Cars are a double-edged sword.
On one side, they provide great convenience, freedom, and flexibility.
On the other, they tie up significant amounts of cash into a depreciating asset.
I’ve talked a big game on this site about how great of an investment biking has been, but times are a-changin’. My wife and I are moving further from the city, we’d like to explore our region more, and have hopes to start a family. It was time for us to buy our first car.
Here is what helped me with our search:
- Setting a realistic budget – I avoid increased operational (monthly) expenses like the plague, and, from my research, found that you can get a reliable used car for $5-15K. I wanted to land the plane just under 10K.
- Define needs – folks end up with more car than they should when they have their identity wrapped up in the purchase. I found it helpful to remind myself that a car is a tool, not a part of my identity. Defining our needs for the car helped us avoid some of the trappings that can come with a car purchase.
- Utilizing Kelly Blue Book – the best online tools I found were https://www.kbb.com/whats-my-car-worth/ and Craig’s List. I would search cars that I was interested in on craigslist, then compare the value of the make/model/mileage to KBB. One important thing to note: KBB values are based on what cars in your area are actually selling for, not what they get listed for. This helped with the negotiation. Everything on Craig’s List is negotiable. One tip for Craig’s List: stick with people who have a thorough description and good pictures; this is a leading indicator that they will be more responsive when you do business with them.
- Once you find a car – offer to see it in a neutral location, or, even better, at your mechanic. I had many offers turned down when I was trying to negotiate online, but the one I did in person was a success. From my point of view, a fair offer is the KBB value less work that needs to be done quoted by a mechanic.
Follow these steps and you too could be the proud owner of a 10-year-old Toyota without breaking the bank 😉
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