Car Shopping – How to Avoid Buyerâ€™s Remorse
Most people would like to own a new car, but is it really worth the price?Â Let us look at the options, and then you decide for yourself whether buying new, used, or leasing is right for you.Â Making a calculated decision now will help you make the right choice and prevent buyer’s remorse later on.Â
Buying a New Car
Buying a new car is exciting.Â It has all of the latest gadgets, and that “new car smell” is just irresistible to your senses.Â However, buying new has both pros and cons.Â Here are some things to consider; once you drive a new car off the lot, it is immediately worth less than you just paid for it.Â Seriously, once the tires hit the road, it is a used car and the value depreciates considerably.Â Thus, if you secured a loan to buy the car, you immediately owe more than the car is worth.Â Furthermore, within five years it may be worth 30 to 50% of its original price.
However, buying a new car typically means that you qualify for a low interest loan.Â For instance, if you have excellent credit you may qualify for a 0% loan from the dealership.Â This type of offer can be an excellent deal if you have a stellar credit rating. Otherwise the loan rate may only be 1 to 3% lower than that of a used car loan.Â A new car also comes with a manufacturer’s warranty.Â When it expires you have the option of buying an aftermarket car warranty through a less expensive, independent provider.Â It will usually save you some money compared to what a dealer offers for the same type of coverage.Â When you are looking to buy a new car, perhaps the best way to avoid buyer’s remorse is to use the Kelley Blue Book to compare depreciation rates in your area, because paying too much would certainly bring on that guilty feeling.Â
Â When you buy a used car, you avoid the initial depreciation associated with a new one.Â For example, using the Kelley Blue Book, let us compare the price of a new 2011 Ford Mustang Coupe with a used 2010:
2011 Ford Mustang – $22,995
2010 Ford Mustang – $19,280 (20,500 miles)
Used Car Savings – $3,715
You see, you can save almost $4,000 just by buying the previous year’s model of the same car.Â When shopping for a used car you do not get the same lengthy manufacturerâ€™s warranty, so you need to protect yourself by purchasing a used car warranty from a trustworthy company.Â Also, call a credit union and ask for the loan value of the vehicle, and request a carfax from the dealer or seller.Â This will help ensure that you do not over pay for the vehicle, and that it does not have hidden damages.
Â Auto leasing allows you to lease a new car for a number of years, usually two to five.Â Instead of a car loan, you sign a contract promising to make monthly payments, to keep the car insured, and to take responsibility for the care of the vehicle until the lease ends.Â At the end of the lease, you return the car and pay for any damages or additional mileage incurred.Â A lease means that you are paying for the depreciation of the car while it is in your possession.Â Therefore, if you lease a new $30,000 car that is estimated to depreciate by $10,000 during the lease agreement, you will pay $10,000 in lease payments.Â When compared to the amount you would pay for buying the car, leasing is more affordable in the short term, and if you prefer to drive the latest vehicles, leasing makes more sense than buying.Â Just understand that you are assuming more of a financial risk as opposed to buying a car.Â Over all, buying a used car rather than leasing or buying a new one is the better option in terms of finances.Â However, you do have the option to buy or trade the leased vehicle in for a new model.Â If you decide to buy it, make sure to buy a separate vehicle warranty, independent from the dealer to get the most for your money.
Here is the best advice to avoid buying a car and then regretting it later on
ÂŸÂ Never sign any type of contract unless you are 100% certain that you want to buy the car.
ÂŸÂ Never put down a deposit on a car unless you are going to buy it.
ÂŸÂ Take a few days to think things through before making a final decision.
ÂŸÂ Understand that the loan payment is just one part of the equation.Â You also have to factor in the cost of full coverage auto insurance, as well as the costs to maintain and operate the vehicle.
ÂŸÂ Always walk away from an aggressive salesperson.
Since a salesperson makes a commission based on the number of sales they close, they will try their best to get you to make a quick decision.Â It is a sales tactic that benefits them, not you.Â Therefore, they do not care if you are getting in over your head.Â Their main concern is the commission, and they will go to almost any length to close the deal while they have you on their turf.
If you allow them to take on the role of the puppet master, you are almost certain to walk away with buyer’s remorse, and that is when the trouble begins.Â They have you, because you have already signed a binding contract that you cannot get out of.Â And so, they sing all the way to the bank, and you go home and cry the blues.Â Do not let yourself be controlled; realize that there are numerous vehicles out there from which to choose.Â Refuse to give in to pressure, and the only thing you will miss out on is buyer’s remorse.Â Remember, you are in control, not the salesperson.