It's a Money Thing®
Buying a Used Car
If you take your time and do your homework, buying a used car can be rewarding and cost-effective. Used cars typically come with a lower cost and wider selection. Plus, you avoid the depreciation that happens when you buy a new car (new cars will lose about 30% of their original value in the first two years).
So, how do you get a good deal on a used car? Follow this simple strategy: Research, Evaluate, Negotiate.
Do Your Research:
- Set a realistic price range, including insurance and repairs.
- Figure out what kind of car you need. Explore your options: compact, sedan, SUV, van, or truck.
- Get pre-approved for financing. If you don't have the cash to buy your vehicle outright, you'll need to get an auto loan. Being pre-approved will let you know how much you can spend and equip you with negotiating power.
- Find your vehicle. Visit the manufacturers' websites to find makes/models you like. Then, look at consumer reports and reviews of the vehicle you're interested in.
- Decide who you will buy your car from, a dealer or private seller. When going through a private seller, you have the benefits of lower prices, less intimidating negotiations, and no unnecessary costs. However, dealerships offer warranties, extra services, and trade-ins.
Evaluate Your Vehicle:
- Inspect the interior and exterior. Look for offset doors and fenders, cracks and difference in paint color, as this may indicate body damage. Inspect the interior for wear and tear and water damage.
- Look underneath the car for rust. A used car with a rusted frame isn't structurally sound.
- Inspect the tires and wheels. Look for even tire wear. Uneven wear could mean that the wheels or suspension are out of alignment.
- Look at the engine. Rounded or stripped nuts and bolt heads may indicate shoddy repair work.
- Take the vehicle for a test drive. Drive the vehicle cold, as it will reveal more about the vehicle. Plan your route, vary the terrain, check the controls, brakes, gears, and alignment.
- Get a comprehensive vehicle history report.
Negotiate Your Cost:
You've found a car you're happy with and now it's time to negotiate.
- Research the price. Find out what the going price is in your area for the type of car you want. Check out classified ads in the paper or online to get an idea.
- Make an offer. Offer 15% below the asking price. Tell the salesperson that you know there's about 20% gross margin in the price and that you want him or her to make a profit.
- Turn down add-ons. If you're buying a used car from a dealer and they try to sell you add-ons, just say no. You can likely find a cheaper source elsewhere.
- Be prepared to walk away. In any negotiation, be flexible in your choice and don't get too attached to one car.
