Did you know that a car loses 20% of its value as soon as you drive it home from the dealership? That’s right – if you buy a new car for $50,000 and sold it the next day, you can only expect $40,000 in return. This is known as depreciation and, unless the car is a vintage or super-duper sports model, the value will dwindle over time. That’s why savvy entrepreneurs and those with a similar mindset often think of buying a car that’s “new to us” instead of factory fresh. There are many alternatives to buying brand new that will help you save a bit of money in the short and long term. Here’s our roundup of tips.
Buy used or certified used
Instead of buying new, buy used or certified used. You can find great deals on used cars from private sellers or dealers, but certified used cars are vehicles that are manufacturer refurbished, no older than three years, and come with an extended warranty. Better still, some certified used cars may be electric vehicles, which could save you money in “fuel” and maintenance costs. They are pricier, but the benefits often outweigh the costs.
Research the most reliable used vehicles
If you are buying used, be sure to do your homework and pick a car that’s known to be built to last. Research the most reliable vehicles, preferably the ones that require little maintenance and are the most fuel efficient. If a car costs a bundle to maintain and replace parts need to be shipped from across the world – don’t bother!
Set a strict budget
You need to set a strict budget for your car purchase; and you can do that by using a car loan calculator. If you know how much you can comfortably afford each month in repayments, fuel/electricity, maintenance, registration, and insurance, this gives you a figure to work with. You can apply for a loan in advance, too, which is known as loan pre-approval. This gives you a price ceiling dealers and sellers must meet if they want to make a sale. Trust us – they always want to make the sale!
Buying on the open market means cheaper deals
Buying a car on the open market from private sellers usually means cheaper prices on the same vehicle. Sellers have one goal in mind – to sell the car and get on with their lives! Some may be desperate to sell due to moving overseas. Don’t be fooled by scams, though – if a seller is “about to be deployed” and requires a “delivery fee” upfront, it’s probably a scam.
Remember to sign off on the paperworkA dealer is more expensive than going private because there is someone behind the scenes doing all the admin for you – sorting out stamp duty, switching over registration, and completing the transfer ownership of the new car. You’ll need to do all this yourself to ensure your car is street legal when you drive away from the private seller. Don’t get caught out a few weeks down the road (literally) with incorrect paperwork! Use a used car guide to ensure you take all the correct steps.
