Try to stick with a few simple rules to increase your chances of getting a good used car buy.
Research your used car purchase
First, create a list of all the things you need your used car to do (shuttle kids, go off-road, have good gas mileage, be absolutely reliable, maintain good re-sale value, be easy to park). Second, make a separate list of all the things you want or would like in your used car (body style, colors, luxury options). Now, consider the two lists trading off wants and needs. Your need for a commuter car may conflict with your desire for an SUV. If you prioritize between the two lists, you should end up with a set of qualities that can be used to narrow the used car models you are considering.
To better understand the qualities of the used cars you may want to consider, use the internet. Sites such as Kelley Blue Book, Edmunds and Car & Driver provide detailed specifications, reviews and comparison tools. Don't leave out the manufacturer and dealer sites. They can be an important source of specifics on new and used cars alike. Who knows, you may find promotions and incentives lowering your cost.
Find out the value of the used car you've chosen
Start with one of the valuation services such as Kelley Blue Book, Edmunds or NADA Guides. They contain easy-to-use tools to value the used car you are interested in. Keep in mind, the cost in your area may differ somewhat from the value you find on these services based on demand in your local market, whether you are buying from dealer or private party, what kind of shape the car is in, etc.
Don't stop there! Once you've identified the specific used car you are interested in check out the title and get a detailed vehicle history report. For both of these, you will need to know the Vehicle Identification Number (VIN), a 17-digit code usually located at the base of the dash and/or inside the drivers side door. Vehicle history reports are available for a fee from sites such as Carfax.com.
Walk-around and test drive the used car
Check for common problems during your inspection and test drive of the used car. On the "walk-around", look for significant modifications to the body or interior and for signs that the body has been repainted or repaired. Take a look under the hood. Does the block holding the engine show any faults or cracks? Take a look under the car, beneath the floor mats, etc. for any signs of floods (Hurricane Katrina damaged thousands of cars. One may have found its way to your neighborhood). Prior to the test drive, ensure all lights and signals work.
On the test drive, check out the alignment and steering at a variety of speeds. While alignment problems are common, they are often overlooked. Test the braking bringing the car to a complete stop several times from varying speeds. While there are too many things to watch for to list here, approach the test drive from the perspective that you will get in / out of the car hundreds of times. If there is sluggishness when starting, vibration when driving, a pull when breaking, it will be your problem to solve after you've bought the automobile.
Ask questions. Lots of questions
To buy a used car, you need information. Get it and improve your negotiating position at the same time by asking questions. The seller or used car dealer may not be able to answer all of your questions and not having an answer does not mean the used car is a lemon. But not having many answers or not having basic answers may be a sign of trouble. (Read more about working with used car dealers.) Consider asking:
- How many owners has the used car had?
- What is wrong with the car?
- Has the car been in any accidents or had any body work?
- What reconditioning work has been performed on the used car?
- Do you have the service records?
- Is the used car still under warranty?
- Have you had a mechanic look at the car?
- How long has the used car been on the market?
Focus on the deal; not the car
First, keep in mind that price is only one component of value. While no one wants to overpay, the lowest price is often the worst value. So, per the sections on researching your purchase and asking questions, go into negotiations with a clear understanding of value. That will make the usually stressful price negotiations easier as you will be more confident of the true value of the vehicle.
Dealers make money on both the used car and the used car financing. While there are many moving parts, focus in on the price of the used car you are buying, the value of used car you are trading in, the amount you can put down, and the amount you can pay monthly. Tradeoffs between these four dimensions are fundamental used car buying. Once you have these basic components down, then consider aftermarket products such as warranties, accessories, options, etc. Read more about used car loans.
When negotiating with the dealer, stick to your budget and avoid confusion by focusing on the overall used car price before moving to the monthly payment. Otherwise, in an effort to meet your monthly payment needs, the dealer may need to extend the loan term increasing your total cost. In general, if you move methodically through the components the tradeoffs become clearer and are less likely to confuse. One alternative is to start with the price, then move to use car loan terms, then move to the value of your trade-in. If the interplay of vehicle price, finance terms and aftermarket products becomes confusing, take a time out. If necessary, return later after you've worked through the math. While you run some risk of losing the particular vehicle, you may avoid a costly mistake.
Disclosure: We developed the content for SmartCarCredit™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.
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