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Consumer
Used cars not always the best deal
CHICAGO (8/15/11)--America’s car-buying market is anything but typical these days. Some conventional wisdom no longer applies as unique circumstances have turned the vehicle marketplace on its head (ChicagoTribune.com July 29). In most economic climates, buying a used car is cheaper than buying its new counterpart (Edmunds.com July 20). In recent years, though, used cars have been in high demand, pushing prices up. In July alone, the sector saw sales rise 13.5% (USAToday.com Aug. 1). High demand--combined with a rise in leasing’s popularity and a scarcity of new Japanese vehicles due to disrupted production since the earthquake and tsunami there--means that some low-mileage used cars cost almost as much as, if not more than, new cars. To navigate the changed marketplace, take these steps along with the traditional pre-purchase homework:
* Compare new-car prices vs. used. In some cases, a new car actually costs less than the used version, or the price difference is so negligible that you will prefer the new car. Use resources like Edmunds.com and Kelley Blue Book (kbb.com) to value the cars. Remember to factor in how financing and depreciation will affect car values. * Consider trading in your current vehicle. In the past, the general rule was that you earn more selling your car privately than by trading it in. Now, with used cars in demand, dealers are offering top dollar for trade-ins, especially for desirable models in great condition with low miles. That tightens the dollar gap between trading in a vehicle and selling it yourself, which involves more hassle. * Lean toward Detroit brands for used models. It used to be that American cars earned their tarnished reputation when compared with Japanese counterparts, but Detroit cars have improved steadily over the last decade. In recent years, some Ford Motor Co. and General Motors Corp. vehicles have even outscored Toyota and Honda in Consumer Reports assessments (Daily Finance.comJuly 27). You can take advantage of the lingering bad reputation, and thus the lower demand for used Detroit models, to get great value from a dependable American vehicle.
For more car-buying guidelines, visit the Autos section in the Home & Family Finance Resource Center.
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