Seven Steps For Buying A Used Car
According to the 2015 Used Vehicle Market Report, there were 38.3 million used-vehicle sales industrywide, the best tally in eight years. Between private-party and dealership sales, nearly 40 million used cars change hands every single year.
The average vehicle will likely have three owners in its lifetime. In general, there are many benefits to buying a used car which include:
- Lower price tags due to depreciation
- Avoiding the state sales tax often applied to new cars
- Getting all the newest features of a new car for less money
- Avoiding paying extra fees that come with buying a new vehicle
When it comes to buying a used car or pre-owned car, it’s important to do your homework there too. Whether you’re buying from dealers of pre-owned vehicles at a used car dealership or dealing with a private seller, here are some steps to take when trying to find the right pre-owned vehicle.
- Choose the right vehicle: presumably this is a car or truck you plan on driving for a while, so it important to pick a make and model you’re comfortable with.
- Set a budget: figure out how much you’re willing to spend for a vehicle and find something that fits your needs and meets your budget. In general, the most frequently searched price range for a used vehicle is under $5,000.
- Go for a test drive: again, it’s going to be your car, so take it for a spin and see how it handles. An estimated 20 percent of used car buyers don’t take the opportunity to test drive a car before buying it. The last thing you need is for a previously unknown issue to pop up because you didn’t take the time to test drive a vehicle.
- Price cars: Pricing guides such as NADA Guides and Kelley Blue Book can give you an idea of what the car you’re looking for is worth and how much you might expect to pay for it.
- Locate good cars: You can go online and peruse through sites like CarFax and AutoTrader to find your perfect auto. You can also do it the old-fashioned way and visit used car lots. Dealers of pre-owned vehicles should be able to give you a good idea of what a particular dealership has in stock and whether or not that dealership has what you’re looking for.
- Know a vehicle’s history: Use a vehicle’s VIN number to get a rundown on the history of the car and to make sure there’s nothing shady going on. Customers lose as much as $4 billion per year on odometer fraud, with the average rollback being 15,000 miles.
- Wrap it up: Once you’re done negotiating, make sure you’ve got all the proper paperwork taken care of and a payment plan set up. When it comes to financing, there are several ways to do it:
- Apply for a direct loan: Get a copy of your credit report and contact local banks and credit unions in your area. You can also try getting a loan from online lenders. Either way, get rates from multiple lenders to compare the rates you’re being offered. Once you’ve found a workable loan, fill out an application and try to negotiate with your lender.
- Go through the auto dealer: Virtually all auto dealerships offer the convenience of one-stop shopping through on-site financing offerings that assist customers in securing financing. Most dealerships work with at least 5-10 different banks or finance companies so that they offer competitive deals to customers. Offering a down payment can help lower your monthly payment and can potentially give you a boost when negotiating with a dealer.
- Buy here, pay here: if your credit is less than stellar, you can do the buy here, pay here option. Before you go that route, know that some dealerships are willing to work with people who have bad credit. You can also have someone co-sign a loan for you, such as a relative. Buy here, pay here agreements allow you to pay in installments, but paying them on time is crucial.
Having a plan when you go to buy a used auto will make the whole process a lot easier and make negotiations with dealers of pre-owned vehicles a lot less stressful.