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Thursday, January 30, 2020

The Money Smart Way to Get a New Car


My best friend Michelle recently bought a car and she was telling me how she did it, and as I was listening to her, I was fascinated and full of admiration; it seemed like a really smart and budget conscious way to get a car, and I felt my readers deserved to know this information, so I asked her to write this post to share with you. As someone who never owned a car, I can't speak about this from personal experience, but I know that if I ever would buy a car, I would definitely follow this process. Of course, much of it is US relevant, but a lot is helpful information no matter where you live.

Thanks for this post, Michelle!

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I was left off of a lease policy that belonged to someone else, and I needed a car, asap. I did not have more than $6,000 to spend on a car, and I needed one as soon as humanly possible. But I didn’t want to throw money down the drain.


First: set your absolute top price limit. Don’t forget the title cost (usually around 500-600), the license plate cost (50), taxes (another 500 in my horrible tax county) and possibly repairs you might need. In my case, I was willing to pay up to 6,000, but that meant that the car itself could only cost 5,000 as I was reserving 1,000 for title, taxes, fees, and possible repairs. Do not go over that top price limit, no matter what. Get the best you can for that price, but do not agree to go a penny over it. Bargain people down if they are $300 or so above your price limit, but do not go over it. Try and buy only what you can afford to pay outright. Best is not to lease or finance a car if you can. Even a 3000 car totally paid for will save you some money. To be able to cash flow your car, set aside money every month while you currently have a car to pay for a future car, so that you don't need to borrow for and finance a car when you need one.

Next: Set your priorities in a car. I had already decided that I was going to look at Toyotas, Hondas and Nissans, due to their good safety records and my previous experience (my first car was a Toyota, next two were Nissans, all used). Toyota for example has a reputation of being able to keep driving all the way up to 200,000 miles, while Nissan and Honda get iffy around 120-150,000 miles but either way would be excellent as long as the mileage was low enough. I did not focus on the year, but rather the amount of miles on the car, the Carfax (more on that in a second), the price, and the description/type of car. If a car was a 2012 with 150,000 miles, I liked it less than a 2008 with 120,000 miles if the description sounded decent for both.

I was looking for a car that had never been in an accident (although salvage cars can be good, they are a higher risk especially if I wasn’t heading to a dealership), and I didn’t care how many owners, although 3 or more seemed high. I also always checked the Kelley Blue Book to make sure that the car was worth around what they were selling it for, with that mileage and specs. That will make sure you get your money’s worth, and if you find a good deal, you will know if it is a good deal or be highly suspicious as to what’s wrong with it that it is priced so low. Too low and you worry about something seriously wrong with the car.

Make sure you think about seating (van vs car or SUV), height (small car vs SUV or van), trunk space, and gas mileage. You can compare gas mileage on cars also online to see what would work well for how much you drive.

You can also set “optional” priorities, like “it would be nice to have X”. My kids wanted automatic doors (didn’t happen), a sunroof (did), and I wanted keyless entry (didn’t happen). These were extras and we were perfectly happy without it. But it’s kind of fun to set “optional” priorities.

Thirdly: scour the used car lists. I made an excel sheet actually, with the make, model, year, cost, and mileage, as well as if I called/emailed them and what followup was needed. To investigate used cars I looked at: Craigslist, Facebook Marketplace, local listings (Nextdoor is an app that’s nice sometimes), and CarFax. You can also look at dealer websites, but in my research I found that not a single dealer website was cheap enough for me. Craigslist didn’t disclose a lot of accidents or title issues, but Facebook Marketplace has both dealers and private owners, and they were pretty decent. You can also look in local Facebook groups or newsletters. There are a few more auto websites- I think AutoDealer is another one although it doesn’t do what CarFax does.

Now, Carfax is not just a used car website (which will send you updates of the listings in your area), but also allows you to put in the VIN of any car and see its maintenance and title history. So I could check out a car on craigslist, and if the owner didn’t send me the CarFax, I could ask for the VIN and put it on CarFax myself. You can get a certain number of free CarFaxes and pay for the next ones, so if you are researching, ask the person for their Carfax first (if they have a copy) as that will be free for you. The first questions I asked a seller were: “Does it have a clean (accident free) Carfax? If so, could you send it to me?” “How many miles are on it?” “Is there anything else wrong with the car?” “What is the price you are asking (sometimes they would change it between the post and the phone conversation”.

If a car that met my priorities (low mileage, from the 3 companies, top 5000 usd price point, no accidents and clean Carfax and title) was available, I then said, could I come and see it. I called over 50 cars and nixed a whole bunch this way, and went to see several.

Like what you saw so far? Helpful information, right? There's more, but instead of making one really long post, the next half is getting posted tomorrow.

What process do you follow when you get a new car? Is this the same process that you go through?

3 comments:

  1. I'm planning on getting a car soon. This article will be very helpful.

    ReplyDelete
  2. My last 2 cars were brand new and I did finance them, even got a pre-approved loan. Then after a year I re-financed them to get a lower rate. I paid my first car off in 18 months. My 2nd car is going to take a few years longer to pay off because my money is needed elsewhere. Either way, I'm 2 months ahead on my car payment and last year they only got about $250 in interest.
    I will not be buying another new car. Plan to shop for a 2 or 3 year old used one to save more money. Also in my county (US) you have to pay all the taxes on your tag at the beginning.
    Drove my last new car 2001 Nissan Altima to 120,000 miles over 17 years. Plan to get 15 years out of my current car. Otherwise it's not worth the investment. I do hope to pay cash for my next car. Your friend is right in how to do this. Time consuming but worth the savings.

    ReplyDelete

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