Saturday, February 25, 2012

How to Purchase a Car

Purchasing a Car: Step 1 of 4
Step 1: Preshopping Activities
1.      Problem Identification
2.      Information Gathering

**Buying a car is a very nerve racking activity for most people.  My hope is that through this series of four blog posts I, along with others, will become confident car purchasers. 

1.      Problem Identification
a.       All good decisions begin with an open mind.  When many people, including myself, begin the car buying process they already have preconceived ideas of what brand they want and where they are going to buy the car. This type of narrow view is a bad way to begin your search for a new car.  Define your problem as widely as possible to allow for the most possible solutions.  Is your problem that you need a fast car, a work truck, a car that can hold more kids, a car that gets good gas mileage, or merely a means of transportation?  It is important to truly identify your problem before you begin to shop for a car, but remember to keep an open mind. 

2.      Information Gathering
a.       The better informed you are, the better purchasing decision you will make.  To be an effective and efficient car buyer you should not spend too much time, or too little time gathering information for your purchase.  In their book The Millionaire Next Door, Thomas J. Stanley and William D. Danko found that "There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one's financial future." The average millionaire spends an average of an hour each year purchasing motor vehicles, while the rest of us spend an average of 60 hours each year purchasing motor vehicles.  Besides being time consuming, spending too much time researching automobiles can take you away from more important endeavors.  The following information sources may be helpful when purchasing a car:
                                                              i.      Personal contacts: Let everyone know that you are looking for a car.  This will put more eyes to work for you over a larger area. 
                                                            ii.      NADA: This website will give you the approximate market value of nearly any car. 
                                                          iii.      Your local dealership: Ask which cars sell the best and which cars they rarely see in the workshop.  This is a good indicator of a reliable car. 
                                                          iv.      Consumer Reports: Websites that offer independent 3rd party reviews are invaluable to a purchasing decision. 
                                                            v.      Media Information: Look through the classified ads of your local newspapers.  Research online for cars that are for sale in your area. 
                                                          vi.      A local mechanic: Ask the mechanic about the car you are considering.  Mechanics see a lot of cars and will have a good idea about which cars have the most problems. 

*This is the first phase of buying your car.  Identify what your problem is and keep an open mind.  Research and document information to find out which type of car you would most like to look for.  The next phase of buying a car will be Evaluating alternatives.

**The information for this post was primarily taken from Focus on Personal Finance: An Active Approach to Help You Develop Successful Financial Skills 2nd Edition by Kapoor, Dlabay, and Hughes. 


  1. 3 things.

    1. This is awesome. I've actually been dreading one of our cars breaking down and having to go through the process of buying one.

    2. While I agree that it's a good idea to ask your mechanic about the car you're thinking about getting, I will say that I've found mechanics to sometimes have the strongest opinions about companies and are therefore fairly biased.

    3. The formatting on your page seems a little messed up. All of the number headers are hanging over the the content section of the page a little bit. Just so ya know.

  2. Thanks Chuck! Yeah I do these on Word and they don't transfer over right. I'm going to have to figure out something different to do. Good point on the mechanics, I guess it may only work if you really know the mechanic will offer unbiased advise. I'm in the same boat as far as dreading the car shopping experience, let me know if you run across any good info.