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5 Tips For Buying A Car That Will Hold Value

5 Tips For Buying A Car That Will Hold Value

Buying a car is something that you only do every few years. However, when it comes time to purchase a vehicle, the investment is substantial enough that you want to make a smart choice. If you’re currently in the market for your next vehicle – or will be in the next few months – then you’ll want to heed the following tips.

1. Safety is a Big Priority

“The last decade and a half has seen some significant safety improvements with new technologies and systems designed to help prevent collisions,” says John R. Quain of VehicleHistory.com. “Many of these important safety features will be mandatory on new cars in the future—but they can already be found in used cars on the market.”

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When you purchase a vehicle, there are two primary points of value you should consider: (1) The features that are valuable to you at this very point in your life, and (2) The features that will be valuable in three, five, or ten years when you decide to sell the vehicle.

We’re only at the cusp of vehicle safety right now. In a few years, many of today’s optional safety features – such as rearview cameras, adaptive cruise control, and side impact airbags – will be required. If your vehicle is going to retain value, it should have these features now.

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2. Never Buy New

Everyone loves that new car smell. And there’s nothing like knowing you’re the first one to own a vehicle. However, common sense says that you should never buy a new vehicle. The moment you drive a vehicle off the lot, it loses roughly 11 percent of its total value. On a $30,000 vehicle, this means you’re losing $3,300 the second you drive home. After five years of ownership, the car is worth only 37 percent of what you paid for it.

Are you willing to eat this cost?  By purchasing a used car – even one that’s only two or three years old – you can save thousands of dollars. There’s really no reason to buy a brand new car.

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3. Purchase Proven Brands

The marketplace is flooded with lots of different car brands. While there’s nothing wrong with purchasing from an up-and-coming brand, it’s much more sensible to buy a known brand name. You can’t go wrong with brands like Toyota and Honda. These names are synonymous with quality and reliability. Not only does this (hopefully) mean you’ll have fewer problems with maintenance, but it’ll help when you when you decide to sell in the future.

4. Don’t Get Caught Up in Superfluous Details

What do you think is going to add more long-term value to a vehicle: an upgraded engine or heated seats? While the latter feature may be more noticeable on the front end, a superior engine is obviously going to give a car more value in the long run. Don’t get caught up in superfluous details when purchasing a car.

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5. Put Your Needs First

Finally, here’s one tip that you won’t hear anywhere else: put your needs first. While you may be purchasing with the intention of selling in five years and recouping a sizeable portion of your investment, you have to focus on your immediate needs. This is the only way to buy a car that has any value, and thereby meets someone else’s needs in the future.

Be a Smart Shopper

It takes very little effort to shop for a vehicle. You can always find some dealership or corner lot that will sell you a vehicle for little or no money down. However, it does take some time and effort to be a smart shopper.

Just remember: What you get on the back end of the transaction – safety, reliability, satisfaction, higher future resale value, etc. – makes all of the upfront work worth it.

Featured photo credit: John Lloyd via flic.kr

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Larry Alton

Business Consultant

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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