When it comes to buying a car, if your goal is to get the biggest bang for your buck, purchasing a used car rather than buying a new one will save you money. There’s no denying the good feeling you have when you go car shopping and find the same car model used as new, but pay a lower price for it. That’s a good of a reason as any to buy a used car, but there are other cost-saving reasons to buy used. With a little bit of homework before deciding on a used car to buy, here are 9 tips for buying a used car and some of the benefits of doing so.
Loss of equity is limited on used cars.
After a few years, the depreciation will flatten out on the car. In this day and age, it is possible to buy a car, drive it for several years, and sell it without losing that much equity. On the other hand, many financial advisers suggest buying a car older than two years and simply driving it until it can no longer drive is really the most cost-effective way to own a car.
Lower car insurance premiums are a plus.
The cost of car insurance relates to the value of the car. Because older cars are less valuable than new ones, the cost of insurance will be lower, which in turn, saves you money.
Buying used cars from a dealer rather than a private seller can be beneficial.
Financing is one reason. When it comes to private sellers, banks won’t finance older used cars with high miles. There are no guarantees on the car if it turns out there are serious mechanical issues, leaving the bank at risk with a worthless car if the borrower walks away from the loan in frustration.
A good reputation is another reason to buy from a dealer.
These days used cars come with warranties. No dealer is going to intentionally sell a flawed car and risk losing a hard-earned reputation for quality customer service. Most dealers will go out of their way to solve a car’s mechanical problems. A private seller doesn’t share the same concerns as a dealer. Once the car is sold, it is sold as-is.
Work on your credit.
Getting approved for a car loan at low interest has a great deal to do with your credit history. However, bad or no credit may limit the choices of what used car you can buy, but it will not prevent you from buying a used car. One of the early steps to take is to work on your credit before car shopping. Check your credit report in advance—it’s free to do so once a year. Start to clean your credit before applying for a loan, to improve the terms of your loan. The advance time allows you to pay off past-due accounts, dispute any credit report errors, and making sure that positive information gets added to your credit report if it’s missing. At the same time, stay current on your monthly bills and avoid late payments.
Save money to make a bigger down payment.
Putting more money upfront will save you money over the long term. It will increase your lending power, and offset taxes, fees, and higher interest rates. Plus, it will give you a wider selection of cars to choose from.
Spend what you have, not what you can!
There is a temptation to overestimate what you can afford just to get a little bit more car for the money. Stop! You need to know what you can afford to pay monthly, not only for the car but the car’s insurance. What you can afford is the amount of money presently left over after all the bills are paid. Also, even if you’re approved for a loan with larger payments, stick to your budget.
Keep your peace of mind by using consumer-friendly companies to be informed about your purchase. Use Kelly Blue Book to get a fair price for the car. Avoid any potential hidden problems by running vehicle history reports using services like Carfax or AutoCheck. These reports check the VIN (the Vehicle Identification Number) and will produce a wealth of information about the car, verify mileage, and even provide any record of accidents.
Used dealerships offer perks.
Buying a used car from a dealership rather than buying one privately means the car is backed by the dealership. The vehicle has gone through a series of mechanical inspections, has been reconditioned, and is offered for sale with additional warranties. There are none of the unknowns that are associated with buying a car from a private seller.
Like our tips for buying a used car? Contact us at Auto Action today to learn more!