You have decided to save money by buying a used car instead of a new one. However, you must be careful in your purchase or you may end up paying more than you expected, whether at the dealership, in operating costs, or in unexpected repairs.
Consider these seven steps to avoid being taken for a ride as you attempt to purchase a ride.
- Set Your Goals – Before you ever set foot on a car lot, you need to determine what features are important to you in a vehicle. This keeps you from being directed to certain cars and buying on impulse.
With respect to features, we are talking functional and not cosmetic. Your favorite color may be blue, but it is much more important to focus on things like how many passengers will you need to comfortably seat.
- Work Out Cost Limits in Advance – Think over how much you are willing to pay in total, and what level of down payment and monthly expenses you can afford.
When the time comes to buy, if you are working with a used car dealer, he or she will hit you with a torrent of numbers for down payments, monthly payments, loan terms, and financing options. Figuring out your upper limits in advance makes it less likely that you will overspend through confusion.
Watch out for three things when considering cost limits and terms.
First, one of the newer 7-8 year car loans may lower your payment significantly, but are you even going to own the car that long?
Second, make sure you are aware of all fees upfront before you sign, and make sure that they fit in your budget.
Finally, as you consider the operating costs, look hard at the gas mileage. It may be worth paying more initially for a car that can save on gas costs over the next few years.
- Do Your Research and Have the Car Inspected – Check online inventories of used car lots to identify a few cars of interest, and then check out the pricing and how it compares to the Edmunds or Kelly Blue Book Value. Go on Internet forums and check into customer satisfaction, typical repair costs, and safety records for the cars you have chosen. If you are considering purchasing from a private party, there are numerous websites — including eBay and autotrader.com — that connect you with people selling their own vehicles directly.
Congratulations! You have finished your preparation, and it is time to go to the dealership (or to the current owner, if you are buying directly).
- Check the History – A CARFAX report is a good start, but trace the full history as best you can. Are you buying a program car (aka former rental car) and how many miles does it have? Are service records available? If buying from an individual, try to pick up clues about their typical driving habits.
- Use an Independent Mechanic – Have any vehicle of interest checked out thoroughly by an independent mechanic before you purchase it. A trained mechanic can give you an idea of the wear, what is likely to go out soon, and whether the price is commensurate with the previous use.
- Check out Financing Options –The dealer may be able to offer you suitable financing, but do not count on it. Check your options at a local bank or credit union; you may find a superior rate.
- It is Okay to Say No – You may have invested time in considering a particular car, but that does not mean you have to buy it. Do not be afraid to walk away if a dealer tries to slip in last-minute costs that you do not agree with, or if the deal does not feel right. Trust your instincts.
With preparation before you get to the used car lot (or private party), and resolve once you get there, you can find a great deal on a used car – and feel the pride of not getting taken to the cleaners in the process.