Used Car Buying Guide: What You Need to Know
Nearly everyone will need to buy a car at some point in their lives. Most car buyers will not have the ability to buy a brand new car, and so there’s a thriving used car market. However, it can be intimidating to buy a used car. There are a number of different factors that buyers need to keep track of. That’s why we’ve put together this helpful guide to help you get the best deal on a used car.
The Best Place to Buy Used Cars
Buying a Used Car from a Dealer
Dealers are the most common choice for used car sales. A dealer is a company that sells cars as its primary business. Many dealers get used cars as a trade in when someone buys a car from them. As a result, dealers usually have a wide selection of used cars.
Greater protection under the law
Greater opportunity for warranties
Car is more likely to have routine maintenance done
Car is more likely to have been inspected
More financing options
Ability to trade in old car toward cost of your new used car
Established trust and credibility
Dealer handles title transfer and other bureaucratic processes
More likely to have vehicle history
As you can see, buying from a dealer gives you all of the benefits that you get from using any professional business. The dealership has a closer scrutiny from regulators, and thus has to meet higher standards for the cars they sell than private sellers do. However, there can also be some drawbacks, namely:
May not be as motivated as private seller
Less ability to haggle or negotiate
May not have the type of car you’re looking for
Dealers are not as flexible as private buyers, and so the disadvantages of using a dealership all center around that lack of flexibility. Furthermore, the things that make a dealership attractive, such as tighter regulation, also have their own tradeoffs, like more paperwork.
Buying a Used Car from a Private Seller
Easier to negotiate or haggle
Prices are usually lower
More payment options
Private sellers don’t have the overhead or organization that dealerships do, which can work to the customer’s advantage. Moreover, because buying from a private seller is a private transaction, customers can pay through any method the seller agrees. This means customers could pay with Paypal, bitcoin, or even trade labor for the car. No matter how flexible a dealership is, it is very unlikely they will let you work off the cost of your used car.
Private sellers do have their fair share of disadvantages though, including:
Less legal protection
No recourse through business organizations like the Better Business Bureau
Harder to verify car condition
Can’t trade in toward payment
Harder to get vehicle information
Private used car sellers don’t have the same protections that dealerships have. As a result, there are fewer options for buyers to redress issues. Moreover, buying a used car from a private individual can be unsafe, especially if the transaction involves a large amount of cash.
Things to Check When Buying a Used Car
One of the first things that any savvy used car buy should consider is the vehicle’s history. Cars that have been in accidents are more likely to have underlying issues that haven’t been detected yet. Additionally, cars that have had major repair work or major components replaced are also more likely to run into problems down the road. Understanding what, if any, accidents a car has been in, and the extent of the damages, is a good indication for what you can expect from the car.
Another indicator of the car is the ownership history. Cars with more owners are more likely to encounter problems, as people are more likely to trade in or sell their car when they feel a major repair bill coming up. Cars with fewer previous owners are more likely to be taken care of and well maintained, decreasing the risk that they’ll need major repair work.
Another important factor to consider when buying a used car is the condition of the vehicle. Buyers do not need to be certified mechanics to spot many problems. For example, what is the condition of the interior? Is it clean and well cared for? Full of rips, tears, and stains? Are there handles, buttons, or levers broken? Not only will these observations give you a better idea of the value of the car, but they will also provide insight into the car itself. A used car with a ripped and stained interior is less likely to have been maintained mechanically, and thus should be a red flag.
Another thing that buyers can evaluate is the bodywork. You should be sure to check the condition of the paint, looking for dents, breaks, and scratches. Buyers can also look for signs of rust. If a car was kept in an environment that allowed rust to form in one place, than it can form in other places as well. Buyers should be especially aware of rush when buying cars from locations that get regular snowfall. The grit and salt used to keep roads safe from snow and ice can also play havoc with bodywork and mechanics.
Finally, buyers should do a visual inspection of the engine. Once again, one need not be a mechanic to make basic observations. Buyers should check for rust spots, leaks, and general condition. They should look at the belts to see how worn down they are and to check that they are properly aligned. Engines that have rust spots, leaks, or worn belts are more likely to need service in the future.
Once users have checked the interior, bodywork, and engine of a used car and found them suitable, the next step is to take the car for a test drive.
Test Drive Checklist
Visibility in front of, behind, and through
mirrors of the car
Radio/CD/SAT/Audio Input + speakers
Noise from loose or missing seals
Engine noise – it should be regular and even. Sounds that are out of rhythm or seem out of place are a red flag
Paying for a Used Car
Once you’ve found a car that suits your needs and have ensured it is structurally and mechanically sound, it is time to pay for your car. While you can buy a car outright with cash, a check, cashier’s check, money order, or other method, most people will need financing. Getting a loan for a used car is a bit of a mysterious process, so here’s some things you should know:
Used car loans most often come from banks, though some dealerships will also offer financing. Most banks will allow you to pre-qualify before you start shopping for a used car. This will give you a better idea of how much of a loan you can get, so you can narrow your price range ahead of time.
Interest rates for used car loans are usually lower the newer the car is. This makes sense, as the newer the car the more value the bank can get for it should you default, therefore newer cars are a lower risk to bank. Your interest rate will be based on your credit score, and your monthly payments will be determined by the total cost of your loan. One of the best way to get your monthly payments lower is with a down payment.
The Down Payment
A down payment is how much money you pay toward the car upfront. Part of your down payment can include the value of any trade in should you use a dealership. Down payments lower the overall amount of money you will need to borrow for the car, and so make your monthly payments lower. Depending on the interest rate you are offered, it may be better to make as large of a down payment as possible to reduce the monthly bill.
Everyone who drives understands that they need car insurance. However, some people may not consider how their insurance interacts with a car loan. If you need to finance your car then it is likely your lender will require you to take out a comprehensive coverage insurance policy, which will be more than the state minimum insurance in most cases. This can add to your insurance if you previously only carried the minimum, but does protect you in case the worst happens. Having comprehensive insurance means that if your car is totaled you won’t have payments for a vehicle you no longer own or use.
Advantages of Warranties
Reduced cost of routine maintenance
Reduced cost of major repairs
Protection from unknown mechanical issues
Indication of vehicle quality
Disadvantages of Warranties
Cost more money, which could mean a bigger loan
May not be used
May not cover issues that come up
Issues may not justify cost