My wife's Pathfinder turned 15 this year. Although it still started up every morning - and we've LOVED not having car payments on it for a decade - we decided it was time to replace it. I just hope that replacing her car after only 1.5 decades won't blow Simone's frugal street cred!
Here are a few car buying tips in case you find yourself in the market for a car:
Tip 1: Know the type of car you need.
Cars depreciate in value so start your search by determining the type of car that’s likely to fit your lifestyle over the entire time you’ll own it. For example, if you’re planning on starting a family soon, it doesn’t make financial sense to buy a two-seater sports car.
Tip 2: Know your credit score.
Your credit score will determine whether you’re able to get a loan as well as how low your interest rate will be, so review it ahead of time. You can get free copies of your reports at www.annualcreditreport.com. I prefer to purchase my score score directly from one or more of the credit bureaus, but you could also get a free score from www.creditkarma.com.
Tip 3: Get financing before shopping.
Being approved for a loan before you start your car shopping puts you in a much better bargaining position. You can shop for loans from a local bank or credit union or use an online service like www.myautoloan.com or www.up2drive.com. Credit unions generally offer better rates than banks.
Tip 4: Know how a car dealer makes money.
A car dealer can make money from (1) the price you pay for the car, (2) the amount they give you for your trade in, (3) the financing they arrange for you, and (4) add-ons like extended warranties, environmental packages, and fees. Being aware of all of the ways a car dealer can make money on the transaction can help you avoid paying too much.
Tip 5: Focus on the total price.
A low monthly payment doesn’t matter much if the interest rate is too high and the payments last too long. Pay attention to how much you’re paying overall – not just monthly – and try not to buy a car you can’t pay off in three to four years.
Tip 6: Consider buying used.
Most of the depreciation in value occurs during the first few years, so consider buying used, especially if you don’t keep your cars for long. If you prefer buying new cars, then it's best to plan on driving them for years, and years, and years, and years, and....
Tip 7: Do your homework.
As with most things in life, the more you know about buying a car, the better off you'll be. Use sites like Kelley Blue Book (www.kbb.com) and Edmunds (www.edmunds.com) to research car reviews and pricing. Another great website about car buying is www.carbuyingtips.com.
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