Japanese used car

With the average price of a new vehicle topping $28,000 and used ones averaging $14,000, car shopping is second only to buying a home in financial importance.

Don’t let the ads seduce you. Because the decision to buy new can involve almost half the income a typical family makes in a year, it needs to come more from logic than emotion.

“I don’t watch too much TV or listen to the radio too much,” says Randy Davis of Henrietta, N.Y. “When I go out to look, I go, ‘Is this something I can afford or can’t I?’ “
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Before you walk out on a car lot - or even rev up your computer - look at your budget. Don’t focus on how much you can pay each month. Instead, look at total cost. Then make a short list of what you must have in a vehicle.

After that, it’s time to research, both the cars and the cost of financing or leasing, because most people who need a vehicle end up making some sort of car payment. And many will make loan payments for five years or more.

New or used?

If cost were the only consideration, more people would choose used simply because of depreciation.

“A new car loses most of its value when you drive it off of the lot and for the first two years,” says Rob Gentile, director of auto price services at Consumer Reports. Depreciation varies by car, and domestics generally depreciate faster than European and Japanese cars.

“In general, cars depreciate anywhere from 15 to 20 percent in the first year,” he says.

Ariana Percy of Greece, N.Y., knows her 1995 Geo Prism isn’t the prettiest, but that doesn’t matter to her.

“I don’t need to look good, I just need to get from place to place,” she says. When she bought her teal green Prism for $1,500, the odometer showed 92,000 miles. But she expects to drive the compact for three to five more years.

“It has a long-standing engine, and it’s in perfect condition,” Percy says. “It needed no work, and it passed inspection with flying colors.”

If you just love that new-car smell, consider buying new and keeping it long after you finishing paying for it. A typical U.S. household pays almost $7,400 a year to own an average of two vehicles, according to the Bureau of Labor Statistics. More than half of those costs come from car payments.

One advantage to buying a new car is that all include a manufacturer’s warranty, some for as long as 10 years and 100,000 miles. Some dealers inspect and certify used cars, giving additional protection on warranties that already have expired. But many used cars, some sold at dealers and most sold by individuals are on the market as is, without guarantees.

“New vehicles have the features and benefits that the public wants, and they’re willing to pay for it,” says Rick Dorschel, president of Dorschel Automotive Group in Rochester, N.Y.

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