Should You Buy New or Used?

A car loses value quickly, especially when new. Consider the pros and cons:

• New: Warranty, latest features, no history — but highest cost and depreciation.
• Used: Lower price, slower depreciation — but may require more maintenance.

Most people save significantly by choosing a lightly used car (2–5 years old).

How Much Should You Spend?

Use the 20/4/10 rule as a guideline:

• 20% down (or as much as possible)
• 4-year loan max (shorter loans = less interest)
• 10% of take-home pay should be the max total monthly transportation cost

Transportation includes gas, insurance, maintenance, and payments — not just the loan.

Cash vs. Financing

• Cash: Best long-term value, no interest, no payments.
• Financing: Good if the rate is low and you can afford payments comfortably.

Avoid long-term loans (72–84 months). They cost more and leave you upside down longer.

The Hidden Costs of Buying a Car

Always budget for more than just the sticker price:

• Sales tax and registration fees
• Insurance increases
• Maintenance and tires
• Fuel or charging costs
• Pre-purchase inspection (for used cars)

These extras can easily add $1,000–$3,000 if unplanned.

Negotiation Tips That Save You Money

• Know the car’s fair market value before you go
• Get financing quotes from a bank or credit union first
• Be willing to walk away — the biggest power move
• Negotiate the total price, not the monthly payment
• Avoid dealer add-ons and extended warranties (usually overpriced)

The more prepared you are, the more you save.

Used Car Checklist

Before buying a used car, always check:

• Vehicle history report (accidents, mileage, ownership)
• Maintenance records
• Tire condition
• Test drive on both city streets and freeway
• Have a mechanic inspect it — $100–$200 well spent

A clean inspection is more important than the price.