What is the least expensive car to drive?
The least expensive car for you to drive is probably the vehicle you are currently driving! So consider driving that paid-for car a little longer and take the money you would spend on a car payment and put it into a car fund in order to reach the goal of eventually paying cash for your cars.
People talk themselves into a new car for a variety of reasons such as gas mileage. However, when you calculate gas mileage and the money “saved” when compared to interest payments and depreciation on that new car, you will find that you do not even come close to saving money. The average new car depreciates roughly 30 percent within the first eighteen months, with an average loss of value of five thousand dollars as soon as you drive it off the dealer lot. So if it really is time to replace your car, always consider purchasing a used vehicle first.
However, there are occasions when a new car may make sense. For example, when interest rates are incredibly low or your family needs the warranty (because of high mileage commutes). Try to get and end-of-the-year clearance model or a demonstrator model. If possible, buy the car at the end of September, which is the end of their fiscal year.
The following tips can apply to buying a new or used car, but each sales point should be negotiated separately.
Negotiate the price of the car at a dealership apart from the value of the trade-in. Tell the salesperson you want to determine the price of the car without the trade-in. The reason you want to do this is because salespeople will often give you far more for your trade than you expected—thus hooking you on the deal. However, this higher-value-for-the-trade-in shtick can be part of the technique they use to get you to purchase the car. If a higher value is given to the trade, then they will give a lower discount on the price of the vehicle, because all the discounting went into the value of the trade.
Now that you’ve determined the price of the car, ask what the dealer will give you for your trade-in. Most likely, you will get more for your car if you sell it yourself. A little elbow grease and some top-notch detailing can net you hundreds of dollars more than a dealer can give you, if you can find a buyer. Some people (like military families) don’t always have the time to sell their car because of mobbing schedules and so forth. So if you are going to try to trade in your car, look up the value of your existing car at http://www.Kbb.com/ or http://www.Edmunds.com/, print the page, and bring it with you to the car lot to negotiate the price. Consider negotiating the price and trading at the same time. Bottom line: try your best to gather enough facts so that you make a wise decision. Unfortunately, we often see the deal inaccurately as the smell of new leather and gleam of fresh paint job cloud our sensibilities.
The finance and insurance office is where the lions share of a dealerships profit is made. In this office, you will have to navigate interest rates, payments, terms, and warranties. Unless you put miles on your car for business or you are purchasing a car that will cost a lot to repair (and you intend to keep it longer than the warranty lasts), extended warranties are usually not a good value. When it comes to vehicle financing, you can generally do better on interest by selecting your own creditor (unless, of course, the manufacturer is offering a lower APR). The credit life insurance that dealers offer is more expensive than raising your regular insurance premium by twenty thousand dollars to cover this expense. And don’t forget to go to USAA to see if you qualify for great insurance at a great price. We’ve been with this company for three decades!
What is your favorite part of buying a car?
America’s Family Financial Expert (R)