There are far more used cars sold every year than new cars, with some 40 million used cars sold annually, compared to around 14 million new cars, according to The Car Connection. While purchasing a used car can be a much smarter move financially, if done the wrong way, you could end up losing out big time, coming home with a lemon.
Whether you plan to buy from a private seller or a dealership, there are some essential things to consider when purchasing a used car.
Do Your Research Before Browsing
Your first step should be to know what you want in a car. Walking into a dealership and looking to see what’s there is an easy way to end up getting pressured into buying what you don’t need or really want. Write down a list of musts, such as an economic car that gets good gas mileage for a commute, or a larger vehicle that can transport your entire family. Research cars that fit your requirements and get an idea of what they’re worth. Look at classified ads, and prices from various dealerships to find out what you can expect to pay for the vehicle you want in your area.
Set a Budget
It’s important to know what you can afford before looking at used vehicles for sale. Set a price range for yourself, and don’t let the seller or any salesperson persuade you from going above it. In fact, it’s best not to share your price range at all, as you’ll have more negotiating power. Be sure to keep in mind that your budget shouldn’t just include the price of the car, but maintenance, fuel costs, inspections, repairs, etc.
If you’re short on cash, you may need to cut back in other areas. For example, instead of giving pricey gifts for birthdays, anniversaries, and so on, consider creating reward coupons for home, with suggestions of what they can be redeemed for depending on the recipient. For example, parents can give a coupon that allows their child to have a friend over for dinner, or a spouse might create a coupon for breakfast in bed for their partner.
While cash is always the best way to go to get the lowest price for a vehicle and avoid paying interest, if you need to finance the car, consider all of your options, not just what the dealership offers. For example, you may be able to get a much better rate on a loan through a credit union, or your own bank.
Private Seller or Dealership?
There are pros and cons to buying from a dealership and a private seller. Large, reputable dealers often include an extended warranty or other service programs, which means if you end up with a problem, it’s likely to be taken care of while providing more peace of mind. At the same time, any refurbishing the dealer must do, adds to the cost of the vehicle, not to mention sales commissions which can make the price a lot higher than if you were to purchase from a private party.
Unfortunately, when buying from an individual, you’ll be at a higher risk of getting a lemon. You’ll need to be sure the seller has the title or certificate of ownership to register it in your name. It’s also a good idea to get the vehicle inspected and to check its history by requesting a vehicle history report to find out if It’s been in a major accident.