Buy a Used Car – It’s Smarter Than You May Realize
Most of us need a car to get to work, run errands or got to and from the places we wish to go. Since owning a car is such a necessity, millions of of us buy brand new cars without considering the benefits of pre-owned over new cars. A brand new minivan like the one I drive can cost over $20,000. A 2 year-old van with 45,000 miles on it can be bought for less than $7,000. Considering that a good car will last at least 125,000 miles without major repairs such as transmission, engine or suspension problems, a new minivan would cost you 16 cents a mile just to own it, versus the used van which will cost of just over 11 cents. If you run the math, the value of a used car is impossible to beat.
There are strategies you can follow to make sure a used car will fit into your lifestyle. Most people fear used cars due to reliability issues. This is a fair concern, but how you choose a used car will help you mitigate this issue. To begin, a car that was a dud when it was new will still be a dud after three or four years. Well-made cars are still well made after several years. It isn’t difficult to buy a car with a good reputation that has been maintained responsibly. Do your research and choose several years and models of car that will both suit your needs and have a good reputation, such as winning a JD Power award, a good mention in Consumer Reports, or a good review with Kelly Blue Book. All these have online resources you can use to get clear and important information, like how much a car is actually worth on the open market. Knowing this you from paying too much for the car.
Once you have some car models in mind, arrange financing if you don’t have the cash. Your bank or credit union will know what the “blue book” value is on a car and can commit to a price so you know how much you can offer. Craig’s List is an excellent resource to buy from individuals, and I have found that some will even accept PayPal. Here is a little hint when buying from individuals either through websites or newspapers, the farther the person lives out of town, the better deal you can get because they usually have fewer buyers to choose from. In my town, these websites update hourly, so don’t be afraid to check often. Another money-saving strategy is to buy a car BEFORE yours goes kaput. If your current car does fail on you, renting a car for a week or two and taking your time to find a good used car will save you money and headaches in the long run.
In a perfect world, a buyer would let you take your car to a mechanic for a thorough check, but I have found there are some simple ways to tell if a car has been taken care of and is in good repair. Begin by going online for a good checklist, but I have found that people who are sticklers for maintenance show it in other ways. Check out their yard and garage. A tidy garage, tool shed and house is the sign of someone who takes care of things. A guy who shows you all the receipts for minor repairs and maintenance is telling you he’s a good steward of his car. If you buy a car that is less than 10 years old, you can often get an extended warranty to insure against major repairs for just a few dollars a month, far less than a car payment.
Finally, join an automotive club ( I joined AAA), and pay the extra money for the gold membership if you can afford it. Even a good used car may need a new battery, and you may not learn until it is an extra cold or extra hot day. Frankly, to save the cost of a car payment every month (not to mention the insurance), I am willing to sit for an hour until the tow truck arrives. Most of us have cell phones, but a cheap disposable one for less than 20 bucks can buy you peace of mind. Like buying a car before you need one, choose a mechanic the same way. I have a great mechanic I have known for years and recommend him all the time. Someone you know has a favorite “car guy”. Keep that information handy in case you have a problem.
Given the sheer math, I can tell you from decades of experience there is no better value when it comes to owning and operating than a used car. Choose carefully, and the used car isn’t any more problematic than a new one but they cost a whole lot less to own.
Nick McPherson
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