inspect it for any obvious signs of damage or required maintenance since this could be used as leverage for negotiating the price. If you don’t have a mechanics eye that’s ok, here is a quick checklist of items you may be able to gauge yourself. I would recommend having it professionally inspected at a dealership of the OEM of the vehicle. Each manufacturer has its own issues and quirks so make sure if its an Audi to take it to an Audi dealership to get the best feedback and inspection. Standard cost for inspections is about $150 which is a small price to pay when you’re spending a cool $20K on an exciting new car.
Even though there’s a ton of other details in the process of buying a car, these tips should help get you started and give you the confidence to land a good deal.