Tuesday, May 12, 2009

Car Buying Basics - Take Two

So, now you have an idea of what type of vehicle you want and the rough price range you hope to pay. When we were in this step, we had narrowed our search down to a mid-sized SUV, minivan, or large sedan - something that would fit 2 and potentially 3 carseats that we could use as a family car for long trips with luggage and the dog. We had pretty much decided on an SUV or sedan with 4WD/AWD (we live in the mountains and winters can be rough) but we knew we wanted a minivan eventually.

You have also made the decision about what to trade or sell if applicable. We went back and forth on this issue as well. My car was a 13 year old beater that we just replaced the transmission and knew needed brakes and knew had some sort of leak (turns out it just needed a new power steering pump - not too pricey). My car had a Kelly Blue Book trade in value of a whopping $500. DH's car was in much better shape - a 1999 Honda Accord that drove great. The biggest problem was it was a stick. He had developed foot problems and has been getting shots in his left foot. Shifting wasn't very fun for him. I hadn't driven the car in over a year. I know I am able to drive it and now that most of my anxiety issues have resolved, I could relearn, but we also knew that when I am pregnant again, I would quickly be unable to reach the clutch with my belly in the way (I could no longer drive that car at 5 1/2 months pregnant). Lastly, the Honda had a much higher trade-in value. In the end, we traded the Honda. We thought about doing a private sale. We had done that in the past and decided it wasn't worth the extra hassle for the relatively small amount of money we'd make above trade-in value.

Let's talk finances. I am a huge Dave Ramsey fan. DH and I took the Financial Peace University class last year. We've always been very careful with our money and have tried our hardest to stay out of debt and to pay off my student loan. We have never had a car payment. We never wanted to have a car payment. When we looked at our situation, we weighed everything carefully and decided to finance a small amount and pay extra to get it paid off as soon as possible. If the medical conditions weren't an issue, we definitely would have paid cash. Dave Ramsey suggests always paying cash and never buying brand new unless you have over a million dollars. He feels that unless you have a LOT of money, you just can't afford to take the butt kicking in depreciation with a new car.

I strongly urge you to consider saving up to pay cash for a car. Pay yourself a car payment into a savings account each month. Scrape together as much cash as you can. If you are in dire need of a car, Dave suggests buying what you can with cash even if it is only a $1000 car. Drive that car while you continue saving up money. Once you can, sell the $1000 car for $1000 (no depriciation left at that level) and use what you saved up plus the sale price (ex. $1000) to move up to a $2000 car and so on until you are in a comfortable car.

If you are unable to pay cash outright, I suggest keeping your cost down as much as possible and financing as little as possible. Shop around for rates before purchasing. You can get some quotes, ideas, and information from Bankrate.

Now, for the fun parts! You are just about ready to start test driving! I don't have the willpower to go for test drives without being at the point where I can buy. DH can. Stop back tomorrow for some great links to fill in all the information gaps so you will be ready to shop smartly and buy smartly. I leave you with a FANTASTIC article that looks into the inner workings of car dealerships and car salesmen. This is a long article but a very worthwhile read. Enjoy "Confessions of a Car Salesman."


Share your links easily.
Related Posts with Thumbnails