My Chevy Cobalt is coming up on its 12th birthday and is still running fine, though I don't think they make new ones anymore.

There are 2 schools of thought when it comes to car buying: buy only new, and never buy new.

A lot of it depends on what kind of financial position you find yourself in, and how much tolerance you have for unplanned expenses.

New car loans are subvented by the captive finance arms of the major manufacturers. That's how they can afford to offer 0% financing, but the special financing might not always be the best deal. Sometimes taking the rebate is better, because you pay less for the car overall, even with a loan that carries interest. The problem with buying a new car these days is that you're not going to find one for less than $15,000, and that will be an econobox. The plus side? It's a brand new car with at least a 3 year/36,000 mile bumper to bumper warranty and a 5 year/60,000 mile powertrain warranty. If you go the KIA or Hyundai route, the powertrain warranty is for 10 years/100,000 miles, but it's not transferable so it won't apply if you buy one used.

If you're shopping for a used car from a dealership, do all of your research online, including researching the dealership. Some are awesome, and others make the Master look benevolent. Jessica mentioned Consumer Reports, and they are a great resource for reliability ratings. I'd supplement that with the ratings from JD Power and Edmunds.com. Those three will give you a fairly accurate picture of how a vehicle will hold up. Pay special attention if they call out the engine or transmission for a particular model year. Those are usually the two most expensive things to fix on a car.

In addition to autotrader.com, I use cargurus.com and truecar.com for used car pricing. Both cargurus and truecar will tell you if it's a good price or not. The resale market is very strong right now, so prices will be higher than you think. What time of year and where you are in the country also makes a big difference. Buying a 4WD/AWD vehicle in the off-season will be cheaper than buying it at the start or middle of winter. Buying that same vehicle in Florida will be a lot cheaper than buying it in Maine. There are wholesale used car prices, and retail used car prices. You want to pay somewhere in between.

Try to buy at the end of the month. Dealerships are scrambling to make both their new and used car numbers, and are more likely to make a deal. There are some dealership groups that advertise themselves as no-haggle--Sonic dealerships being one, in addition to CarMax. We bought the SOs new (used) car from a Sonic dealership, and it was a great price, and the process was smooth, even though we were in PA and the dealership was right outside of DC. I inquired over the phone, they sent pics since photos weren't up on the web yet, and once we saw it told them we'll see them in 2 hours. We went home with the car that night. No haggle, no fuss, and no hard sell on extras.

You're usually better off coming in with your own financing, unless you're planning on buying a certified (from the manufacturer) pre-owned vehicle that may be eligible for subvented financing rates from the captive finance arm. Dealerships make money off of your loan if they put you in it, and it might not be the best deal. Ask the dealership how they get paid if you utilize one of their loans. If they refuse to tell you, walk out. That's not all they'll hide. If they say it's a flat fee per loan, it may be worthwhile to see what rate you can get. If it's a percentage, say no thanks and stick with your preapproval from your CU or bank.

Always negotiate the purchase price, not the monthly payment, and don't forget to account for taxes and fees. A 6% tax on a $15,000 car is an extra $900, and then there's registration/tags/title/doc fees, which can add another few hundred on to the price. You will see a line item on the purchase contract called "Doc Fee" that may run $2-300. The dealership doesn't have to charge it, but if they do, they have to charge it to all customers. They cannot take it off of the contract. If you feel it is too excessive, ask them (continued...)

( continues...) to drop the purchase price of the vehicle by the same amount. There are calculators out there that can tell you what your monthly payment will be based on the purchase price and interest rate. I believe Capital One's calculator will also calculate tax and typical reg and title fees as well. This will help you to figure out what you can afford for the loan length you desire.

Dealerships love to sell you on a monthly payment, but what they fail to highlight is that the lower monthly payment comes at the cost of a longer loan term, which means you pay more in interest. A longer term also puts you at greater risk that you'll be upside down on the car, which means the car is worth less than you owe. If something happens, you'll be responsible for the difference (can be thousands of dollars). If you're going for pre-approval, ask your financial institution if they include gap insurance which will cover you in that situation. If they don't, ask your auto insurer. Gap insurance from the dealership is usually overpriced.

Also ask to see any invoices from the work the did to get the car in saleable condition. If they put 4 new tires and both sets of brakes on the vehicle, the higher price they're asking may be justified. Also ask to see the safety inspection results. This will tell you how soon you may need to repair components in order to pass inspection in the future.

Once you've negotiated a price and you're ready to close the deal, you'll be taken to the finance manager who will try to convince you to buy all kinds of unnecessary goodies. Most of this is pure profit. Don't buy any kind of fabric protection, tire insurance or the like. Just say no. The extended warranty *may* be worthwhile, but ask to see the specifics before you agree. Many extended warranties only cover limited components and aren't worth squat. If it's comprehensive, then it's worth discussing. Always ask for a discount off of the price they quote. If they don't give you one, don't buy it. You can find aftermarket warranties on your own, but note you'll have to pay for those upfront instead of rolling them into your car loan. Even at the no-haggle dealerships, the cost of the extras can often be negotiated.

Will car dealerships take a big chunk of cash and then finance the rest? Or is it a situation of, if it's legal tender they'll do whatever it takes to get it?

Connie, the dealerships will take whatever downpayment you have and finance the rest. Often, if you have a large downpayment, the interest rate will be lower because you have more skin in the game. A larger downpayment can also avoid the upside down issue.

Dealerships will do just about anything to make a sale, but don't expect them to lose money on the deal. If they're selling the car for $10,000, and it's worth $9500, don't offer them $8000 just because you have it in cash. They won't bite. They're entitled to make money--expenses were incurred in prepping the vehicle for sale, there's overhead, they have to pay the salesperson commission,and it's not unreasonable to try and make a small profit.

If you're uncomfortable at any point, walk away. Once you sign the contract, it's done. There's no reconsideration period. There will be another car that meets your needs.

I'm happy to help once you get to the point of actually buying. Email addy in profile is good.

And get or ask for a carfax. That will tell you if the car has been in any major accidents, and how many owners it had. Stay away from cars that have major accident damage. They're never the same after being repaired.

One of my friends bought her smartcar while home for Christmas in Cleveland because it was so much cheaper there than here that it was worth paying for it to be shipped out here. Because no one in Cleveland wanted a used smartcar, but here they're popular.

That was amazing, Maria, and I don't ever intend to own a car!

My feeling is buy Hondas and Toyotas new, buy domestic cars used, and don't buy European cars. IME, at least in the Midwest, there is a massive premium on used Hondas and Toyotas while Fords and GM fleets get sold off here and are pretty cheap. That may be different on the coasts.

there is a massive premium on used Hondas and Toyotas

There is a v good reason for that, me thinks.

meara,exactly. It's why msbelle will probably get a great deal on a hybrid car in Texas, but would pay out the ass for it in Seattle.

Thanks, Jesse!

My feeling is buy Hondas and Toyotas new, buy domestic cars used, and don't buy European cars. IME, at least in the Midwest, there is a massive premium on used Hondas and Toyotas while Fords and GM fleets get sold off here and are pretty cheap. That may be different on the coasts.

I'd flip the new and used portion, depending on where you are. Domestic manufacturers have better incentives than Honda and Toyota, which makes the acquisition costs of a new vehicle cheaper. Honda does not play in the fleet market at all, while Toyota has a fairly robust fleet department. Fleet/rental sales depress the residual values, which makes for a cheaper used car. It's a very delicate balancing act for the OEMs when allocating cars to fleet vs. retail.

Imports tend to do better on the coasts. Pickup trucks are king in Texas and Oklahoma. I wouldn't put a blanket ban on European cars--late-model Audis are holding up very well, and BMW is a lot better than they used to be. Mercedes is still a money pit. VW could be a great bargain in light of the emissions scandal, but perception matters to a lot of people.

Sedans are fairly cheap in Utah because of the big families. Once you get past two small kids, you're going to need something bigger, and wrangling youngsters needs better space than even a four-door. There are several 2-3 year old Imprezas on lots around my town currently.