No matter what your budget, there is a new or used car out there for you. It's finding the right model, however, that can be tricky. Kelli Grant, Sr. Consumer Reporter for SmartMoney.com, has some tips for finding your new ride.
If you're on a tight budget, common knowledge would tell you to look at used cars as apposed to new models. However, Grant says buying used isn't always the best option.
"Now, demand for used cars has pushed up prices at the same time that new cars are seeing record incentives, 0% financing - even a sales tax reduction," says Grant. Weigh your options before you sign on the dotted line. That new car may not be out of reach.
If you can help it, though, do your best to avoid buying '08 models. Grant advises that with the New York Auto Show going on, '08 models are now almost two model years old.
"Any 2008 models you buy, they're really not going to resell very well. You're better off spending a little bit more for the '09's or the 2010's," says Grant.
If you're hunting for a new car, it's also important to buy to keep. That means to buy a vehicle for the long term - not just because it's the hot new car right now. Depreciation is your enemy here; Grant says some models lose up to 20% of their value just by driving them off the lot.
If you sell that new car within 2-3 years, you're not getting the best resale value for your money. "If you're keeping a car longer than that... when you go to sell a car that's more than five model years old, it's more about how well you've taken care of the car what you initially purchased it for," says Grant.
In addition to resale value, pay attention to the brand of car you're buying. Detroit's Big Three auto makers - General Motors, Ford and DaimlerChrysler - are in financial trouble right now, which could create problems down the road for car owners who have vehicles from those companies. Warranties, however, should be okay.
"President Obama has promised that the Federal government is going to step in and cover warranties for either GM or Chrysler if either of those auto makers is unable to do so itself," says Grant.
In addition, certain companies are considering shutting down some of their brands. For example, if GM doesn't find a buyer, it's going to have to shut down some of its brands like Hummer and Saturn. "Resale values for what they call an 'orphan' brand are going to drop by about 5%," says Grant.
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