Matching Your Vehicle and Your Budget
The best way is to start with your budget. By looking around the web, you'll know what inventory is available. You’ll also have an idea of what type of budget you’ll need to buy a car.If the type of car you want has a higher average cost than your budget allows, take a realistic view of what you can pay. Don’t look for a used Lexus SUV when your budget is in the Ford SUV range, no matter how great a deal that Lexus is.
Once you’re comfortable with both the type and average cost of a vehicle, decide how you will pay for your purchase.
Car Loan or Cash?
There are two ways to buy a used car. You can either pay cash or take out a loan.If you are paying cash, be careful not to exhaust your savings in one fell swoop. You'll still need a nest egg for emergencies or if your used car has a problem down the road. Also, remember to put aside funds for taxes, fees, registration and title.
If You’re Borrowing: Caveats
Some used vehicles are sold above book price, particularly in today’s inflated market. Be aware that if the car’s price is inflated, it could cause you to be upside down on your car loan: in other words, the car’s worth could be less than what you borrowed.Plus, if you buy a vehicle with an inflated value, and it’s totaled or stolen, there may be a gap in your insurance coverage. Auto insurance companies settle claims based on actual cash value. That means that if your car depreciates, you won’t be reimbursed for what the selling price was. Instead, you'll be paid for the depreciated value. That could be a big difference, leaving you unable to easily purchase a replacement.
Finding the Car You Want
There are various ways to find a used vehicle that meets your needs and budget. Private sellers list cars online, and dealerships sell the used cars they take as trade-ins. While going from dealership to dealership—or from website to website—is one option, using a central vehicle listing site like Auto Trader will save you time.Evaluating a Used Vehicle
Once you find the vehicle you’re interested in, several factors should be examined. Check the year, make and model. Look at what options it has. Does it have a navigation system or a backup camera? These add to the cost but also add to the enjoyment. Decide what options are important.Mileage is a big factor. How much mileage does the car have? Keep in mind that more miles a car has, the more likely it is that the car will need major repairs, sooner rather than later.
If you are purchasing the vehicle from a private seller, have a mechanic drive the car and evaluate the engine. You'll also want to examine the body. Surface rust could indicate deeper problems.
Research the Vehicle’s History
Is the title clean? If you’re buying from a private seller, does the person truly own the vehicle? Beware of stolen cars. It’s always a good idea to run the vehicle identification number (VIN) through the National Insurance Crime Bureau (NICB) VINCheck. This free service could save you a great deal of trouble.Check to see if the title has “salvage” on it. A salvage vehicle may be a bargain—and it may look great—but it could have hidden structural issues from an accident.
A vehicle history report includes major accidents, airbag deployment, and red flags such as “not actual mileage” or “true mileage unknown.” While this could mean that someone simply typed in incorrect mileage at some point, it could also mean that the odometer has been rolled back.
Negotiate a Price
With the current landscape, this one might be tough, but it can’t hurt to haggle.If you’re buying a car from a dealership, salespeople will often focus on the monthly payment. Don’t negotiate for a lower monthly payment. Instead, the goal is to negotiate the total cost of the vehicle. The monthly payment may seem low, but it would have been even lower if you had negotiated the vehicles’ overall price.
Write down the prices that are being thrown around so you don’t get confused. And ask about fees and taxes, as these can inflate the price.