While it is an essential purchase for most of us, it’s never an easy decision to make. New or used? Red or blue? Car or truck? While we can’t answer all of these questions for you, we can provide you with some things to think about when buying a car.
Benefits of Purchasing Used
- Avoid depreciation – Cars are not an investment. In the first two years of ownership alone, a new car will depreciate about 30%. Looking ahead to when it’s time to sell your used vehicle, less money is lost on resale than had you purchased new, largely due to avoiding the initial depreciation.
- Wider selection – While you may not get to choose features a la carte like you can in a new car purchase, you do end up with more choices overall.
- Lower Price – The nature of used cars is that they are less expensive. Used doesn’t necessarily mean worn out. Looking for features such as low mileage and recent model years can increase your buying power, and more bang for your buck.
Do Your Homework if Purchasing New
- If you decide now is the time to buy a new car, be sure to do your homework!
- Decide on your price range – Before you get to the lot, before you are wooed by a car that is outside of your budget, decide what you are willing to spend. Crunch the numbers to know what monthly payment you can comfortably afford and what your overall sticker price cap is. Don’t forget to include fees such as insurance and repairs!
- Get preapproved from Compass for financing – Before you scour online sources or visit a vehicle lot, talk to us about getting preapproved for your auto loan. This will also help you know how much you can afford.
- Read the reviews – Once you’ve decided on the type of vehicle you want to purchase, read reviews at sites such as consumerreports.org, Edmunds.com, and kbb.com. From recalls to the pros and cons of each make and model, these sites are dedicated to providing you with knowledge about the vehicles you are considering.
The Art of the Sale
- Negotiate your offer – Offer 15% below the asking price. There’s about 20% gross margin in the asking price. Offering 15% below allows the salesperson to still make a profit while you get the vehicle you want at a fair price.
- Turn down add-ons – If a used-car dealer tries to get you to add on products and services, decline. These are likely offered at a less expensive rate elsewhere.
Being prepared helps take the stress out of car buying. Compass is here to help with any additional questions you have!
