Should You Buy a New or Used Car

Car

New Cars

At car dealers, the price of the cars and their optional features are almost always negotiable. In fact, most buyers do not pay the manufacturer’s suggested list price (or sticker price). Here’s how to get the best price:

Before negotiating, learn the manufacturer’s wholesale price to the dealer, which will be somewhat less than the sticker price. This wholesale price can be found online or purchased from services such as Consumer Reports.
Negotiate price over the phone with several dealers. Because it is easier for you to end a phone conversation than walk out of a dealership, you are likely to get a better price. If the dealer won’t talk price with you over the phone, call another dealer.
If reluctant to negotiate, consider seeking assistance from a car buying service. One nonprofit consumer group maintains a popular service, CarBargains, in which several dealers bid for your sale.

Used Cars

Purchasing a used car is risky in that you often cannot be certain of the condition of the car. Here’s a purchase strategy:

Check the Kelly Blue Book price to learn what used cars in a certain condition usually sell for. Bluebook prices can usually be found in a library reference book or online.
Keep in mind that there are few effective used car warranties. Most cars are sold “as is,” and most of the rest carry a 50-50 warranty that obligates you to pay a portion of the repair costs.
Try to find a mechanic who is willing to check the car before you purchase it. And see if the seller will make the sale conditional on the car passing inspection.
Consider purchasing from family or friends who are more likely than dealers to tell you what they know about the condition of the car and not overcharge you.

More car buying resources:

Take the Pledge

Savers who make a plan are twice as likely to save successfully.

Take the America Saves Pledge

Tip of the Day

Keep track of your spending. At least once a month, use credit card, checking, and other records to review what you've purchased. Then, ask yourself if it makes sense to reallocate some of this spending to an emergency savings account. http://ow.ly/sj972

Share Your Tip or Story

And if we feature you in our newsletter, you get $25.

Saving With My Boys

When Kelly was a kid, she loved the picture book A Chair for My Mother by Vera B. Williams. In the story, a little girl lives in an apartment with her mother and grandmother. The little girl’s mother is a waitress and sole provider for their family. Together the family saves money by putting their change in a giant jar every day. They are saving for a big cushy chair for the little girl’s hard-working mother. Together with patience and diligence, they buy the mother a very comfy chair.

Make it Automatic

Holding ourselves accountable can be tough. Maria knew that if she didn’t “set it and forget it” she would have a hard time making sure her regular savings deposits were happening. In April, she took the America Saves Pledge and created a savings plan to increase her emergency fund.

Taking Steps Toward Financial Fitness

Nicky Vasquez learned about Virginia Saves when she attended her first class with Bank On Virginia Beach. The instructor shared how important it was to have a written savings goal, and the entire class joined Virginia Saves as the first step toward financial fitness.