Here are five steps to buying a car and saving you thousands of dollars.

  1. Buy a 2 to 4-year old car
    New cars are nice, but the amount of money you lose to depreciation in those first few years is high.  Think about having two different buckets of water.  The first bucket has one little hole and the second has five large holes and water drains out super fast.  That’s what it’s like with the depreciation of a new car, where you are losing money in total value really quick.
  2. Consumer Reports
    Check with your local library to see if they offer free Consumer Reports, or consider buying a 1-month subscription.  Consumer Reports provides a wealth of information to help you find a car that is reliable.  Of course, they’ll also help you avoid problematic vehicles.  Before you go shopping, have a list of multiple vehicles you are thinking about purchasing and look at their reliability ratings.
  3. Edmunds Total Cost to Own (TCO)
    Edmunds calculated the total cost to own a vehicle over a five-year period.  They include depreciation, taxes, financing, fuel, insurance, repairs, and maintenance.  For a 2020 Jeep Cherokee versus a 2016 Jeep Cherokee, buy a 4-year old car and you’ll save $1450 annually over 5 years according to Edmunds TCO.  That’s a total savings of $7250.
  4. Identify the Trim Level
    If you have a few “must-have” items on your car, make sure to look at the trim level.  For example, let’s say you require cruise control.  You may find that’s available in all models, or you may find that it’s available in only 5 of 7 trim levels.  You don’t want to go through all the research, only to drive the car home and discover the car is missing a “must-have” feature.
  5. Obtain a CarFax or AutoCheck
    These services will provide a 5-year claim history on the vehicle.  If there was a bad accident you may find the car has more issues than anticipated.  You may also want to see if there have been more than one owner of the vehicle.
  6. Three More tips
    • More and More dealerships are offering a seven-day money-back guarantee.  That will allow you to take the vehicle to a mechanic to give your vehicle a look over.  After all, they are the experts and can identify issues.
    • Buy from a reputable dealership.
    • Don’t buy Emotionally.  Some car salesmen know people buy with their emotions.  For example, “this car may not be here at the end of the day”.  Or what about “this Holiday sale ends today at 7 pm”.

These are our car buying tips that may save you thousands of dollars.  What would you add to this list?