Getting a good deal on a used car takes more work and grind than buying a new vehicle. It involves a little more risk than buying a new car because you never know how the previous owner treated that vehicle. However, with some careful planning and by following the below steps, buying a used car would not be as complicated as it may look, and you can ensure you get the best possible deal when shopping around for a used vehicle.
Make a Budget
The first step in buying in a used car (or for that matter any other big purchase), establish the amount you are willing to spend or, if taking a loan, calculate your maximum monthly payment. Whether you plan to pay it all in one go, or take a pre-approved loan from a bank or credit union or use the in house financing option of a ‘Buy Here Pay Here’ dealer make sure you get the budget accordingly. A rule of thumb: If you’re taking out a loan to pay for your car, your monthly installment shouldn’t be more than 15% of your monthly income.
Know what you want before going on a search
Get an idea of what you want. Do you want a small car, an SUV, a truck? Two rows, three rows? Automatic, manual? Make a list of all the things you need your vehicle to do (haul kids, go off-road, get good gas mileage, be absolutely reliable, maintain good resale value, enjoyable ride) and also a list of all the things you admire in a vehicle (body style, colors, luxury options). And most importantly what best fits your budget.
Locate your Car
Once you know what your budget is and what you are looking for in a car you use the below options to locate that matches
Shop for Finance
There are several places to get used-car financing, and you should review most or all of these before deciding on which car loan is right for you. Some lenders have special programs for current customers, first-time car buyers, or buyers with bad credit or no credit.
Large National Banks: Banks offer a vast array of auto financing options and services but in many cases they would like to see previous auto history or a strong credit score.
Credit Unions: You’ll find credit unions ranging in size from tiny, one-person operations to massive operations rivalling the reach of national banks. In most cases credit unions want to build a relationship with their customers and a bit more lenient on approvals that larger banks. Credit unions are relationship lenders.
Auto Financing Companies: Similar to banks, except that lending money for automobiles is their focus. In most cases these companies charge higher interest rates than you credit unions and large national banks but the approval is easier. There are hundreds of auto finance companies throughout the US.
Car Dealerships: These are “buy here pay here” dealerships where you get your car and financing directly from the dealer also known as In House Financing. In many cases this would be the easiest option as the dealership has their own unique approval process. The interest is higher due to the fact the money being lent out is private capital. In house financing is a great option if you have no credit, bad credit, or have never had any previous auto experience. This type of financing could help you get back on track and heading in the right direction.
Verification – Test Drive- Independent Mechanical Inspection
These are crucial steps to ensure that the car you liked is actually as good as it looks and will help you avoid problems in the future.
Get Vehicle history report: Before you consider buying a used car, you’ll want to obtain and study its vehicle history report from a company like Carfax or AutoCheck. The report would provide you with information about Accidents or other damage, Title status, ownership history, Odometer reading, Service history, Sales information, registration, and inspection information. In many cases the vehicle history can be different on both sources.
Test Drive: Conduct a thorough test drive and check for Engine noise, Steering vibration, Brakes Dashboard Lights, Cockpit ergonomics, Seat Comfort. Pay close attention to your 6th sense.
Independent Mechanical Inspection: It is critical that you get the car checked out by an independent mechanic to ensure that it has no underlying mechanical issues. The cost of the inspection can be between $50 to $150 but is worth the investment. It’s better to be safe than sorry!
Negotiate the Price
Negotiating the right price for a used car takes finesse and preparation. Part of your preparation should include looking at what others are paying for similar cars. Internet would be your best friend here, a valuable tool you would want to make the most out of. You may have a better chance of saving yourself a few dollars if you negotiate the price of the vehicle, your interest rate, and your trade-in separately. Negotiate well to stay within a reasonable price range and try not to overextend yourself.
Seal the deal
One of the last steps before you can take your new-to-you car home, is signing the purchase paperwork. In the case of private sales, one of you will need to create a bill of sale that notes any special terms that are applied to the transaction including any repairs that were agreed upon. Dealers will usually have a stack of documents for you to sign, and you’ll want to read each of them before you put your signature to ensure there are no last-minute surprises. Also, do not forget to discuss about add-ons, warranties and insurance with the seller.
So that’s the basic outline. Once you have your car ensure that you maintain it properly to protect its value and lessen the depreciation that would occur. Good luck and Happy driving!