How to Buy a Car: A 5-Step Plan

Whether you’re thinking of purchasing a car now, during end-of-year sales, or sometime down the road, you’ll do well to have a game plan to help you make the best decision. First and foremost, don’t fall into the trap of letting your emotions — or your ego — interfere with the selection.
Here are the primary steps in choosing the best vehicle for you:

1. First determine what you actually need. Try not to start by choosing the car you like best. Approach the task with a utilitarian perspective and think about the attributes your new car or truck should have to meet your requirements.
    For example, perhaps your kids have grown up and you can now downsize from that minivan to something smaller. But if this will be your family’s primary vehicle you have to consider how many adults you may need to transport comfortably.
    Speaking of space: Do you have pets that need to ride along? You’ll want to make sure there’s room in the back of a new vehicle for Fido. Or you might haul other large items around on a regular basis like musical or sports equipment, or tools. Can it all fit in the trunk or cargo area or would a smaller car with a roof rack do the trick? If so, figure in about $500 for the rack.
    An important consideration these days is your carbon footprint. The same car that meets your other requirements might come with 4, 6 or 8 cylinders. Are you more interested in performance, or fuel efficiency?

2. Decide whether a new or pre-owned vehicle will better suit the needs you’ve identified. Are you looking for the best warranty available, or simply the “most car” for the money?
    A new car will generally have a much better warranty, so can hedge against unforeseen costs down the road. There’s also a pride in ownership when buying new that can’t quite be matched by buying a car someone else drove for a few years. More importantly, how did the previous owners treat the car?
    On the flip side, a new car depreciates faster — typically at least a grand or two as soon as you drive it off the lot, and in some cases up to 50 percent of the value within three years. That can mean some great bargains in cars from 1 to 3 years old.
    Used car makes and models have a known record. Depending on their reliability over a couple of years they receive ratings from consumer guides that can help steer your choice. Many used cars are now sold with excellent manufacturer certifications. In short, you can often get more bang for your buck by choosing a used car.
For comparisons, I searched Seven Days Auto Finder for both new and used vehicles with a price range of $24K to $26K. I found that for about $25,000 you could get a new 2009 Subaru Outback AWD Wagon or a used 2005 Volvo XC70 AWD Wagon with 21,000 miles. Or, you could consider a new Honda Accord versus a used 2006 Mercedes-Benz C-Class Luxury Sedan with 20,410 miles.

3. Pick two or three models that fit your criteria and research the reliability, safety and resale value of each. If you need help, email me at [email protected] and I’ll be glad to assist with that research.

4. Test-drive each of the vehicles you’ve identified. Take notes on what you liked, or didn’t, about each one.

5. Finally, decide which vehicle is right for you and negotiate the best deal possible. As always, email any questions you have to [email protected].

Some Tips For Negotiating To Buy A Car

When you sit down to negotiate the price for your next car or truck the more cards you hold the better position you will be in. Financing is a key component. Get pre-approved for a loan so that you know what you can afford and don’t have to rely on the dealer to provide financing for you. Sometimes a dealership can offer you better terms than you can find from your local lender, sometimes they’re worse. By all means consider what the dealership has to offer, but if you are pre-approved you take control of that portion of the negotiation. This allows you to focus on the price.

When you’re ready to buy it’s easy to get over excited and just go pick out a car and want to buy it right away. Force yourself to take the time to compare at least two or three different makes and models with comparable features that meet the criteria you have decided will meet your needs. When you decide to make an offer keep your options open. Don’t just focus on that one car. If negotiations aren’t going your way have a plan “b” car and be ready to step back and logically consider your choices.

Should You Buy A New Or Used Car

There are great deals available out there for both new and used vehicles. Each have their benefits.

New Car Pros
A new car will typically have a much better warranty. Hyundai has made a name for themselves with a 10 year/100,000 mile powertrain warranty. Now US manufacturers have finally brought their vehicles up to standards that meet or beat their foreign competitors and can offer even better warranties in some cases. New Dodge, Chrysler and Jeep cars and trucks offer a lifetime powertrain warranty for the original owner of the vehicle. Got that? As long as you own that car or truck the major mechanical parts are guaranteed. That is close to amazing. So to hedge against unforeseen costs down the road a new car can be the safest bet.

There’s a pride in ownership in buying a new car that can’t be matched by buying a used vehicle someone else picked out and has driven for a few years. And more importantly how did they treat the car for those years?

New Car Cons
A new car loses value faster, typically $1-2k in value as soon as you take it off the lot and in some cases a loss of 50% of value within three years after you bought it.

If it’s a new model or the model has undergone significant changes since the previous year the long-term reliability is somewhat of an unknown. It's not uncommon for a popular car to get a redesign that diminishes some of the key features that made it popular in the first place. It can take a year for that kind of information to circulate. So there may be unanticipated problems that make your life difficult.

Used Car Pros
Used cars as a group have a known reliability record. Individual makes and models have been out on the road for a couple of years so you can better gauge which will be most reliable and maintain their value.

Many used cars are now sold with manufacturer certifications. You can protect yourself with a great warranty by buying a certified used car. On Seven Days Auto Finder you can target your search specifically for cars that are certified.

If you can find a used vehicle with complete service records, whether it's from a dealership or a private owner, that will remove many unknowns and also indicates that the car was well cared for.

You can get "more car" for your money with a used car. Car and Driver recently created a list of 9 cars they think are the “Most Fun for $25K.” This may not be your most important criteria, but it really makes the point that you can get into a higher-end vehicle if you’re willing to buy used.

The first two cars were new, the Mazda MX-5 Miata and the Volkswagen GTI. Both great cars, but modest in comparison to the rest of the list. The three top used cars were the 2001-04 Chevrolet Corvette Z06, 2002-06 BMW M3 and the most fun for $25k was the 1991-94 Acura NSX.

Hmm… a new Volkswagen GTI vs. a slightly used BMW M3. Makes for a difficult decision doesn’t it?

On Seven Days Auto Finder I did a search using the price range sliders to target vehicles from $24-26k. Here are some interesting comparisons I found.

- A new 2009 Subaru Outback AWD Wagon vs. a used 2005 Volvo XC70 AWD Wagon with 21,000 miles.

- An mid-level Honda Accord vs. a used 2006 Mercedes-Benz C-Class Luxury Sedan with 20,410 miles.

So should you buy used or new? First start by considering what kind of car you need and then figure out what you can afford. Take all of this into consideration and the decision might make itself for you.

How To Buy A New Or Used Car Or Truck

This is the first in a series of posts on how to buy a new or used car. Yes the economy is in rough shape and yes the auto industry has been taking a beating lately. The good news is that if you need to buy a new or used car or truck there are opportunities to find good deals out there.

First you need to figure out what you need. If you just go out and start shopping you’re liable to end up with a car that doesn’t meet your needs. There are a number of considerations you should take into account.

When we recently replaced my wife’s vehicle here are some of the things we thought about before we started looking around.

Living Creatures
Our kids are grown up and living their own lives at 21 & 24 so we didn’t need our Chrysler Town & Country minivan anymore. It had the capacity to seat 7 people. We do still occasionally all ride together, for instance to concerts in Montreal or Bruin’s games in Boston, and sometimes there’s an extra friend tagging along. So we decided we needed the ability to haul 5 adults comfortably for up to 4 hours.

Do you have large dogs? In some instances our 90 lb. lab Arlo and two small terriers needed to fit into the same car we were hauling those five adults in. The terriers could fit at our feet or in our laps if necessary. Arlo needed his own space. We brought each vehicle home and gave Arlo his own test drive. To meet our (his) needs it was necessary that he could get in under his own power and then have enough room to be comfortable.

Utility
Play in a band? Or do you haul large recreational items like skis or tents & coolers? Will they fit in a large trunk? Be sure to test fit anything you want to haul around with you. Also consider a roof rack. You might be fine with a smaller vehicle if your gear would fit on the roof. Figure in an extra $500 for a roof rack with carrier if you go this route.

Do you need to tow anything? If you have a boat, snowmobile or utility trailer you will need a vehicle that has a tow kit and the power to move whatever you’re towing.

Efficiency and/or Performance
Are you interested in reducing your carbon footprint and saving money on gas? The same car that you have determined meets your size requirements might come with a choice of 4, 6 or 8-cylinders. Are you more about performance or efficiency? If efficiency is very important consider one of the many hybrid models now available. Seven Days Auto Finder has the ability to just search for cars that get 30 mpg or better.

Personal Expression
Maybe you don’t care what your car looks like, but let’s face it, no matter what you think, the rest of the world sees your car as an extension of your personality. What kind of car are you? Sporty, luxurious, thrifty, cute or tough as nails?

So that’s where to start your quest. Did I miss anything? What other things would you consider important?

On Thursday we’ll compare the value of  new versus used vehicles.

CNN Rates 5 Most Cost Effective Fuel Saving Autos

CNNMoney.com recently had analysts at Intellichoice.com look at fuel efficient vehicles in various classes and then determine which were actually the best buy once long term value and ownership costs were figured in.

Here are the winners-

• Compact Car: Honda Civic Hybrid / Mileage: 40 mpg City, 45 mpg Highway / Price: $22,600
• Midsized Car: Toyota Prius / Mileage: 48 mpg City, 45 mpg Highway / Price: $22,000-$24,270
• Small Crossover: Mazda Tribute Hybrid / Mileage: 34 mpg City, 30 mpg Highway / Price: $25,310-$29,570
• Sport Sedan: Lexus GS / Mileage: 19 mpg City, 27 mpg Highway / Price $44,550-$52,375
• Sports Car: Chevrolet Corvette / Mileage: 16 mpg City, 26 mpg Highway / Price: $47,045-$102,450

Here's the complete online version of their report.