Things You Need to Know Before Buying a Used Car in the USA
What should one buy? A new car or a used car? That is the most crucial question. It’s an age-old dilemma that every car buyer has to face. Unfortunately, neither answer is right nor wrong. It all depends on what you want, what your needs are, your budget, and appetite for risk. Let’s do a short comparison of the costs and benefits of buying both new and pre-owned vehicles. Then you can make the right decision when you finally enter your car-buying adventure.
Advantages of Used Cars
The biggest advantage of buying used cars is that the primary owner will have absorbed the comparatively high-cost depreciation that occurs in the first few years of ownership. Their pain is our gain, however, as it will facilitate us to save thousands or tens of thousands of dollars on the cost of our car, we can make our budget much less for our vehicle purchase or make a new-car-sized budget and end up with buying a bigger or fancier model than we would be able to at the first place.
Listed below are the prominent reasons people relate to buying used cars:
• Used cars cost less than brand new cars
• Used cars have lower insurance payment rate
• New cars depreciate fastest in the first two years of ownership. So for a used car, you will have better value in comparison with the price.
• Cars are built better than ever. So these days there is less risk than before in buying used.
It can be a tricky affair to buy a used car to perform because you can never find any two cars as the same. Every car has a distinctive history which can either result in your favor or becomes your worst nightmare. In addition to the regular common steps required to find a profitable deal on a brand new car, there are additional steps when buying a used vehicle, we must be aware of.
We need to be on our watch when we are buying a used car. We can easily get stuck with a lemon or rebuilt car if we keep our guards down. When you see a shaking wreck on the road you may not realize that many of those shabby cars end up being repaired, rebuilt and sold on the used car marked.
There is no need to be stressed as there are many benefits buying used cars. Most importantly we will get more value for our dollar since someone else has taken the huge hit on the depreciation on the first few years. This initial depreciation is the biggest source of money lost when buying a new car. If you follow our used car buying guide you will be able to stay safe and avoid the most common scams and pitfalls.
In This Article:
• Set Your Budget
• Make a Targeted List of Options
• Find the Right Used Car for You
• Investigating the Car’s History
• Consider Certified Pre-owned Vehicles
• Financing a Used Car
• Locate Used Cars
• Check the Vehicle History
• Contact the Seller
• Test Drive and Inspection
• Negotiating Like a Pro
• Closing the Deal
• Get an Extended Warranty to Protect Your Purchase
• Bonus Tips
1. Decide Your Budget
Before you even start hitting the car lots, you first need to decide your budget you are willing to spend on your car. While you set your budget, however, keep in mind that there are two different options for funding your used car. You can either pay in cash from your savings or take out a loan.
If you prefer to go the cash route, keep in mind to keep aside money for insurance registration, insurance, and any repairs that may need in the near future. For those who prefer to go the loan route, make sure to get it preapproved on pen and paper before you head the lot. This will simplify the buying process for you. This will also rest you in a privileged position when you start negotiating at the car dealership or with the owners.
If you are wondering about the amount you may need for your loan, you can always use an auto loan calculator to help you figure it out. In general, though, you should go for putting down around 10 percent and then finance the vehicle for the period of next three years.
2. Craft a Targeted List of Options
Showing up to the car lot without having any idea what kind of car you want will leave you dumbfounded and confused. Get yourself ready for the car lot by making a targeted list of options of cars. It is well accepted that Honda Accords and Toyota Camrys make an excellent choice for used cars, but these options may be outside your budget. Do not hesitate to consider other quality brands as well, such as the Kia Optima or Ford Fusion.
Try to come up with a list of 3-5 cars that suit your needs and also land within your budget.
3. Find the Right Used Car for You
This step may seem evident but you should not just go out to the used car lot and start the shopping process. First, you should do some in depth research on the online used car classifieds. You can also go to the local newspaper websites to find the local automotive classifieds to view ads for cars that are close to your List. However, to get the largest selection view it is recommended that you use the larger websites with thousands of entries. There you will be able to choose from a large variety within in your budget. Also you will get a better idea which key points are adding in the price of the car.
4. Investigating the Car’s History
This is by far the most important tip for you to follow when buying a used car. Whatever you do, you should never buy a car without verifying what you are buying by running a history report at first. There are many people who ended up buying a used car and later find out it had been wrecked beyond recovery. There are body shops Who are professionals in making a car look good and sound. It can happen to anyone. If the VIN is not mentioned in the ad and the seller refuses to give it to you then forget it and move on to the next car. They are most likely trying to keep something hidden from you. Since you are generally buying a used car “As Is,” you will want to know about any problems it had before you finally make the purchase.
Remember, as we mentioned before, every used car has a unique story. When going for shopping used cars, make sure you have picked a model that is well known for its dependability and durability. You can find previous maintenance reports from the owners or from either JD Power or Consumer Reports.
Also, never forget to take into account the final cost of ownership. While a car can be lucratively cheap to buy upfront, but its maintenance cost, insurance fees, and repairs could result in costing you much more in the long run. You can find estimates for the total costs from websites like Consumer Reports’ Cost of Vehicle Ownership or Kelley Blue Book’s Five-Year Cost.
One of the most crucial to steps is to make sure to go for a used car history report in addition to having a certified mechanic inspect the car down the hood. Why should you spend your hard earned money on a mechanic? It Is always better to pay for a mechanic now than to spend thousands on repairing costs in future.
5. Consider Certified Pre-owned Vehicles
One of the most optimum tips for buying a used car is that people usually do not remember To look for a car that is certified pre-owned (CPO). This is a very good idea if you are planning to invest in a car that is less than five years old.
A CPO vehicle is a vehicle that has a long-term warranty which is not only backed by the dealers but also by the car manufacturer as well. Buying a CPO vehicle can positively save you a lot of money in future if any issue rise up that is covered by the warranty.
6. Financing a Used Car
Financing a car can be handled differently based on whether you are making the purchase from a dealership or from a private party. Either way, most banks will most likely refuse to give you a loan for a car older than 4 or 5 years. In common, you have to pay at least 2% higher APR on a used car loan than you would on a new car loan. But you can overcome this by using an online lender that specializes in financing used cars. You should have your credit score over 680 because that way you will be considered as a prime borrower and will get the lowest possible APR. Just in case if your credit score is really low you might want to try and repair it before you buy a car.
7. Locate Used Cars
There are many websites those list used cars for sale, so you can easily find a good amount of options available. To help you getting started, here are some used car listing websites you may find useful to check out:
Great for finding low-end used cars in your area. However, be extra cautious of scammers.
This is a site where sellers pay to list their cars. Therefore, it’s better at filtering out scammers. Here you will find a good number of mid-end to high-end vehicles.
This is an aggregator site that pulls together used car listings in your area.
This site offers no-haggle pricing as well as an extremely large number of options in used cars.
8. Check the Vehicle History
Once you are done with your research and you have finally set your eyes on a certain car, do not get too excited just yet. One of the most significant things to remember when it comes to the tips for buying a used car is to check the vehicle history report. Unless you are buying from a trusted friend or relative, this is a must-do for all. On the vehicle history report, you should check to see if:
The car has a clean title
Any serious accidents that have been reported to the insurance company
The odometer has been spun back (shady car lots tend to apply it)
How many times the vehicle changed hands
Required maintenance was done on the elapsed time
9. Contact the Seller
If there is not any red flags spotted from the vehicle history report, it is time to contact the seller. Here are some questions you may need to ask them:
• Are you the first owner of the car?
• Do you have the service records available?
• Do you have a clear title?
• What did you do to set the asking price?
• Can I get the car inspected by a mechanic?
• Can I test drive the car? If yes, when?
• Is there anything you had not included in the ad that I should know about?
10. Test Drive and Inspection
Even though you’re not a car expert, but you can still do a quite good initial inspection on your own by giving the car a test drive. Here are a few things to check during your test drive:
• Can you get in and out of the car easily?
• Does the check engine light turn on?
• Does the air conditioning function properly?
• Is the seat a comfortable fit?
• Do you have good visibility from the rear-view and side mirrors?
• Are the brakes making any funny noises?
After you have done your initial inspection, it’s also a good idea to have the vehicle inspected by an actual mechanic. A pre-purchased vehicle will cost you around $100, a great investment that can alert you to any potential issues for future.
11. Negotiating Like a Pro
Among all the steps to buying a used car, the one-on-one negotiation with the seller is the most intimidating! You need to use all of the available information to your advantage to pull the price down while the seller tries to keep the price up. Before you step into the negotiation, invest the time to do all of the research we recommend.
Negotiation for your used car does not have to be a monotonous experience. Listed below are some points you may keep in mind while negotiating:
• Decide your max price ahead of time
• Make an opening offer that is lower than this price
• Try to arrive at a price that sounds good to you and is near the average price paid
• Try to keep your offered price close while negotiating
• Remember, sellers don’t like negotiating either, so be kind!
12. Closing the Deal
After your price negotiation is done and the price has been finalized, it is time initiate the transaction. We all know that such transaction should never be done in cash because if something goes wrong you may face trouble getting your money back. Besides, carrying around thousands of cash is not entirely safe. You can choose to pay with a credit card, if possible or a check of some type (personal, official check, etc.). With a credit card or check you will have a paper trail and at least have some recourse available if anything goes wrong.
One of the most difficult things is to deal with when completing the purchase of a used car when the seller still needs to pay money for it to a money lender. This situation most likely to occur when you are buying from an individual seller. The lender would be holding the title and you have to make settlements with them along with the seller to have the note paid off and the title finally transferred to you.
13. Get an Extended Warranty to Protect Your Purchase
When you buy a used car which is not covered by the manufactures warranty, you are vulnerable to the risk of expensive repairs which may needed in future. That’s why we recommend that you opt in to get a prolonged warranty any time you are in such situation. If you purchase a 3 or 4 years old used car, most chances are that the manufacturer’s warranty would have expired by then and you will be solely responsible for the repair and other related costs. Stay alert not to be fooled by high mileage “powertrain” warranties as these usually do not cover most common problems we face with an old car. Make sure to do your research to conclude what is truly included in the manufacturer’s warranty and what is not.
If you buy your car from a individual private seller it will always be “As Is”. In such situation, you really do not have much choice but to buy an extended warranty otherwise you are taking too much risk on your future repairing related costs.
Buying Used Cars from Rental Companies
There are a few things to take into consideration when you think about buying a former rental car. The rental companies do constantly follow the recommended maintenance procedure so the key car components, like the engine, are most likely to be in better condition than cars owned privately by individual people. Externally you are more likely to find more minor scrapes and dings, mostly around the trunk since people do not seem to be able to be cautious or careful while lifting their luggage. Also, the rental companies mostly prefer to take cars out of their service after a year or two continuous use. So you will end up with a relatively new car which has been preferably well maintained. Since they do not have extra time to engage in negotiation and mostly do not want to deal with lengthy negotiating, they will generally have “no haggle” pricing. In case if you do not want to engage in any negotiation process but want a purchase a good used car at a decent price, this option is the suitable one for you.
Used Car Myth: “A car sold by a big dealer has got to be ok!”
Regardless of where you buy, you need to execute with your due attention. It has seen that accredited pre-owned luxury cars have been earlier broken or have other faults. A totaled car was traded as “certified” by a Mercedes-Benz dealer. The dealers prefer to promote things like 175 point inspections but in actuality, these do not bear much value and they actually do not do much to recondition the cars rather than standard detailing. Please do the decent background check on any used car and if possible get a certified report.
Do Not Count on a Used Car Lemon Law!
Lemon laws are usually written to preserve new car buyers gains. Most states do not have lemon laws for used or second-hand cars. Since these laws vary from state to state, review the website for your state’s Attorney General to see what might be applicable to your state.
At the end of the day, it is your final justification that can make you a winner. Buying a used car certainly has its own risks but it also has its own perks. If you follow above mentioned tips, you will certainly be able to avoid scammers and also avoid hidden risks. By investing a little time in researching the car and its history can help you to save thousands of dollars. So if you have the time and energy, follow our tips and find yourself a winning deal on used car. Good luck!!!