We got our first car in 2005, the year we came to this country. That was a used car we saw on Craigslist. There were hardly any people to turn to for tips for the car those days. We were new and were still getting accustomed to the car buying process. Now after 10 years and having purchased 2 more used cars, here are some basic tips for anyone who’s looking to buy a used car in the US.
Buying a used car isn’t as easy as it sounds. More time you spent in searching and researching, the better deal you’ll make, most likely. If you’re dealing with this for the first time, here’s how to navigate the dealership and walk out with a reliable automobile instead of a lemon.
Have a fixed Budget
Having a budget is important. When you don’t have a budget, you tend to spend more than you can afford. Of course, setting a budget can be difficult without knowing what kind of car you want.
Know The Car You Want
Knowing the type of vehicle you want can help you assess whether your budget is reasonable. It also helps you avoid the classic sales pitch where a salesman talks you into a vehicle that he wants to sell you rather than something you can afford.
When you don’t have any idea what you want, it becomes all about squeezing as much money out of you as possible. Don’t let that happen.
It’s all about aligning your budget with your goals and wants. Be realistic about both. If you want a Ferrari, you’re going to have to pony up quite a lot of money. That’s why most people don’t own Ferraris.
On the other hand, you probably want a vehicle that’s reliable, and those can rarely be had for $500.
The used cars at Carmax or online listings would be a great example of where to start looking for price comparisons on makes and models. Just make sure you know what you want before you step foot on the dealer’s lot.
Checking forums can be a great way to research both dealers and vehicles. Other people probably have already had problems with a vehicle you’re considering. Opening up an account with a car forum targeted at your desired make and model can save you thousands of dollars.
For example, Honda-Tech.com is a forum for Honda enthusiasts. If you sign up there, you will be in the company of professional and amateur mechanics and people who are generally very knowledgeable about Hondas.
This is a great place to ask questions about a Civic or Accord you’re considering buying. Let’s say you’re considering a Civic, but you heard that the newer models have had problems with second gear.
Sure enough, you hop on the forums and find out that the 6-speed transmissions in some Hondas grind going into 2nd gear. But, there’s a simple fix for it. You could decide to walk into a newer Civic purchase knowing that you’d have to fix the transmission or you could opt for another model year that didn’t have those problems.
Forums like this exist for a variety of different manufacturers, whether you’re considering a BMW, a Toyota, A Ford, or GM product.
Look For Used-Car Auctions
A used-car auction will get you into a used car for much less money than what you’d pay at the dealership. But, these auctions are usually crowded with dealers. So, you sort of have to know how to outbid or avoid them.
If you do decide to go this route, take a friend who has experience buying vehicles from a dealer.
Find Out What The Certification Process Consists Of
Does the used car dealer offer certified used vehicles? Great. Now, find out what that certification process is. Some used car dealers will (unfortunately) use this as a sales gimmick to get you to feel safe about the vehicles they sell.
Get It Inspected By Your Own Mechanic
Always have a used vehicle inspected by a mechanic you trust. Unless you know your way around a vehicle, you’re going to want a second opinion from an expert.
Think Before Financing Through The Dealership
There’s a reason why they often call them “stealerships.” When a dealer offers to finance, stop. Go talk to your local bank. Dealer financing is almost never a great deal because the dealer cuts another deal with a preferred lender and is allowed to charge additional interest on the loan to you.
The difference between what the lender offers and what you’re offered by the dealer is pocketed by the dealer.
For example, a dealer might offer you 10 percent financing on your vehicle. Meanwhile, the bank they’re going through to secure the funds for you is charging the dealer 8 percent. The difference – 2 percent – is pocketed by the dealer.
Instead of taking this deal, you should go directly to the bank. Although I have a very different opinion about dealer financing. When we bought our Toyota Camry, we got a 0% car loan from Toyota Finance.
I tend to believe the fact that loans on new cars are cheaper than the loans on used car as the valuation of used cars is a difficult task. Lending for a used car is riskier than lending for a new car.
Be Willing To Fold
This is the first rule of negotiation, be prepared to walk away. Sometimes, you just can’t get a deal. That’s OK. You don’t have to buy or even consider every car out there. You could show up to a buyer’s house or a car dealership and find out that there’s something wrong with the vehicle that you didn’t notice in the ad.
Being willing to walk away from a deal means that you’re not emotionally attached to the car before you’ve given it a test drive and verified that it’s mechanically sound.
This is one of the best ways to avoid being taken. It’s also something a lot of people have trouble doing. Stay objective, be honest with yourself about how much you really know about the vehicle and the seller, and you should be fine.
Martha Wood is a car loan officer. She loves sharing her insights online. Look for her posts on many personal finance blog sites.