Many families put nearly as much money into owning and operating their vehicles in a given year as they invest in their 401(k) plans.

Yet few people devote the same attention to their automotive investments as they do to their portfolios. As a result, these folks are squandering their hard-earned cash.

But an astute owner who pays attention to the details can easily save thousands of dollars on a car or truck over the typical ownership period. Here’s how to do it.
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1. Find the right vehicle
Whether you’re shopping for your family’s only car or for a third vehicle for weekend excursions, don’t automatically buy the most expensive one you can afford. Rather, choose a vehicle that’s less costly yet dutifully serves its purpose, whether that’s hugging the curves at speed or carpooling the kids to school.

Choose your options wisely: While only the most frugal motorists will choose a stripped down car or truck, it’s no bargain to buy a vehicle loaded with costly equipment you’ll rarely use. Look for option packages in which a number of popular add-ons are bundled together at a discounted price. But shy away from those that include features you don’t want or need.
 

2. Consider selling before you buy
Pick a model with excellent resale value.

You can assess a vehicle’s future worth by checking its residual rating. (Find the rating by calling a local car-leasing agency or consulting an online price guide, such as Edmunds.com.)

The residual rating is usually expressed as a percentage of the original retail price after two to six years. This is especially important if you’re leasing a car or truck, because your monthly payment will be based on the difference between its transaction price and end-of-lease value.

Take the projected resale values among four comparably priced 2004 luxury sedans:

• BMW 545i
• Jaguar XJ8
• Lexus LS 430
• Mercedes-Benz E500

Though each of these cars costs about $55,000 new, the resale value of the E500 is projected to be $7,337 less after five years than that of the LS 430.
 

 
3. Compare ownership costs
As with your portfolio, you need to think long-term to get the best return on your automotive dollars.

• Consider the cash you’ll sink into a vehicle’s gas tank. Fuel-economy ratings for new vehicles are issued by the Environmental Protection Agency (EPA) and can be found on an online pricing service, such as Edmunds.com, or from the EPA.

  While, as they say, your mileage may vary, we found a five-year cost difference of $978 between the thirstiest (the Mercedes-Benz E500) and most-economical (the Jaguar XJ8) car in our study, based on 15,000 miles per year at $2 per gallon of premium fuel.

• Determine what you’ll pay for insurance and shop around to find the lowest rates. Premiums are based largely on your age, marital status, address and driving record. But some vehicles are inherently cheaper to insure than others because of their claims histories. The automotive-cost-rating service Intellichoice forecasted an average range of $2,630 over five years between the Jaguar XJ8 and the 2004 BMW 545i or the Lexus LS 430.

• Find the lowest available interest rate. Bank Rate Monitor, which tracks financing costs for loan programs, recently showed as much as a 3 percent difference in auto-loan rates. Assuming 20 percent down, this would amount to a difference of $3,657 over five years on a $55,000 car. If you can get an automaker’s cut-rate or zero-percent financing program, you can save even more.

4. Never pay retail
So maybe the Ferrari dealer won’t haggle, and Saturns are sold only at full retail. But virtually all other auto retailers are only too happy to negotiate with you.

While the laws of supply and demand ultimately determine what you’ll pay for a new vehicle, the difference between paying the lowest possible cost — the dealer’s so-called invoice price — and paying full retail among our list of luxury cars was as great as $7,792 for the LS 430.

How do you get the best price? Consult a published guide or Internet site to determine a vehicle’s invoice price, including all the options you want, plus delivery charges. That’s your target price. Always make this figure your first offer in sales negotiations.

If the manufacturer is offering a cash rebate, make sure it’s deducted only after you’ve agreed upon a purchase or lease price.

And treat your trade-in as a separate transaction to prevent the salesperson from inflating your old car’s value at the expense of the new car deal. Research the value of your trade-in ahead of time — it’s usually listed as the "wholesale" price in published and online used car guides.

Finally, refuse to pay for any additional charges, and avoid buying high-profit, low-value add-ons such as service contracts, rust proofing and fabric protection.
 

5. Pamper your pride and joy
Follow your vehicle’s scheduled maintenance schedule to the letter, both to keep it in good running order and to honor the manufacturer’s warranty.

Keep it in like-new appearance. If you lease, you’ll help avoid having to pay equivalent wear and tear charges when you return the vehicle to the dealership. Plus, you’ll help maximize your vehicle’s resale value. The difference between five-year-old luxury cars in "poor" and "excellent" condition, according to Kelley Blue Book, is about $3,000.

No one model in a given class will likely offer the best deal in the original cost, ownership costs and residual value. But combine those elements, and you have more than $25,000 at stake over five years on a $55,000 luxury car.

That’s a return few investors can afford to ignore. Click here for more information on personal finance.