How to Save $10,000 on Your Next Car

Here's a follow-up post on yesterday's tip about buying a used versus a new car. Yesterday we focused on how much you can save on financing by buying a used car versus a new one. Today's article from MoneyCentral covers another big cost of buying new versus used:

As a rule of thumb, figure that a car's value drops by half every four years. For new cars, the bulk of that depreciation occurs in the first year of ownership. A new $30,000 car is worth only $22,500 after just the first year -- a full 25% less. Over the next three years, its value will fall by another 25% off the original price to $15,000. You save almost $8,000 over four years just on depreciation by buying used, to say nothing of added savings from insuring an older vehicle.

Then the article tells you how to get a great used car:

Where can you look for the best [used car] deals? You can search by price, specific car make and model, or by category, such as "passenger cars" or "sport utilities," on sites such as MSN Autos, AutoTrader.com, Autobytel, AutoWeb and CarsDirect. Most offer detailed vehicle write-ups and classified listings you can search by geographic area. And Edmunds.com's "True Market Value" calculator will give you an idea of what people are really paying for a specific car in your area.

The advent of "certified used cars" has changed the used-car landscape dramatically. Because these cars must pass inspections, they are usually in excellent condition. According to the J.D. Power study on dependability, the differences between certified and non-certified vehicles are especially apparent among non-luxury car makes. Twenty-five percent of non-luxury buyers of certified used cars rated their vehicle outstanding, compared with 16% of those who bought non-certified cars, the study said. Even better, certified cars come with warranties, thereby eliminating one of the major worries many people have when buying used.

And one final consideration before you buy that used car:

Given current fuel costs, it doesn't hurt to research this before making your final decision. You can look up individual cars' annual gas costs and make side-by-side comparisons with other makes on the U.S. Department of Energy and the Environmental Protection Agency's Fuel Economy site. It also has a list of least and most energy-efficient cars, including diesel, electric and electric-hybrid vehicles, and a fuel-cost calculator. Using the site's example of a car that gets 20 mpg versus one that gets 40 mpg, both burning $1.70 gas, driving the 40 mpg car would save you $2,550 over four years (based on 15,000 miles per year).

I usually end a post with my thoughts, but theirs is so much better:

So next time you're in the market for a new car, stop for a second and consider just how much you're really willing to pay for that new-car smell.

Comments

[Betsy Markum]

I can't believe it, my co-worker just bought a car for $60477. Isn't that crazy!