When you're shopping for your next car, it pays to be well-informed of the common mistakes car buyers make. Here are five car-buying mistakes to avoid:
Buying New Instead of Used or Certified Pre-Owned (CPO)
A car is an asset, not an investment! New cars depreciate in value quickly, so when you buy a new vehicle, you can expect it to continuously decrease in value from the moment you drive it home. A new car typically decreases in value by 25%-40% in the first two years alone. The first two years represent the greatest rate of depreciation of a car, so why not let someone else take that initial 40% hit by buying a slightly used vehicle that is 1-3 years old. Just because buying used is much cheaper than buying new does not mean that you do not have to do extensive research on the used car you plan to purchase. If you choose the wrong car, SUV or truck -- one that already needs repairs or will soon -- then you could be out a lot of money in repair costs. Buying a certified used car or CPO vehicle makes a lot of sense, since they are generally one to six years old, have been inspected and come backed with an extended warranty plan, which can offset any expensive service needed down the road.
Selecting the Wrong Vehicle
What are your specific needs for your next vehicle? If this will be a family vehicle, then you certainly want to buy one that is practical for everyday use. If you will mainly use the car for commuting, then you may want to consider a small used car that gets great gas mileage. Selecting a reliable and well-rounded vehicle that offers enough passenger and cargo space, reasonable fuel economy and plenty of convenience features always makes sense. Choosing the wrong car is not only about body style, but also price! Consider how much you want to spend on your next car and do not go over your budget.
In the upcoming Part 2 of this series, we will cover financial choices related to your car purchase. Stay tuned!