Should You Buy a New or Used Car

Car

New Cars

At car dealers, the price of the cars and their optional features are almost always negotiable. In fact, most buyers do not pay the manufacturer’s suggested list price (or sticker price). Here’s how to get the best price:

  • Before negotiating, learn the manufacturer’s wholesale price to the dealer, which will be somewhat less than the sticker price. This wholesale price can be found online or purchased from services such as Consumer Reports.
  • Negotiate price over the phone with several dealers. Because it is easier for you to end a phone conversation than walk out of a dealership, you are likely to get a better price. If the dealer won’t talk price with you over the phone, call another dealer.
  • If reluctant to negotiate, consider seeking assistance from a car buying service. One nonprofit consumer group maintains a popular service, CarBargains, in which several dealers bid for your sale.

Used Cars

Purchasing a used car is risky in that you often cannot be certain of the condition of the car. Here’s a purchase strategy:

  • Check the Kelly Blue Book price to learn what used cars in a certain condition usually sell for. Bluebook prices can usually be found in a library reference book or online.
  • Keep in mind that there are few effective used car warranties. Most cars are sold “as is,” and most of the rest carry a 50-50 warranty that obligates you to pay a portion of the repair costs.
  • Try to find a mechanic who is willing to check the car before you purchase it. And see if the seller will make the sale conditional on the car passing inspection.
  • Consider purchasing from family or friends who are more likely than dealers to tell you what they know about the condition of the car and not overcharge you.

More car buying resources:

Tip of the Day

  • Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account. http://ow.ly/sj972

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