How to Not Lose Money When Buying a Car

Written by Karen Bryan

Cars are one of the necessities that tend to have bad investment returns. This is due to the depreciation that occurs when a car leaves the lot. When faced with the decision to buy a new vehicle or a vehicle that’s new to you, there are some easy ways to ensure you don’t lose too much money on your deal.

There are several factors that come into play when purchasing a vehicle. Knowing what to look for, what questions to ask, and how to set yourself up for success when negotiating are just a few things to keep in mind. Continue reading to learn more about how to save the most money when buying a new car.

Do Your Research

When it comes to buying a car, impulse buyers will typically end up with post-purchase regret. Purchasing a car can feel overwhelming, especially when you are trying to make the right financial decision. Weigh your options and see if your vehicle has a better deal online, on the lot, or if you can find a private seller who is willing to negotiate. There are also many online calculators out there to aid you in your decision-making process. The more research you do in the beginning, the more confident you will be when it comes time to make a deal.

How to Not Lose Money When Buying a Car

Cars are one of the necessities that tend to have bad investment returns. This is due to the depreciation that occurs when a car leaves the lot. When faced with the decision to buy a new vehicle or a vehicle that’s new to you, there are some easy ways to ensure you don’t lose too much money on your deal.

How to Not Lose Money When Buying a Car

Cars are one of the necessities that tend to have bad investment returns. This is due to the depreciation that occurs when a car leaves the lot. When faced with the decision to buy a new vehicle or a vehicle that’s new to you, there are some easy ways to ensure you don’t lose too much money on your deal.

There are several factors that come into play when purchasing a vehicle. Knowing what to look for, what questions to ask, and how to set yourself up for success when negotiating are just a few things to keep in mind. Continue reading to learn more about how to save the most money when buying a new car.

Do Your Research

When it comes to buying a car, impulse buyers will typically end up with post-purchase regret. Purchasing a car can feel overwhelming, especially when you are trying to make the right financial decision. Weigh your options and see if your vehicle has a better deal online, on the lot, or if you can find a private seller who is willing to negotiate. There are also many out there to aid you in your decision-making process. The more research you do in the beginning, the more confident you will be when it comes time to make a deal.

Think Ahead

When purchasing a car, few people take the future into consideration. If you are looking to make a smart purchase, it’s imperative you keep in mind the car’s expected resale value down the road. By purchasing a car that will sell for close to the same amount in the future, you will minimize your net price.

There are online resale calculators to help you find out how much your expected resale value for your chosen vehicle will be. While it isn’t possible to know exactly how long you will own this car or how many miles it will have when it comes time to sell, you can get a general idea of what the car will be worth by conducting some simple research.

Check the Car Facts

When taking this advice into consideration, there are certain categories of cars that you would be wise to steer clear of if you are looking to save money. A couple obvious types of cars to avoid are luxury vehicles and low mpg sports cars. While these cars look great and run smoothly, they don’t add a ton of value for those in need of basic transportation.

In an attempt to save money on fuel, many car buyers resort to hybrids and electric cars. This is where some research will apply. Battery technology is changing quickly, meaning resale of electric and hybrid cars is less consistent. Be aware of this when making your decision!

Avoid the Newest Cars

While the experience of driving a new car is tempting, it isn’t worth it. If you are able to look beyond the clear odometer, brand new car smell, and status symbol that comes with driving a new vehicle, you’ll save yourself a ton of money.

This isn’t just because used cars are less expensive, but because they depreciate less. In fact, after 75,000 miles, depreciation slows dramatically. Typically, this amount of miles is accrued during the first five years of purchase, so anyone buying the car new is the most likely to suffer the bulk of the depreciation. On the other hand, if you buy the car once it’s reached 75,000 miles, you’re moving out of the depreciation red zone and into a position to make a play for the end zone (by selling the car for a less-depreciated value).

Purchase Based on Needs, Not Wants

Owning a car that functions is way more important than how good it looks on the outside. Furthermore, owning the correct vehicle type for your situation will end up being a better investment than purchasing the vehicle you want to buy.

For instance, a family will need a car that has more seats available while a couple may want an all-terrain vehicle with overhead storage for camping trips. Buying the car that fits your lifestyle will save you money in the long run because you won’t need to worry about buying things to compensate for your dream car that lacks the features you need.

Mileage Matters

If you find a car that is at least 3-5 years old but has a low mileage, you’ve hit the jackpot. These cars are typically sold by older people who haven’t driven long distances. By acquiring a car after it’s depreciated for several years with low mileage, you’ll secure a lower rate but reap the benefits of a car with less wear and tear. This also has the added benefit of being able to resell the vehicle at a later date for a better price.

Clean Titles Only

If you think you are interested in a car with a title that says “rebuilt” or “salvage,” think again. While these cars may pass inspection and drive like they are new, they are much more difficult to sell and may cause you a headache down the road. In essence, these cars are walking around with titles that say, “I’m broken, but give me a chance.” If you don’t have the time or money to be patient with one of these vehicles, it’s best to steer clear and head for vehicles with clean titles.