How to Buy Good Used Car
Buying a used car can be a smart investment when a replacement vehicle is needed. While with the growing economy new car sales have increased, used cars can provide a great alternative as long as you know what to look for.
You can get the most bang for your buck with a used car. While this offers an opportunity to live more comfortably, by definition a used car has problems from daily wear and tear. Hence, it’s important to avoid making such expensive mistakes when shopping for a used car.
Set your budget
You really only have two ways to buy a car: pay cash or take out a loan. When you pay cash, it’s fairly simple to budget. But don’t waste your money in full. Remember to set aside money for insurance and registration — and possible future maintenance.
Many people take out a car loan to protect their savings and purchase a costlier model. Being pre-approved for a car loan is smart because it simplifies the purchasing process and puts you in a stronger position at the car dealership. Later, you will see how the pre-approval fits into the process.
That the Honda Accord and the Toyota Camry make good used cars is no mystery. But it could cost a few thousand more than a similar Ford Fusion or Kia Optima, although these are good cars too. So consider more than one brand, if you’re looking to save money. We suggest that you make a list of three cars that meet your needs and fall within your budget.
Create a List of Used Vehicles
When you plan on buying a vehicle that is less than 5 years old, find one thatis pre-owned (CPO) certified. CPO cars have long-term warranties guaranteed by the carmaker and not just the dealership that sells them to you. The only ones that can sell a CPO car of the same name are franchised dealerships that offer the same brand new one. So if you were for example a CPO Chevy Cruze, you’d have to buy it from a Chevrolet dealer.
Shopping Recurring Fees
Many people who are looking for a new car worry about the monthly payments they will have to make. While a lower monthly payment is good for your monthly budget, a longer period of payment means that you end up paying back more total money. Because of compounding interest, it might make more sense for you to take on a higher monthly payment, since the principle can be paid back in a shorter period.
Also, don’t be fooled by the disparity between paying a lease and paying for a vehicle. Although your monthly lease payments may be lower than your monthly loan payments, at the end of your lease you will return a leased car. If you have purchased your used car, at your choice, you can sell it or trade it in.
Although monthly payments are an important part of using a loan to fund a used vehicle, don’t forget about the cash. If you have enough money to buy your used car directly, you can save a lot of money on a long-term basis and avoid the risk of buying a used car based on monthly payments.
Find a car and take a look
Once you have an idea of pricing the models you are considering, take a look at your neighborhood’s used-car inventory. Numerous dealers and private sellers list online their used cars. You can also visit the nearby dealerships to see what’s on their list.
Do some homework about every car you’re considering. This may include reviewing vehicle records and title ownership files, test driving, and inquiring about past inspections.
Check the history of the vehicles
If you buy the car from a close friend or family member who can vouch for their history, expect to get a history report about the cars. The early move is essential. If the car you are looking at is showing poor history, the sooner you know the better.
AutoCheck and is the best known source for information on car history. Such reports that show crucial car information, including whether the odometer has been rolled back or whether it has a salvage tag, which means the insurance company has declared a total loss. To obtain this detail, you will use the vehicle identification number (VIN) for the car, and in some cases, all you need is the license plate number. Such reports are offered for free by most big dealers if they have the vehicle in their inventory.
Contact the seller
Just don’t rush out to see it once you find a good prospective vehicle. First call the seller. This move is an excellent way of establishing a relationship with the seller and of checking the car details. You may ask private party sellers why they are selling a car or if there are any mechanical problems with it. And if you buy from a dealer, the best way to ensure the car is through a phone call or text.
The seller will sometimes mention something that wasn’t on the ad that might change your decision to buy the car. Our used car questionnaire is a good reminder of what to say, if you want to go deeper. You’ll find the last thing on our list is the car’s asking price. Even though many are tempted to bargain before they lay eyes on the car, it is better to wait. You should tie your bid to their situation once you see it.
If things go well, make an appointment to test-drive the car. Make it for daylight hours if possible. Which makes the state of the car easier to see.
Negotiate the price
If all checks out for the car you want, then it’s time to negotiate the price. Use as a reference the pricing figures you have collected from places like Edmunds and Kelley Blue Book.
The salesperson can try to win you over by promising to lower your monthly payment if you are financing your car through a dealership. But if they stretch the term of the loan to bring down the monthly payment, you could end up paying far more interest over the life of the loan. Keep your focus on the total funding price— not just the monthly payments.
Close the deal
You should apply this to your insurance policy before taking ownership of the vehicle. Then, you only have to pay for the car — usually with cash or check from a cashier. Make sure you get a title and have it signed right by the seller. If in doubt, check the website of the State’s registry for more information. Most states allow the car to be registered in your name for around 10 days.
(source: nerdwallet.com, edmunds.com, and creditkarma.com)