Monday, February 27, 2012

How to Purchase a Car

Purchasing a Car: Step 2 of 4
Step 2: Evaluating Alternatives

1. Comparing Vehicle Options
2. Comparing Used Vehicles

Almost every purchase comes with several alternatives.  You may ask yourself: Can I delay the purchase? Should I buy the item with cash or credit? Can I find the item at a better price? Which brands should I consider?  If we begin to evaluate the alternatives of each purchase, we will become much more effective consumers.

When buying a car, most people use comparison shopping.  Comparison shopping is great when 1) making a large purchase or 2) buying items that you purchase very frequently.  A car would definitely qualify as a large purchase.

1. Selecting Vehicle Options: Optional equipment for cars can be viewed in three categories.

  • Options that improve performance
  • Options that offer convenience
  • Options that enhance the outward appearance of the car
As a consumer, we must take all of these options into consideration and determine what we are willing to pay a premium for.  For instance, power seats are definitely not a deal maker or breaker for me.  On the other hand, I definitely want my car to have a working air conditioner.  By making a list of the items that you find to be vital, you will be ready to evaluate almost any car.  

2. Comparing Used Vehicles: After you find a few cars you want to evaluate, I would suggest using this used car evaluation worksheet to ensure that you ask the correct questions when looking at a car.  I would also suggest taking a list of items you should check on the car. I really like this checklist to take along when car shopping.  It may feel a little bit nerdy caring around a clipboard of checklists, but it will help keep your thoughts clear when being hounded by the dreaded salesman.  Used cars can be tricky to examine if you are not prepared, so do your research before you go shop.  Kelley Blue Book has many great articles such as The 10 Best Used Cars Under $8,000, that would be great to look at before you go car shopping.  

The majority of this information was taken from Focus on Personal Finance: An Active Approach to Help You Develop Successful Financial Skills by Kapoor, Dlabay, and Hughes. Feel free to share your car shopping experiences and any tips you may have.

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