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By Jim Kerr; photo by Chris Chase
It’s both intimidating and exciting. Buying another vehicle is a rare occasion for most of us and is usually only second behind housing costs in the amount of dollars involved. Choosing the right vehicle isn’t difficult, but it does take some time to make a wise choice, and some of that time must be spent on asking yourself some important questions first.
Three of those important questions are: What do I need? What do I want? How much will I spend? For many drivers, the last question is the first one to answer. How much will I spend? Set yourself a realistic price range. If you are just starting out and this is your first vehicle, then perhaps something in the $10,000 to $20,000 range is best. If this is to be a used second vehicle, maybe it could be in the $5,000 to $15,000 range, but if you are looking for a luxury vehicle, your range is going to be much higher of course.
Everyone wants to spend as little as possible, but the cheapest car for sale may not be the best one for you. By setting a realistic price range that is within your budget, it narrows down the search for your vehicle. By the way, don’t forget to include insurance and license in your budget, as these can add significantly to the cost of operating a vehicle.
Next, what do you need? A friend wants a small used economy car and she has set the price range around $10,000 to $14,000. When questioned further, she says that her four growing children are finding their existing economy car cramped for space. I suggested that she look at a mid-size or larger car, as she would be driving children for several years yet and that the difference in fuel economy could be offset by lower purchase prices on larger vehicles. Another friend wants a pickup truck, but when asked what he hauls, it is typically a bag of hockey equipment that would fit in the trunk of a compact car. Listing your needs accurately on a sheet of paper will help identify they type of vehicle you are looking for.
Both cost and need are tempered by “What we want”. I may want all the bells and whistles, such as in-car entertainment systems, heated leather seating or powerful engine, but do I really need them or simply want them? Although the reliability of most of these “luxury” items is excellent, they do cost more to fix if repairs are needed.
Items such as air conditioning, power windows, alloy wheels and automatic transmission add to the purchase price but also make the vehicle sell quicker and worth more later on. They are worth the price. Other features such as navigation systems are costly options and have a limited appeal. If you really want it and can afford it, why not? But don’t confuse “want” and “need” when shopping. You will make a much wiser choice if you have identified these accurately.
New vehicles are the most costly but have few surprises. It is easy to comparison shop, warranties protect you if there is a problem and maintenance costs will be very low for several years. They also have the most depreciation. When I am vehicle shopping, I not only look at the price of the vehicle now, but what it will likely be worth a few years later when I sell it, assuming I keep it in good condition. The difference between those two prices is the real cost of ownership. A cheap car may not be a good buy if there is minimal resale value, where a little more expensive vehicle may retain a much higher percentage of its value.
Vehicles depreciate most during the first two to three years. Buying a used, vehicle two to three years old will save you a lot of money, but it involves more work because you want to verify that the vehicle is in good condition before you buy it. Just because it looks good doesn’t mean it is good. Have a repair shop go over the vehicle for you to identify vehicle problems or worn items before you purchase it. It may cost a few hundred dollars to have several vehicles inspected, but if you buy one without an inspection that needs repairs you may spend many times that money.
The next big drop in vehicle value occurs when the mileage gets over 100,000 km. Although the vehicle probably easily has double that in life left, the possibility of costly repairs scares many buyers away. These vehicles can be good buys, especially if you are mechanically adventurous. Extended warranties can help ease the mind (and possibly the pocketbook) on high mileage vehicles.
Now that you know what type of vehicle you are shopping for, it is time to make a list of suitable vehicles and hit the dealerships, but that will have to wait for Part 2 of the story.