How I Bought A New Car After An Accident

August 16, 2018

A lot of the financial guidance out there about making big purchases such as a car focuses on building up savings and shopping around for the best deal. But what happens when you need a car right away?

As outlined in my last blog, I was recently in a car accident. What I didn’t say in that blog was that my car was totaled. Because of this, I was suddenly thrust into the car-buying market without a plan. I typically like to spend months researching a car purchase but this time my process was greatly condensed. I hate buyer’s remorse, but my 5-member family is busy and one car would not cut it for long.

Here are the steps to quickly prepare for your next vehicle purchase

Determine the type of vehicle you need

As much as I am going to miss my old vehicle (we named the car John), it had been less than ideal for our family for some time. When we bought the sedan we were just a family of 3. We are now a family of 5 with 3 car seats/boosters. We determined that this was a good opportunity to not just replace what we had, but find something that would give the kids more space. Doing this helped us focus our search. Picking a car based on need can simplify things in an environment where you find every car in a 50-mile radius within seconds on your phone.

The search is on

Once we knew what amenities to look for, we began the search. There are dozens of apps and sites to choose from. For my search, I preferred tools that could give me easy to view pictures, the ability to filter searches based on price, mileage, and vehicle features. I also preferred tools that gave me a measure of the value of the vehicle. This helped me to understand how much negotiation room there was in the price.

New versus used

The advantage of a new car is that you are the first person to own the car and so you know the standard of care and maintenance history. Also new cars usually come with manufacturer’s warranties. The downside to buying a new car is the price and the fact that the value of the vehicle depreciates significantly once the car is driven off the lot.

Because of the size of my family and the amenities they enjoy like leather and entertainment, used cars have often been a better value for me. While a used car forgoes the rapid depreciation in value of a new car, they often present their own risk. Unless the previous owner kept good records, it can be hard to determine the level of care the vehicle received. Also, unless you buy a low-mileage used car there is high likelihood the manufacturer’s warranty has expired.

In those cases you might consider buying a warranty. To mitigate the concerns about the maintenance, request a vehicle history report like Carfax. In many cases those are available free online. It also does not hurt to have an experienced mechanic look at the vehicle to determine if maintenance costs will likely be needed in the short term.

This is what I do to make sure I’m not buying a used lemon, but instead a quality used car that will last as long as I need it to last.

Buy versus lease

Before you negotiate the price for the vehicle, it’s good know how much car you can afford. Most of the car search apps and sites offer a calculator that will give you an idea of the monthly car payment. You will want to reach out to your bank or credit union to get loan terms before going on a car lot as well.

Most dealerships are incentivized to get you to finance through them and I have seen price breaks for choosing dealer financing. Even if it is a good deal, having your own independent loan quote is still a good idea to have bargaining power – this will help to ensure that you get a loan at a reasonable interest rate. Also, the dealer may try to match your bank’s terms, which is what happened with us.

Leasing can be a reasonable alternative to taking out a loan, especially if monthly payment is an issue for your budget. However, leasing a vehicle means you’re pretty much locking yourself into having a car payment for the foreseeable future. This article offers 5 questions that can help you determine if leasing is the right move for you. For me, I like the idea of eventually being free of a car payment, while still having a car. That’s why we opted for financing.

By assessing your needs and shopping with a knowledge of what you are looking for, along with your preferred plan to pay for it, you can be certain to walk away with a car purchase you can feel good about for years to come. Now to find a name for this new car…