The Best Tips for Buying A Car

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Joel Ohman
Founder, CFP®

UPDATED: Mar 3, 2020

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Here's what you need to know...
  • Before purchasing a car, do your research to discover which makes and models are the safest
  • Evaluate each car’s fuel economy to estimate gas prices and long-term expenditures
  • Consider the market and resale value of any car you may purchase
  • Choose the best insurance coverage by comparing rates from several different companies

Buying a car should be fun; it is shopping, after all!

But the process of buying a vehicle can be a tough one that is fraught with pitfalls and missteps, leaving you the owner of a car you wish you never purchased.

So we’ve put together the best tips for buying a car to help you navigate through hundreds of models and learn what to look for and how to get the best deals on auto insurance.

Check out auto insurance quotes from multiple providers right now by entering your ZIP code into the FREE tool above!

With a focus on safety, gas mileage, and financial issues, using our tips for buying a car will leave you feeling well equipped to purchase your perfect car!

Safety Isn’t Rocket Science

The number one concern for most consumers when buying a car is how the vehicle looks.

Sure, we all have visions of ourselves in fast, powerful cars with a great haircut and an expensive pair of shades, but most vehicles look pretty much the same after an accident.

Imagine yourself in the driver’s seat of any smashed vehicle that you’ve driven by, and you’ll be forced to admit that the most important aspect of buying a car is always safety.

According to the National Highway Traffic Safety Administration (NHTSA), traffic accidents increased significantly from 2011 to 2012, with over 33,500 more people dying in 2012 as a result of motor vehicle accidents.

Such sobering numbers certainly illustrate why safety is much more important than the color of your new vehicle.

So before you even begin the search for a new car, check out government safety ratings issued by the NHTSA.

The NHTSA conducts testing to assess a vehicle’s safety during head-on collisions and side-impact crashes, as well as a vehicle’s likelihood of rollover.

They also list the recommended safety features found on each vehicle, such as electronic stability control. Any safety issues encountered during testing and the details of standard safety features are noted.

Vehicles are graded with a five-star system and they are all searchable by make, model and class of vehicle.

In this day and age of advanced technology, it’s important to choose a vehicle with a four or five-star safety rating.

The NHTSA tests sedans, trucks, SUVs, and vans, even allowing you to compare the ratings of vehicles side-by-side.

Safety Options

Young attractive woman sitting on car seat and fastening seat belt, car safety concept.

Safety can’t be stressed enough. The health and wellbeing of you and your family are at stake. Whether you drive a fast car, a safe mini-van, or a fun motorcycle, safety will impact insurance cost and lives.

So check out more safety ratings at the independent, nonprofit Insurance Institute for Highway Safety (IIHS) before you hit the dealerships for your next vehicle.

The IIHS also conducts testing for front and side impacts as well as roof strength and head restraint safety during a rear-end collision.

Rating vehicles on an easy-to-understand four-point scale from Good to Poor, the IIHS also puts out a list of Top Safety Picks every year. The IIHS rates everything from subcompacts to hulking pickups, and their Top Safety Picks go back to 2006.

Fuel Economy and Dollar Signs

If you have the funds and aren’t too serious about pollution issues, then you likely don’t need to be concerned about a vehicle’s fuel economy.

However, the rest of us know that we want cars with great fuel economy to save on gas and to do our part to lessen our carbon footprint.

Smart cars, hybrid vehicles, electric cars and even vehicles that emit nothing but water are no longer a thing of the future.

Fuel economy is being stretched to limits unimaginable just a few years ago, and this is a bandwagon you surely want to get on during your vehicle search.

But how does one navigate the vast array of different vehicles, miles-per-gallon, and electric versus gasoline?

The simple answer is to search and compare vehicles at the U.S. Department of Energy’s Fuel Economy website to get the lowdown on all things related to gasoline and your wallet.

Do this before you head out to test drive cars, and those rising fuel costs won’t bother you a bit.

The Fuel Economy website allows you to compare the costs and miles-per-gallon ratings of multiple vehicles.

Many of the various trim levels available for most models that can vary widely in their fuel economy due to larger engines and options like turbochargers are included.

Hybrids, electric cars, and standard gasoline vehicles can all be compared side-by-side with electric mileages converted into a gas mileage equivalent.

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Resale Value

Now that you have narrowed your driving field down to a handful of safe, economic vehicles, your next step is to again contemplate money.

You need to check out the fair market value for that handful of vehicles that you have chosen.

Whether you are in the market for a new or used vehicle, it really pays to know the true value of a vehicle before speaking with the salesperson.

Kelley Blue Book can help you to find the market value for any vehicle based on factors such as the vehicle’s age, mileage and interior and exterior condition.

While you probably won’t be able to get the exact market price on a vehicle, you will be able to use the information to your advantage.

First, you’ll know if the dealer is really asking way too much for a particular vehicle.

This will be useful during the dreaded haggling phase where you will be able to let the dealer know that you know how much the vehicle is truly worth, and then you can give a counteroffer for a more reasonable price.

Additionally, knowing a vehicle’s market value will also help you spot a red flag when a salesperson is trying to sell you on a vehicle priced way below market value.

Knowing approximately how much the vehicle should cost can save you from buying one that is likely to break down two weeks after you drive it off the lot.

Also, be sure to check out Kelley Blue Book’s Best Resale Value Awards.

This information will be useful down the road when you are trying to sell or trade-in your vehicle, as some vehicles hold their value better than others.

Devaluation can be faster or slower for a myriad of reasons; some vehicles don’t break down often, and some vehicles are so ugly that consumers wonder what the designer was thinking.

Either way, knowing which vehicles hold their value will help to save you from scary financial words like negative equity.

Getting the Best Loan for Your Money

Couple in real-estate agency signing property loan contract

Yup, it’s about money again. Now that you have chosen a safe, cost-effective vehicle, you will more than likely need a loan.

This is a step that you can start working on even before you consider a new car.

Getting a loan for any big purchase, such as a vehicle, involves a perusal of your financial standings through data found on your history report.

Actually, it can be more like a fine-toothed comb and microscope kind of examination, and you don’t want to go through all of the legwork only to be denied for a loan.

Make sure that your credit history and credit scores are as healthy as can be before you talk to the loan manager at the dealership or your bank.

Pay off old debts, make your payments on time, and save your credit card limits for true emergencies.

Also, don’t forget to look into new or used auto loans through your bank as well as the dealership so you can get the lowest interest rate possible.

Tips on Insurance

Insurance on a vehicle, especially a vehicle purchased with a loan, is a must. It is also the law in all 50 states.

You will have a monthly insurance bill just like your car payment, so it is a smart move to get the best insurance you can afford. Auto insurance is all about protecting your health and your money.

Vehicle accidents can cost thousands of dollars, and those amounts only compound if the accident was your fault.

First, you have to know your state’s minimums for insurance and then buy more if they are too low. If you don’t have enough car insurance, you can be sued to pay for someone else’s injuries.

Next, you need to know what optional insurances to get, such as collision and comprehensive coverage, to protect your investment as well.

Last, you need to shop around to get the best rates.

You can shop around for car insurance rates from multiple companies by entering your ZIP code below!

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