Over the past two weeks, I have discussed how to get the best deal whether you are buying a new car or leasing a car. One question I am constantly asked is, “Is it smarter to purchase a car or lease one?” There is a financial answer as well as an emotional answer to this question. Financially speaking, most experts agree that over the long run, leasing is more expensive than buying. In addition, because of the complexities associated with leasing a car, you must do more due-diligence and work harder at negotiations than a straight purchase so you are more likely to leave money on the table. Emotionally, some people just love getting a new car every couple of years, don’t like the hassles associated with trading in autos and prefer to have the smaller monthly payment associated with leasing, some people even forget that they need a Specialist Motoring Lawyer if they get into any trouble with the court.
A better question to ask is “What’s the best strategy for meeting my transportation needs?” The very best way to acquire reliable, relatively inexpensive, transportation is to purchase a used car. A car loses much of its value during the first two to three years once it leaves the dealer—often as much as 25% to 50%. After that, a car continues to depreciate but at a much slower rate. My preference is to choose a one-owner car that has 6-12 months of manufacturers warranty remaining. Most new cars have a 3 year/36,000 mile warranty or longer. By purchasing a car that’s still under full warranty, you will have the opportunity to solve any problems you didn’t discover when inspecting the car before purchase, cost free. In addition, consider these additional steps.
1. Know what car you want and its current market value. Decide what make and model you want so as to reduce your search time. Your best deals will likely come from individual sellers and your best source is your local newspaper or online sellers such as www.cars.com or www.carsdirect.com.
2. Start your negotiations over the phone. Your time is important so don’t waste it ‘kicking tires’. Start out by asking if the car has ever been wrecked. If it has, move on. Ask about the condition of the car, both exterior and interior and keep good notes on the seller’s responses. Ask confirming follow-up questions such as “So you’re saying the car has never been wrecked and there is no exterior damage or dings and the interior is in like-new condition”. If the seller’s description is inconsistent with your inspection, you’ll either have a reason for negotiating a lower price or will know this is a seller you don’t want to do business with. Be sure to ask about mileage (odometer reading) as well as his reason for selling. Ask if he can provide all maintenance records for the car. A ‘yes’ answer is an indication that the owner takes pride in keeping his car in top condition. Once you have a clear indication that this car is a good prospect, ask about price, “So what price are you asking?” “How negotiable are you?” You will often find that sellers will begin lowering the price right over the phone.
3. Decide what you are willing to pay. Be sure to get all the details you need to value the car including make, model, year, miles and condition. Then go to www.kbb.com to determine its current value. This web site will list the trade-in value, private party value and retail value. Your goal is to pay as close to the trade-in value as possible but no more than the retail value. Be sure you are negotiating from the bottom up. Armed with this information, you are ready to go ‘kick the tires’.
4. Inspect the car. Always do your inspection during daytime and thoroughly inspect the inside and outside for the car for rust, damage and signs of repair, including the undercarriage. Carefully review all maintenance records. Check the tires for excessive wear, especially uneven wear. Before and after your test drive, check the engine for leaks, odors or smoke.
5. Negotiate your best price and then get an agreement that the final sale is contingent upon a satisfactory inspection by a mechanic of your choice. This will cost you $50-$100, but may end up being the best money you ever spent.
Once you have your ‘new’ used car, focus on taking care of it through regular maintenance. The longer you keep your car, the lower your overall transportation costs will be. If you want to reduce the ‘due diligence’ outlined above, you could consider purchasing a Manufacturer’s Certified Pre-Owned (CPO) car offered by car dealers. Only the cream of the crop is selected for these programs and all cars come with a manufacturer’s warranty. You’ll pay more but will be confident that you bought a real gem. Two excellent web sites related to all aspects of car buying or selling are www.carsdirect.com and www.cars.com.