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Your Guide to Buying a New or Used Car

Woman driving a car.

Buying a car is a rite of passage, whether it’s your first high-mileage sedan or a growing family’s minivan.


Nearly every buyer will ask the age-old question of “is it better to buy a new or used car?” It’s important to do your research before you drive away no matter what you’re buying.

Transportation experts from Forbes anticipate sales to return to normal after COVID, with numbers on track to outpace 2019 sales by 2023. Shoppers are continuing to seek out online car dealers instead of traditional models, especially for used cars. Experts predict that online used car sales will grow annually until 2025.

Once you’ve decided to purchase a car – whether new vs. used – there are other expenses to keep in mind. If you need a loan to purchase the car, you will pay interest on the amount you borrow. Additionally, you will be required to insure your car and the cost can vary widely depending on the type of car, location and coverage.

Depreciation is another factor to consider. Is it worth buying a new car? With some new cars dropping in value in the first year, it pays to do your homework before making the commitment.

First, decide what kind of vehicle you need. What you choose is entirely up to you, but a little red sports car is probably unwise if you drive clients around or ferry four kids to soccer games. Similarly, think hard before you pay extra for a four-wheel drive sports utility vehicle if it seldom snows where you live and your only off-road driving is in parking lots.

Why buy a used car? A late-model used vehicle may cost thousands of dollars less than a new version of the same make and model and still meets all your needs.

Auto leasing may be an option for you, with advantages such as a low down payment, convenience and lower monthly payments.
 

Helpful Resources

You’ll need ammunition in your search for the best buy. Knowledge is power, so learn everything you can about the vehicles you’re considering. Check Consumer Reports for the lowdown on a model’s value (or lack of value) and for technical and performance data. Consumer Reports publishes a maintenance guide each spring that shows the repair history on cars. Talk to people who own the cars you’re thinking about so you’ll get a ground-level view of the good and bad points. For those shoppers who are scrolling their phones looking for their next vehicle, check websites such as cars.com, J.D. Power and Kelley Blue Book for ratings, reviews and up-to-date values.
 

Trade-In or Sell Yourself?

If you want convenience, trade in the car you own. Just a few clicks on popular online car retailers – think CarMax and Carvana – will give you an estimated trade-in value. A dealer or local used car reseller may be able to match it.

You may get more cash if you detail your car, keep accurate records of the car’s maintenance and decide to sell it yourself. The process may take longer, however, and won’t always offer the convenience of a trade-in.
 

The Deal, No-Haggle and Otherwise

There are one-price car dealers who won’t haggle over price because they have already put a realistic sticker on their vehicles. This is an attractive way to buy if you are not comfortable negotiating a price or if you find haggling with a salesperson not to your taste.

Keep in mind that dealers are often ready to, if pressed, give a little to get your business. By knowing the real value of the vehicle, you’re at a decided advantage. If you’ve done your research and found a cheaper online price or available rebate, bring proof of the deal with you.

Courtesy, firmness, and awareness of the car’s real value will go a long way in securing your best price.
 

 

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A shorter-term loan with larger payment amounts will save money in the long run.

How Do You Finance a Car?

Now that you’ve chosen your new or used car in person or online, choosing your financing is the next important step. “Be sure to get the shortest payback time you can comfortably handle. A shorter-term loan with larger payment amounts will save money in the long run,” advises Emily Dean, SouthState’s Director of Consumer Lending.

For example, the monthly payments for a $15,000 loan for five years at 5% are $283; $1,984 in interest costs. Alternatively, the monthly payments for a $15,000 loan for 4 years at 4% are $339; $1,257 in interest costs. By paying $56 more each month and paying off your loan one year sooner, you will reduce your total interest cost by $727.

Points to Remember

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Icon for Points to Remember
  • Decide on the kind of car you want and research the car’s current price, whether you’re going to a dealer or buying online.
  • You may get more for a car by selling it than using it as a trade-in.
  • One-price car dealers offer realistic sticker prices and no haggling.
  • If financing a new car, a shorter-term loan with larger payment amounts will save money in the long run.

Insurance Considerations

Regardless of where you live, certain types of auto insurance are required. The following is a list of some required and optional coverages:
  • Bodily Injury Liability — pays for medical or death expenses resulting from an accident in which you are at fault.
  • Property Damage Liability — pays for repair or replacement and legal expenses for property damaged in an accident in which you are at fault.
  • Personal Injury Protection — pays for expenses resulting from injury or death to you or your passengers, regardless of who is at fault. This coverage will also pay a death benefit to the deceased’s survivors.
  • Uninsured/Underinsured Motorist Protection — pays personal injury or death benefits if you are in an accident caused by an uninsured, underinsured, or hit-and-run driver.
  • Collision — optional in most states, this pays for damage caused to your car in a collision or rollover, minus a deductible set by the insured. Higher deductibles typically result in lower premiums.
  • Comprehensive — pays for damage caused by theft, vandalism, fire, and most natural disasters. Though optional in most states, banks will typically require you to purchase this insurance if the vehicle you are buying is being used as collateral for a loan. Equipping your vehicle with certain anti-theft devices can reduce your premium.


SouthState offers an easy online application and same-day financing. Want to know how a car loan will affect your budget? Try this car loan calculator.

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