Personal Finance Resources

Buying a car can be a daunting task. If you are looking to buy a new or used car, then you need to consider these 5 things (listed in order of importance in my opinion) before making the decision to purchase:

1. Reliability
   I have found that domestic cars and trucks tend to have higher maintenance costs and therefore are not as reliable as foreign automobile manufacturers. The cause for this - I don’t know, maybe it is attention to detail or continuous improvement that the foreign dealers have mastered and Americans haven’t, but in any case, Toyota and Honda have outperformed the domestic comparables in my opinion. But reliability is probably the single most important thing, because you don’t want your car to be in the shop getting repaired all the time.
2. Cost
   Cost is extremely important, but I listed it second because if you pay too little for a car, you might just get what you pay for. Whether it is a certified dealer or Joe over on 15th street, you should have your mechanic check the car out before purchasing.
3. Gas Mileage
   I am continually amazed at the American people and how they refuse to get rid of their gas guzzlers. Because of the inelastic demand curve of gasoline, as the price goes up, people continue to buy. If we are going to make an impact on gasoline prices, we need to buy small cars, and limit the use of gasoline as much as possible. So when you are looking to buy a car, look at a car that gets over 20 mpg as a minimum.
4. Warranty or Right to Rescind
   If you are buying from a dealer, see if they have bumper to bumper coverage, it may cost something extra, but when your transmission goes out after 30 days of owning the car, you’ll wish you had it. If you buy from a private owner, include a clause in the bill of sale with a right to rescind the contract for a certain period of time. If you want an example of a car purchase contract, just leave a comment to that effect at the bottom of this page.
5. Insurance
   As you probably know, insurance companies take the make, model, color and other features of the car into consideration when rating a policy. Sports cars and the color red are almost always rated higher than other vehicles. Check with your insurance agent before purchasing that car.

These were just a few key points to consider when buying a car. Don’t get in over your head; buy something cheap that is older, and foreign with good gas mileage. You’ll appreciate it when you stop at the pump, and years later when you still have a good working vehicle!

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