While price is an important consideration when you buy a car, it's not the only issue. Think about the overall cost of the car while you own it. Get a glimpse of what a specific vehicle might cost you over the long haul by looking at our Total Cost of Ownership information in our Research pages. Annual operating costs, such as insurance and maintenance, should also be considered.
Residual (or resale) value is the single most-significant factor in figuring overall costs. If two new cars sell for $25,000 but one is worth $14,000 after four years and the other only $10,000, then the latter costs you $4,000 more in the end. While you secured a great deal on purchase by taking advantage of a fat rebate from the manufacturer, you may pay in the long run because the vehicle's resale value could have taken a hit from those same incentives. Best-sellers don't always hold their value either. Manufacturer incentives may bolster those sales, and they may flood the market when they're sold as used vehicles, which helps to depress values.
The safest bet for used-car buyers is the "nearly new" or "barely used" categories. Oftentimes, these are cars that dealerships have used for demonstrations, test drives or short-term transportation during special events such as golf tournaments. These so-called "demo" cars may have from a few hundred to several thousand miles on their odometers, but they're still considered new because they've never been titled by an individual. These gently used, well-cared-for vehicles could save you lots compared to a brand-new one, and they represent a safer risk than a used vehicle. Though they've racked up some miles, they remain covered under the factory warranty.
If you want to get rid of your old vehicle when you buy a new one, you may want to trade it in at the dealership where you're planning to buy. But negotiate a deal on the new car first. That will allow you to shop the new-car price cleanly from dealer to dealer.
Once you've negotiated the new-vehicle price, find out what different dealers will offer for your current car or truck. Treat the price for your current vehicle and that of the new car as separate transactions. You are likely to get more money if you sell your current vehicle on your own, but sometimes it is not worth the extra time and effort. That's all up to you.
Typically, the best price you'll get on a new car is when a manufacturer or dealer wants to clear out current inventory to make room for new models. The end of a model year is a great time to save money. Buying the previous year's model when the new model year has started, generally around Oct. 1, is even better.
In addition, many manufacturers offer rebates, low-interest loans, price cuts and other incentives to consumers as the model year ends. Automakers also sometimes pay extra cash to dealers to clear lots; some dealers pass those savings on to customers. While the waiting game may be a good strategy to get the best price, your selection will likely be limited. You may be stuck with a model that doesn't have the features you want or it may be a color that other people have rejected. And keep in mind that if you sell the vehicle in three years, it will be valued as a 4-year-old vehicle, which results in lower resale and trade-in values.
The purchase of a used car should definitely include an investigation into the history of the vehicle. There are a few companies that offer vehicle history reports. These companies can find out how many previously registered owners a car has had, the odometer readings each time the car was sold or serviced, and whether the car was part of a daily-rental fleet or used as a leased vehicle.
You'll need to provide the company with the 17-character vehicle identification number in order for it to conduct the search. The company can't tell you who previously owned the car, but for a fee you'll receive a state title number with which you can contact the state's vehicle department for further information. Many automakers' certified pre-owned programs automatically require a vehicle history report before a vehicle can be considered.