Your car buying questions answered


Over the shoulder view of a man wearing a plaid shirt with hands on the wheel

If you’re a first-time car buyer, or it’s been a long time since you bought a car, the process can be overwhelming. Here are tips for figuring out how much to buy and if it’s better to buy a new or used car.

If you’ve never bought a car before, or it’s been several years since your last auto purchase, you’re sure to have lots of questions. Here are answers to three common car buying questions.

How much can I afford?

Before you start searching for a car online or head out for test drives, the first thing to do is figure out how much you can afford.

If you’ll pay cash, or use a combination of cash and trade-in, your task is pretty simple. Just add your cash amount to the value of your car which you can determine with the help of Kelley Blue Book. The sum is the maximum price of your new car.

If you’ll finance your new car with a loan, determine how much you’re willing to spend each month. Use our Auto Loan Calculator to quickly determine the purchase price that corresponds with your monthly budget. To see the total cost of the loan over the repayment period, check out our Loan Repayment Calculator.

Keep in mind that the purchase price is just one cost to consider. There will be taxes and fees for the title and registration. Plus, insurance on your new car may be higher than coverage on your old one.

Once you’ve established your price limit, look for cars that come in under your maximum. This will leave you with money to cover extras on a new car or buy new tires for a used car if needed.

New or used? It depends.

Depreciation is cited as a primary reason to buy used rather than new. According to Auto Trader, “On average, a new car loses between 20 and 30 percent of its value the moment it rolls off the dealer’s lot. Some cars can depreciate up to 50 percent in the first three years.”

Depreciation, however, is only one factor to consider. If you hold on to your cars until the end of their useful life, the annual average cost may be lower because there should be few if any repairs needed in the early years of ownership.

To avoid taking the depreciation hit, many people choose a car that is just two or three years old. If you find one with low mileage, there’s still a lot of life left in the car and this can be a savvy financial move.

If you choose a used car, maintain room in your budget for repairs that may be needed for an older car.

How can I tell if used car is worthwhile?

If you buy used, consider buying from a dealer that certifies its used cars or by having the car checked by a qualified mechanic.

You can also get a detailed vehicle history report from Carfax or AutoCheck. Some problems may not show up on their reports but you’ll be able to see odometer readings as well as identify lemons, those used as rental, taxi or fleet vehicles, and if a car is considered junk or salvage.

Do you have auto loan questions? Call our knowledgeable loan professionals at 800.991.2221. If you’re ready to buy your new ride, apply here. We’re here to help you get where you’re going!

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