Tips to buy a used car: use car shopping tools like pricing guides, online listings and vehicle history reports.
Some steps to buy used car
1. Set your budget :
There are really only two ways for you to buy a car: Pay cash or take out a loan. If you’re paying cash, budgeting is pretty simple. But don’t spend all your savings. Remember to set aside money for registration and insurance — and possible future repairs.
Most people take out a car loan so they can protect their savings and buy a more expensive model. It’s smart to get pre-approved for a car loan because it simplifies the buying process and puts you in a stronger position at the car dealership. You’ll see later how pre-approval fits into the process.
Use an auto loan calculator to compute the best loan for you. Plan to put about 10% down and finance the car for three years. Ideally, the total of your monthly auto expenses shouldn’t be more than 20% of your monthly take home pay.
2. Choose the right car:
Now the fun begins — picking your car. Take some time to think about how you plan to use this car. For example, if you have a family, you’ll want enough room for everyone plus ample cargo space. .
Narrow the field by making a list of must-have features. As you move forward, build a list of three target car models to research in more detail.
3. Check reliability and ownership costs:
Every used car is different. Some have been driven more miles and have more wear and tear. But, in general, you want to make sure you’re choosing models known for their dependability. Consumer Reports and J.D. Power collect maintenance reports from owners and rate all used cars.
A closely related issue is the total cost of ownership. Some cars are cheap to buy, but will cost a lot in the long run because of insurance, maintenance, repairs and depreciation.
4. Locate good used cars:
There are a lot of websites that list used cars, and each site seems to have its own character. Here are four good ones to check out:
5. Price the cars:
Once you find several cars for sale in your area — but before you physically inspect them. If you’re buying the car from a dealer, look at the “Dealer Retail” price. If your next-door neighbor is the seller, you should look at the “Private Party” price. You might also notice that pricing guides tell you what the car is worth as a trade-in. Make sure to price your current car if you plan to trade it in at the dealership.
6. Check the vehicle history report:
Here is some of the important information you’ll learn:
- Does this car have a clean title? If a car’s been in a serious accident, fire or flood, and was “totaled” by the insurance company or bank (declared a total loss) it still might be derivable. However, the insurance company will issue a “salvage title” to alert future buyers. Steer clear of cars with a salvage title because it kills the resale value, and the car might still have hidden problems.
- Serious accidents are reported to the insurance company and will probably be on the vehicle history report.
- Shady car lots might spin the odometer back to increase its selling price. The vehicle history report can alert you to this scam.
- Some reports show if required maintenance was done on time and where the work was performed.
7. Contact the seller
A quick chat will answer lots of questions and save time. First, verify the information you read in the advertisement. Then, here are some basic questions to ask:
- Are you the first owner?
- Are the service records available?
- Do you have the title and is it clear? (A clear title shows there are no liens on the car.)
- How did you set the asking price?
- Is there any important information that wasn’t in the ad?
- Can I have the car inspected by a mechanic?
8. Negotiate the best price
Here’s the part that everyone dreads: negotiation. But it doesn’t have to be stressful, particularly if you’ve done your research and have a good idea what the car you want is worth. Compare the seller’s asking price to the average market price you determined on the pricing guides. Chances are, the seller is asking more than the market average.
9. Close the deal :
Some dealerships might include additional fees, some of which are bogus. It’s tricky to know what’s legit and what’s just included to boost their profit. Some dealerships are legal that helps in many problems solutions.