Car Shopping: New or Used?

Have you shopped for a new car lately? They now cost as much as you might have spent for the down payment on your house.

It's easy to get sidetracked by styling; after all, when we were young, we defined ourselves in part by what we drove. And auto makers today continue to play up the cool factor. Zoom, zoom, hey?

But the family car is obviously more than a style statement. Before you start car-shopping, the American Automobile Association says, create a checklist for yourself.

Here's what you should do before and during the search:

1. Set the budget. Determine how much you want to spend and, if you're going this route, line up financing in advance, so you'll know what the monthly payments will be. Use sites like Edmunds.com or KellyBlueBook.com to find out how much you can expect if you're trading in your old car. And check in with your insurance provider to see how much your premiums will go up — and whether some of the models you're considering will cost a lot more to insure.
2. Be flexible. Have your heart set on a particular model? That's a recipe for overpayment and disappointment. Narrow the choices down to two or three vehicles that meet all your criteria.
3. Evaluate your driving habits. Take a realistic look at how you use your car. SUVs with four-wheel drive look cool, for example, but when's the last time you actually went off-road? Do you regularly carry lots of passengers or cargo? Do you drive mostly on the highway or on local streets?
4. List features. Be careful to separate the "needs" from "nice to haves." Don't just think about today; if you plan to keep the car for several years, consider potential changes in your family and situation.
5. Consider depreciation costs. The biggest yearly expense to new cars is depreciation. Research how much models being considered depreciate within the first few years and consider a model that has a track record of holding its value longer.
6. New or new to you? Look at pricing options for both new vehicles, as well as models that are one to two years old. There are benefits to both new and slightly used models. New vehicles typically come with longer warranties, buying incentives from the automaker, the latest features and are widely available. Slightly used vehicles might offer a price break, but it can be more difficult to find the "perfect" vehicle with the exact features you want.
7. Review warranty and maintenance costs. Review the length of the warranty of vehicles being considered and exactly what it covers. Investigate the maintenance costs associated with the car by reviewing its recommended maintenance schedule and pricing out the cost of several of the regularly needed maintenance items. Talk to your mechanic to find out if there's anything about a particular model that would make it more expensive to maintain.
8. Look at safety. Check the safety ratings of all models you're considering from the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety. If you have young grandchildren, don't forget to make sure it's easy to install a car seat.
9. Read reviews. Check online for reviews of models you're considering, but also look at consumer reviews. The professionals who write for car magazines probably have different criteria than you do.
10. Drive, drive, drive. Make sure everyone who will drive the car takes it for a couple of drives in the conditions in which they'll actually use the car. This will help you identify deal-breakers like blind spots or uncomfortable seats.

If you're considering an EV, read Should Your Family Buy an Electric Car?

Should you consider a pre-owned model? Find out our tips for selection and haggling in How to Buy a Used Car.