There is an important difference between the two biggest single expenses in your life (if you live in America): buying a car, and making down-payment for a house. While a house appreciates in value (price goes up with time, usually outpacing inflation), the value of a new car starts depreciating the moment it leaves the dealership lot. Thus, paying 20% down for a house (the median house price was $232,000 last year) is a sound investment, whereas forking out $20,000 for a family car is not necessarily so.

Now you know why I do not like paying extra thousands of dollars for a new car, when a reliable used care can do just as fine. Looking at the larger picture, the used car industry in America is twice the size of the new car industry in terms of the number of vehicles sold each year. Most of these buyers choose a used car because of budgetary reasons. For those of you who can easily afford a new car, I am going to argue in the next couple of posts that it still makes better investing and practical sense to own a used car instead.

If you already made up your mind to buy a new car no matter what, here is a short list of some excellent resources that will hold your hand through the process step-by-step. For the rest of you, picking the right used car demands some time. (We often spend a week planning a $200 vacation; we can surely spare a weekend researching a $10,000 car.) This guide will hopefully make the process easy and relatively painless. It is divided in the following eight posts, and I recommend reading them in sequence (at least from #3):

1. A close look at car depreciation.
2. Why should I buy a used car?
3. Picking a budget.
4. Making a list.
5. Researching your car.
6. Checking the car out.
7. Wrapping it up.
8. A note on extended warranty.

Let us begin by taking a close look at car depreciation »

See related posts:

1. Picking a budget
2. Making a list
3. A close look at car depreciation
4. Why should I buy a used car?