When you think about buying the car of your dreams, you don’t usually think of used cars.
Most Americans spend a ton of money on brand new cars, but these depreciate in value as soon as you drive them off the lot. We think it’s crazy to go for a new car instead of buying a used car!
Here at The Savvy Couple, we are all building wealth, which means we’d rather you didn’t buy something that would lose value- especially one that will drop immediately.
So in this article, we will discuss how to buy a used car since you can save money and find plenty of cars for sale in good condition.
Let’s get started!
1. Make a Budget- And Stick With It!
Set your budget so that you don’t wind up going broke over a car!
If you create a budget and save money each month, it means you’re less likely to need financing when buying a car- or you can at least reduce your monthly payments and make things easier on yourself.
Stick to your budget when buying a used car and always make sure you know how much money you need after all the fees, taxes, price of the car, and down payment are calculated.
2. Research and Find Your Top Picks
Know exactly what kind of vehicles you want before shopping around in person. Places like Kelley Blue Book will give you background details and act as a guide.
This will make it much easier for you to focus on specific cars when shopping around so that you don’t waste your time looking at cars that don’t interest you.
Kelley Blue Book can also help narrow down details of what you want, from price range to safety features. And you can’t forget about their fair price indicator!
Know that there are many different types of used cars available including specialty vehicles, classic used cars and even sports cars.
As you move forward, build a list of three target car models to research in more detail. Then, research in detail to find a target car model and make your selection of the correct car model for you.
3. Check Out Affordable Financing
There are only two ways to buy a car: paying cash or taking out a loan.
Even with a loan, you’ll need some cash as a downpayment. We recommend putting about 10% down and financing your car for three years, that way you have reasonable payment plans.
But as always, be wary of payment plans and make sure to compare all the rates you can.
Here are some options to check out and find a payment plan that works for you.
Oftentimes, your local credit union will offer better car financing rates than other places. You can usually get a much lower interest rate on these cars and feel good about helping out the community as well.
For the same reasons as credit unions, you can usually get better car rates through community banks for used cars. However, you may find that these options are more limited in what they offer.
If you want to buy a used car, consider checking with one of the big national banks. You can usually get very good rates through these places and feel good about getting a loan from an established company. We recommend checking out Lend Key, Chase, Chime, or Discover.
If you want to buy a used car, consider checking out online banks. These are great because they usually offer lower car financing rates than other places and have multiple locations across the country.
You can get good interest rates on these cars and feel good knowing that your money is going to an established company instead of just any old used car dealer.
Finance (Lending) Companies
For the same reasons as community banks and credit unions, you can usually get much better rates with a finance company for used cars.
These places often have multiple locations across the country depending on where you are. Be sure to check what kind of car financing they offer before going in so that you know what kinds of options are available to you.
If you’ve decided on a dealership to buy a car from, then be sure to check their financing options for used cars.
But be careful of any car dealership monthly payment plans for your cars- the rates are the important part, even if it seems easier to finance with them! A bad rate will mess up your whole budget.
Many dealerships offer great rates and have tons of locations across the country. Just be sure to do your research before going in so that you know what kind of interest rate they will charge you and get ready to compare.
4. Pick Who/Where You’ll Buy From
Buying from a private seller is likely to be the cheapest option for buying a used car.
However, there are a few drawbacks.
First, it may be harder to obtain a loan for a private sale; no one really wants a monthly payment, but not everyone has a few grand laying around for a used car either.
In addition, you should know exactly what kind of condition the vehicle is in before committing to buy it.
You can ask the seller questions, but not everyone is informed about their car or really understands the condition it’s in.
A private seller won’t have as much information or a vehicle history report on a used car as a dealership does, but you can still look up Carfax details and do your own look-see to avoid having buyer’s remorse.
You can get great deals on private seller cars but be sure that they aren’t selling you a lemon or trying to pull one over on you.
Be sure to test drive the car and get a good feel for how it’s running. If you know a mechanic or have a friend of a friend, you can have them check out the car from a private party to play it safe.
Independent Used Car Dealers
Used car dealerships that are independently owned will have the same cars you would find at a big dealership and still offers vehicle history reports for the cars they have.
Even though these places are often smaller in size, they can still make you an offer for your trade-in and give you great financing options.
You just want to do some research before going into one of these used car dealerships so that you know what kind of cars they have and what kind of deals are available to you.
These are basically the same as independent car dealerships except that they have a lot more locations around.
The nice thing about these places is that they will usually offer you really good financial options if you need them so that you can afford the used car of your dreams. Just be sure to check out what kind of cars they have available before committing to buy from them.
Franchised New Car Dealers
If you want to buy a used car, then consider checking out new car dealerships. Many of these places will sell used cars as well.
These used car dealers usually have a lot of options available to you and can be one of the best places to buy a used car for your needs. Just be sure that you do some research into what kind of options they offer on their used cars before committing to buy from them.
This way you know if they can actually help you or if they’ll try to sell you a loan that isn’t in your best interest.
Buying from the manufacturer can be good too because they are selling vehicles just like the dealerships and are often very competitive on their price. They may also offer excellent financing options depending on who is running the finance area of the shop.
5. Don’t Forget About Certified Pre-Owned Options
One great option that you can look into is getting a Certified Pre-Owned car. This means they will have gone through an inspection process before being sold to you.
‘Certified’ means that the car is in a certified preowned program. CPO cars are very popular and include an extended factory warranty.
Private party sellers are pretty relaxed about this. If you liked driving the car, and it seems to be in good condition, you should take it to a mechanic.
You really don’t need to take a CPO car to your own mechanic, but some dealers might give you pushback if you have any doubt about the car’s condition.
You should also check the warranty on the vehicle before buying it. Many of these vehicles come with at least one year worth of free coverage if not more, which is a great deal for your money.
Remember: When buying a used car, you must always check its history and try to find any damage around the vehicle or anything like that before agreeing to buy it.
Many people don’t do their research on these cars and end up spending way more than they should because of this.
6. Go For Some Test Drives
Once you’ve narrowed down your choices, go for some test drives. From a quick online search, you’ll be able to find which used car lots in your area carry the best cars for your needs.
But there is no way to know the condition of a car without taking it for a test drive and getting a feel for it. You may like it online but decide once you’re in it that it’s too uncomfortable or too large for your needs.
The test drive is also the time to inspect the car to find issues. You should always see cars in person to check for rust or any kind of damage!
When you test drive the car and find out you can’t turn the wheel comfortably then you may not know if the alignment on the car has been messed up or if you have an issue with the tires that aren’t letting it spin properly.
If something is worn down and weak it will usually only show itself during the test drive when moving at higher speeds or in more stressful conditions, but don’t go crazy speed racer.
7. Narrow Down To One
Once you’ve decided on the model and year, you’ll need to look in your area for dealerships selling them or for a private party seller.
You’ll want to look through a few of them before deciding where you are going to buy from, as some may give you better deals than others or different models may be available.
8. Get A Vehicle History Report
You should always make sure that you have a vehicle history report on your car before agreeing to buy it.
This will show you whether there was any major damage or issues in the car when it was purchased, and what has happened since then.
You can get this for free online through many different websites, so there’s no reason not to do this before buying the vehicle. If you don’t, you might end up spending way more than you should because of damage that’s already there.
Title Status, Ownership, & Registration
You should also check the history report on the car, which you can do before buying it.
This will tell you about all of its previous owners and if any major accidents occurred that might cause problems for you in the future.
Accidents involving other cars can cause a lot of damage that might have to be fixed soon, which is something that you’ll want to avoid.
Fire, Flood, or Other Damage
This can happen if the car was in a flood and moisture got into certain components, or if it caught fire for some reason.
These kinds of things are quite common and will bring down the value of the car significantly.
Maintenance & Service History
You should also check to see if the car has ever been in for repair of any kind and what was done.
Additionally, you’ll want to know what kind of maintenance it received each year with which brand of oil or other lubricants were used. The reason for this is that some brands are better than others, especially with older cars.
If it was never serviced, then you should have them do a full checkup before you buy it and make sure that all components are in proper working order.
The last thing you’ll want is to drive home with your engine light on or be stranded on the side of the road because something gave out without warning.
9. Get A Car Inspection
Used cars can be a great way to save money and get a new car for less than you would otherwise pay, but they require more responsibility on the part of the buyer.
If you are looking at buying from a dealership, then they will most likely have it checked out beforehand to make sure there aren’t any major issues with it.
10. Negotiate for A Better Price
Now, if you are going to go through an individual seller instead, then you can expect to bargain with them a bit more.
If the vehicle is in good condition and they are asking for more than it’s worth, then try and talk them down by a few hundred dollars.
11. Look Into The Fixings
You should also check to see if they will still be in effect after you buy the car. While it’s unlikely that anything is wrong with it, you might as well want to know these things before agreeing to a purchase price.
12. Finish the Paperwork and Drive It Home
If everything checks out and you feel comfortable with the price, then you should go ahead and finish the deal. They’ll probably have all the paperwork ready for you to sign before you leave.
At this point, you can now take it home and use it as your own personal vehicle!
Making the Most Out of Your Used Car
If you are looking to use the car for commuting back and forth to work, then you’ll probably want to keep a good amount of gas in it at all times.
This is an important thing to consider as well because if you find that you’re going through more than normal, then something might be wrong with the engine or other components.
For long road trips, then you can certainly stick to a budget and try not to go over it.
Additionally, as mentioned before, you’ll want to make sure that the fuel filter is clean and there isn’t any debris or other contaminants in the gas tank.
In addition, if you are going to be carrying heavy loads, then you’ll want to be sure that the tires aren’t worn out or need replacing.
This will ensure a safe ride and better fuel economy as well because it will take less effort to push down on the road when they are in good condition.
Maintenance and Upkeep
Another thing to consider is maintenance. While it’s unlikely that you’ll have to do much on a vehicle, it helps if you know how to handle basic tasks such as changing the oil and even checking the air in your tires.
If not, then hopefully there are people around where you live who offer services at a cheap price because most shops will probably be more expensive.
Another thing to consider is keeping everything clean. A lot of times, people don’t do this simple task either and it’s best not to let that happen because a dirty car looks terrible and will probably get noticed by other people when you’re out driving around.
Final Thoughts on Buying a Used Car
There are so many different ways to learn how to buy a used car – just make sure that you do your research and ask someone for help if you are still unsure.