Purchasing a Car Frugally

My current car has over 157,000 miles and my husband and I thought it might be a good idea to start looking for another car. While this may be a good time to buy, since the salesman seem to be a little anxious to sell, we are trying to determine if we should take on more debt with the economy in a downward turn.

Thankfully my car is in great condition, we haven't had to make any major repairs and we do still have the option of making a few minor repairs and sticking it out as long as we can. This option is probably the best and most frugal option. Even in the worst case scenario, something as severe as a blown motor or failed transmission will likely run you between $3,000.00 and $7,000.00 to replace at a dealership, which still isn't enough to buy a new car. To top it off, a new car typically loses an estimated 20 percent of its value the moment you drive it off the dealer lot and your existing car has already taken that depreciation hit.

If your in it to buy a new (or used) vehicle then I suggest the following from my own personal experience:

1. Determine ahead of time what amount you are willing to pay, what you owe on your trade-in (if you have one), where you want your monthly payments to be if you purchase and stick with it.

2. Do not be in a hurry and purchase from the first lot you visit. We stopped at one lot, test drove two cars, which we thought we might be in our price range. Next a gentleman looked at our trade, asked our payoff and came back with a payoff figure which was way lower than what we owe on the car. Once we figured the negative equity in to the price of the new car, the payments were way over our top figure. We said thanks and left even though they tried to show us different cars which weren't even similar to what we were looking for. Never be pressured into purchasing a car you don't like.

3. Look for a better trade in value. A week later we stopped at a different lot to see what they had. This time I went in with a plan and simply found a salesman and told him I saw two cars on the lot I was interested in and wanted to know what they would give me for the trade in. I would not tell him how much I owed on the car as I believe this can affect, both positively and negatively, on the value of the trade in. They immediately did the appraisal and came back with a figure of $600.00 more than first place AND they said if we fixed one thing (a $49.00 fix, since my husband can do the repair) they would give us another $800.00 on top. That's $1,400.00 more than the first place we visited! Since they were so nice we test drove two vehicles there and told them we would call them back after talking with our bank. This leads me to number 4.

4. Talk to your bank before purchasing a car. Often times your own bank will have better rates than the dealership can offer through their financing companies.

5. Ask them to keep an eye out for you. Since the car we were most interested in at the second lots payments were still $40.00 more than we were hoping for, I simply called the salesman, assured him we were happy with his service, and asked him to keep an eye out and let me know if anything came on the lot that might be closer to our price range. He has promised to call me and in fact has already given me a heads up on one car we might be interested in. In the meantime, we'll purchase the $49.00 part and chalk it up to repairing and keeping our current car to obtain the most use from the vehicle.

6. Lastly, continue to shop around. Even though we are thrilled with the service we received at the second lot, we know that the salesman may not be able to find the deal we are looking for. We have since talked with a third salesman from another lot who is also looking for the right car for us. We figure this way, we'll continue to keep our current car and save money by not taking on more debt, unless a perfectly frugal deal comes along!

Please remember these are just my thoughts and ideas. Let me know if you have any good tips on purchasing a car versus keeping your current car.