Experts agree that buying a new car typically isn't worth the cost. "The second you drive that car off the lot, it depreciates, 10%, 20%," Suze Orman tells CNBC Make It. "Let somebody else get that depreciation."
Buying used tends to be the financially smarter option. As self-made millionaire and founder of Millennial Money Grant Sabatier advises: "Buy the nicest kind of used car that will get you from point A to point B."
If you decide to go that route, here are three important questions to ask the dealer or seller.
Ask if the car has been in any accidents, how much mileage it has, how it was maintained and how many people previously owned the vehicle. If the seller hasn't had it for very long and can't tell you much about the ownership history, that's a potential warning sign.
You should also ask for the vehicle identification number (VIN), says Ricart. It's a 17-digit number that's assigned to every vehicle in the U.S. and allows you to pull a Carfax vehicle history report.
The report will cost about $40, but "is worth paying for," he says. It provides key information about the car, including service and repair information, vehicle registration and reported accidents.
Look at the frequency of repairs: If they're well spaced out, it's likely a well-maintained car. If the report shows a bunch of repairs in a short period of time, the car may have a major problem. The Carfax report will also let you "confirm whether the seller is telling you the right story," Ricart adds. "If the story doesn't line up, that's a red flag."
"If the dealer or seller claims they have inspected the vehicle, ask them where they do that," says Ricart. "It's good to actually see where the technicians are working on the car."
If you're buying online through sites like Craigslist or Ebay, you can always ask the seller if you can take the car to your local mechanic for an inspection, he says. It'll cost about $100 for a full inspection of the engine, brakes and transmission, but it's a good way of making sure the bones of the car are solid.
The title shows who owns the car. When you're buying used, both you and the seller will sign it to do a title transfer. You want to make sure the seller has a clean title and is listed as the owner.
You also want to make sure the seller has paid off the car loan and fully owns it, Ricart says. "Say they have a $12,000 loan on the car. If you're buying the car off them for $6,000, that person is responsible for paying the other $6,000 to the bank to get that title for you," he explains.
When buying used, the key is to trust but be aware. "Simply asking the seller to verify things and provide documentation shouldn't cause aggravation on their side," Ricart says. "If they're selling a quality automobile and they're proud of what they're selling, they should be quick to provide you with any information that you ask for."
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